Release 12_ Implementing Capital Projects and Oracle Assets

Suzana Ferrari DARC Corporation

Introduction
This presentation is for users who are considering implementing Capital Projects functionalities, and interfacing capital project expenditures to Oracle Assets. We will cover detailed implementation steps for Oracle Projects and Oracle Assets, including different ways of capitalizing CIP costs and interfacing to Oracle Asset.

Overview
In Oracle Projects, you can collect and track detailed CIP assets information and once assets are placed in service, interface assets to Oracle Assets. Oracle Assets and Capital Projects in Project Costing needs to be implemented to use these functionality.

Implementing Oracle Assets

Fixed Assets Application setup is on a global level. In other words, it is installed in a single instance with multiple Ledgers and Asset Books. The following setup is shared among Ledgers and Oracle Assets Corporate Books: Fiscal Years Calendars Prorate Conventions Flexfield Segments and Values

Oracle Assets has three key flexfields: asset key, asset category and location. The flexfields are designed to group various asset information. Following are Oracle Assets Setup steps: - Define FA Fiscal Years o The Fiscal Year groups the accounting periods. Defines the start and end date of each fiscal year since the oldest date placed in service through fiscal year beyond the current fiscal year (for budgeting/projection purposes). Determine the oldest date placed in service to accommodate conversion of legacy data Specify fiscal year name, description, from and to dates There is no limitation for number of fiscal years in the Oracle Assets, but typically they should match with Oracle General Ledger to facilitate the entries flow At each fiscal year end, the depreciation program automatically generates the next fiscal year You only need to enter the first year, and use down arrow until you reach the current year Save your work

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Define Calendars o The calendars are used as depreciation calendars, and determine the number of accounting periods in a fiscal year. When Book Controls are setup, following is assigned to a book: Depreciation Calendar Fiscal Year Name Prorate Calendar The depreciation program uses the prorate calendar to determine the prorate period which is used to choose the depreciation rate. Define Asset Key Flexfield o The asset key allows you to group assets. For example, you might setup a value Dell to find all Dell assets easier. The asset key has no financial impact. Define Asset Category Flexfield o The category flexfield groups assets for financial information and asset tracking. Assets are grouped according to depreciation rules. Define one Major segment and up to six Minor segments (subcategories). Define Location Flexfield o The location flexfield groups assets by assets physical location. Define System Controls o Enter your company name - this appears on all reports as the first line at the top of each report o Enter the Oldest Date Placed in Service - this defaults on the category setup. No asset can be placed in service before this date o Click on the Flexfield Structures o Click on Starting number and enter a starting number. This will automatically number each new asset in series to a maximum value of 2,000,000,000. o Last Asset Number Used is an information field available at any point in time o None of the values in this screen can be updated once it is saved Define Locations o If you select Allow Dynamic Insert when setting up the location flexfield, you do not need to define valid locations o Using LOV; select valid value for each segment o Click OK o Save your work Define Aset Keys o If you select Allow Dynamic Insert when setting up the asset key flexfield, you do not need to define valid asset keys o Using LOV; select valid value for each segment o Click OK Define Asset Descriptions and Quick Codes o For each Quick Code Type, enter Values and Description Set up Security by Book o Control Oracle Assets responsibilities via security profile Define Book Controls o Enter a name for the Depreciation Book o Class defaults to Corporate o The name entered as Book populates the Associate Corporate Book field o Enter a Description Define Prorate and Retirement Conventions o Determine the oldest date placed in service to accommodate conversion of legacy data o Specify convention name, description, and select the fiscal year o Check Depreciate When Placed in Service flag o Enter from date, to date, and prorate date o At each fiscal year end, depreciation program automatically generates the next fiscal prorate conventions o Enter the first period, and use arrow down to create the subsequent periods. o Save the work at the end of each fiscal year

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o Create the prorate periods through the end of the current fiscal year Define Asset Categories o Common for a group of assets o Rules apply as default when assigned to an asset o Identify if: capitalized; in physical inventory; lease; general ledger accounts; default depreciation rules Set Profile Options

Implementing Capital Projects

Following setup steps need to be completed in Oracle Projects to use Capital Projects functionalities: - Define Work Type o Classification of work, assigned to Project Type; Templates, Projects, Financial Tasks, Team Roles, Project Requirements, Project Assignments. - Define Service Type o Represents activities you want track; Use to group tasks; Use for AutoAccounting; Defaults to top financial task from Project Type / Template - Define Project Type o Details Tab Class Capital Assign Service Type and Work Type o Costing Information Tab if burdening o Budget Option Tab Add Resource List If using forms for Cost Budget assign Entry Method o Classification Tab if required o Budgetary Control Tab if required o Capitalization Tab CIP Cost Type - capitalize costs at their burdened or raw cost amount

Require Complete Asset Definition Flag Complete Asset definition in Projects before interfacing to Oracle Assets? If flag on, do not need to enter asset information in asset line in Prepare Mass Additions in Oracle Assets Override Asset Assignment Flag - Call or disregard the Asset Assignment client extension? Asset Cost Allocation Method - Predefined allocation methods to automatically distribute indirect and common costs across multiple assets:

Event Processing Method - How assets and costs are grouped over time; choose to use either periodic or manual events

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Grouping Method How to summarize asset lines?

Group Supplier Invoices Flag - To consolidate the expenditure items on a supplier invoice into one asset line according to the method specified in the Grouping Method? Interface Supplier Invoices Interface expenditure item on Supplier Invoice as NEW or as MERGED Capitalized Interest Specify a default interest rate schedule for capitalized interest Define Expenditure Categories o Grouping of Expenditure Types o Source of costs Define Expenditure Types o Classification of Costs Define Project Organization o Capital Projects Owning Organization Add Organization to Hierarchy and to Diagram Define AutoAccounting o For Capital Projects Add Expenditure Categories to Resource List o For Budgeting and Reporting Define Template o To be used to create Capital Projects Setup Capital Project

Assets Capitalization Overview

Capital Projects are used to collect CIP costs for Capital Assets. Collection of costs is the same as in Contract and Indirect projects. Assets can be placed in service before project is completed. Once all of the costs are collected, each asset that needs to be placed in service is defined in Oracle Projects. There are different options (based on Capital Project type definition) to create capital assets and place assets in service.

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Capital Project Cost Flow Diagram:

Capital Project Flow Diagram:

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Creating Capital Assets

Depending on Capital Project Type definition, there are various options to create capital assets and interface expenditures to Oracle Assets. This paper will cover couple of options: - Event Processing Method Manual - Capitalizing based on Current Cost Asset Allocation Method and Expenditure Type Grouping Method

Using Manual Events to Capitalize Assets one Asset per Expenditure Item 1. N: Capitalization>Capital Project 2. Find Capital Project a. This will take you to Capital Projects form. 3. Select a project (if multiple projects in your list) 4. To define and assign an asset to a task, click on Assets 5. In Assets form, fill in all of the Asset Information. Example: a. Asset Name b. Project Asset Type c. Actual Date Placed in Service d. Asset Book e. Asset Category f. Asset Key g. Asset Location h. Depreciation Expense Account i. Asset Description 6. Save 7. Once Saved, the button Assigned Asset will be available. Click on it 8. Assign Assets form will open 9. Click on Lowest Task Tab and then check To Task flag 10. Select a task the purchase of an assets was charged to and save. Note the task name will be the same as the Asset Category Name in Oracle Assets (same category you used to in Step #5, on tab Asset Details 11. Close the forms until you return to Capital Projects form 12. Select a project (if multiple projects in your list), and click on Capital Events button 13. Capital Events form will open 14. Insert a new row and enter Capital Event Name and Asset Allocation Method select Current Cost as the method 15. Save. Once saved the Event Number and Creation Date will be populated 16. While still on Capital Events Form, click on Assets 17. Event Assets form will open 18. Click on Attach New Assets 19. Attach New Asset Form will open 20. Enter Information for Asset you defined earlier, and include a task where the capital purchase was charged to 21. Click OK 22. Message will appear: 1 Asset(s) attached to Event 23. Close form(s) until you return to Capital Events form 24. To assign correct expenditure item for asset to be capitalized, click on Costs 25. Event Costs form with open 26. Click on Attach new Costs 27. Attach New Cost form will open

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28. Enter expenditure information; be as specific as possible a. Task Number b. Expenditure Item Dates Range c. Expenditure Type 29. Click OK 30. Message on how many expenditures were attached will appear: # Expenditure Item(s) attached to Event 31. Click OK 32. Return to Event Cost Form Note: In some cases you will note more than one expenditure Unselect the expenditures you do not want and only keep one expenditure. To

unselect, click on the flag where is says Flag ON will be selected and cost will be attached to an asset Flag OFF these costs will not be attached to an asset 33. Save your work and return to Capital Events form 34. Click on Generate 35. Enter dates and click OK

36. 37. 38. 39.

View the PRC: Generate Asset Lines for a Single Project in View Request Once Completed, view output to ensure that asset line was generated Scroll to --- Capital Asset Lines Generated --- in the output report This completes the steps.

Grouping Assets by Expenditure Type and Capitalizing Assets Based on Current Costs 1. Follow steps above to define assets; assign assets and place assets in service a. Steps:1 through 11 2. Summarize the costs: PRC: Update Project Summary Amounts or Refresh Project Summary Amounts 3. Generate Asset Lines; run PRC: Generate Asset Lines for a Range of Projects or PRC: Generate Asset Lines for a Single Project

Interfacing Capital Expenditures to Oracle Assets

Prior to interfacing Capital Expenditures (Capital Assets) to Oracle Assets ensure following is completed: 1. 2. 3. 4. 5. 6. 7. All appropriate cost distribution processes are run If capitalizing burden, interface both raw and burden costs Define assets Assign assets to a project task Place assets in service Update project Summary Amounts Generate asset lines

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Once above steps completed run: PRC: Interface Assets process Successful interface pre-requisites: The actual date in service must fall in the current or a prior Oracle Assets accounting period The CIP costs for summarized asset lines must be interfaced to Oracle General Ledger The CIP costs for supplier invoice adjustments must be interfaced to Oracle Payables A CIP asset must be associated with the asset line.

Conclusion
Capital Project functionality in Oracle Projects allows users to manage assets capitalization by collecting CIP costs from various sources, create assets, place assets in service, define capital events, generate asset lines, and interface assets to Oracle Assets. Oracle Assets functionalities will depreciate interfaced assets and interface assets related financial information to General Ledger (via Subledger Accounting).

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