FA: Fixed Assets Journal Entries

 

Fixed Assets Journal Entries
Asset Addition :
The process of adding a Fixed Asset either through detailed, quick or mass addition is called asset addition. Detail and quick addition are carried out only in Oracle Assets.
The journal entry in Oracle Assets during detailed or quick addition is
Dr. Asset Cost
Cr. Asset clearing account
Asset clearing account is used to reconcile the transactions between Oracle Payables and Oracle Assets. When an asset is added through detailed or quick additions, the credit goes to the asset clearing account. Also for mass addition process, oracle assets use Asset Clearing account for reconciliation.
In Oracle Assets the journal entry remains the same
Dr. Asset Cost
Cr. Asset clearing account
In AP
Dr Asset Clearing Account
Cr Accounts Paya
Changes:
Changes refer to change in Asset Cost or Depreciation method or Depreciation rate for one or more assets. Oracle Assets would use the new cost or depreciation method or rate from the period of change to arrive at the depreciation amount. Also it recalculates the depreciation that should have been calculated so far, compares with the actual depreciation and passes an adjusting entry.
If the transaction results in addition to the cost of asset, then the journal entry created is
Dr. Asset Cost
Cr. Asset Clearing
	Hence an adjusting entry to incorporate depreciation as per the new cost of the asset should be incorporated. Also due to change in method or rate the new depreciation calculated may be lower or greater than the depreciation calculated so far.
If the accumulated depreciation recalculated is lower than the accumulated depreciation calculated until now,
Dr. Accumulated Depreciation
Cr. Depreciation Expense (Adjustment)
If it is greater than the Accumulated depreciation until now,
Dr. Depreciation Expense (Adjustment)
Cr. Accumulated Depreciation
Transfers
Transfers refer to change in Location, expense account, and employee assignment. If there is a change in expense account, for e.g. If an asset is transferred from department 001 to department 002,
The journal entry for accounting the asset cost is
Dr. Asset Cost (002)
Cr. Asset Cost (001)
The journal entry for accounting the accumulated depreciation is
Dr. Accumulated Depreciation (001)
Cr. Accumulated Depreciation (002)
Revaluation
Revaluation is a process so as to reflect current market price of the Asset. The journal entry created by revaluing a fixed asset is as follows:
Revalue Accumulated Depreciation is enabled at the Book Controls level:
The amount of revaluation would be credited to Accumulated Depreciation and Revaluation reserve in the same proportion as the existing Accumulates Depreciation and Net Book value.
Dr. Asset Cost
Cr. Accumulated Depreciation
Cr. Revaluation Reserve
Revalue Accumulated Depreciation is disabled at the Book Controls level:
To the extend of the revaluation amount, the following journal entry would be passed.
Dr. Asset Cost
Cr. Revaluation Reserve
Also the existing depreciation reserve would also be transferred to the Revaluation Reserve
Dr. Accumulated Depreciation
Cr. Revaluation Reserve
Retirements
Oracle Assets passes the following journal entry for retirement.
If the retirement transaction resulted in a Gain, the journal entry passed would be.
Dr. Accumulated Depreciation
Dr. Proceeds of sale
Cr. Asset Cost
Cr. Gain / Loss
If the retirement transaction resulted in a Loss, the journal entry passed would be.
Dr. Accumulated Depreciation
Dr. Proceeds of sale
Dr. Gain / Loss
Cr. Asset Cost
Depreciation:
Running depreciation (as applicable to a particular asset) during the period end would pass a journal entry
Dr. Depreciation Expense
Cr. Accumulated Depreciation