Accounting For All Modules

PJM
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Content
Introduction................................................................................................iv
Purpose................................................................................................iv
Scope....................................................................................................iv
Structure...............................................................................................v
Related documents...............................................................................v
Oracle Payables.........................................................................................vi
Assumptions.........................................................................................vi
Events...................................................................................................vi
Accounts..............................................................................................vii
Accounting entries..............................................................................viii
Notes.....................................................................................................x
Oracle Receivables.....................................................................................xi
Assumptions.........................................................................................xi
Events...................................................................................................xi
Accounts..............................................................................................xii
Accounting entries..............................................................................xiv
Notes..................................................................................................xix
Oracle Inventory, Purchasing and Order Entry..........................................xx
Assumptions........................................................................................xx
Events..................................................................................................xx
Accounts.............................................................................................xxi
Accounting entries..............................................................................xxi
Notes................................................................................................xxiv
Oracle Fixed Assets.................................................................................xxv
Assumptions ...................................................................................xxvii
Events ............................................................................................xxviii
Accounts ...........................................................................................xxx
Accounting Entries .........................................................................xxxii
Notes ................................................................................................xli
Oracle Project Accounting........................................................................xlv
Assumptions.....................................................................................xlvii
Events...............................................................................................xlvii
Project AutoAccounting functions and processes............................xlviii
Accounting entries...........................................................................xlviii
Notes......................................................................................................l
Encumbrance Accounting...........................................................................li
Assumptions..........................................................................................li
Events...................................................................................................li
Accounts...............................................................................................lii
Accounting entries................................................................................lii
Notes...................................................................................................liv
Open en closed..........................................................................................lv
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Introduction
While implementing Oracle Applications there is often a need for an
integrated functional overview on journal entries. This need is especially
felt when setup discussions are on with the customer and decisions have
to be made. The customer enters the discussions from a functional point
of view.
The available Oracle information and documentation is fragmented and

detailed. For each module or application separate manuals exist. These
manuals are focused on descriptions of windows and specific functions.
As part of the Practice Development project of Oracle The Netherlands a

document is created that covers the accounting issues in Oracle
Applications in an integrated way. This is the result.
Purpose
The purpose of this document is to create an overview of the accounting

entries in Oracle Applications in a such a way that:
1. the determination of the system accounts takes place in a structured

way. In practice, as part of the implementation, the customer will
determine the chart of accounts. Often system accounts are not taken
into account.
2. the document can be used as project documentation and information

to explain setup decisions. This is also the case for FastForward
implementations for which all decsions already have been made.
Scope
This document covers the following applications: General Ledger,

Receivables, Payables, Cash Management, Fixed Assets, Project
Accounting, Purchasing, Order Entry en Inventory. Other E-Business
applications are not in the scope of this document. Cash Management is
covered as part of Payables and Receivables. Purchasing, Order Entry and
Inventory are handled in one chapter.
For each Application assumptions are made concerning the setup. These
are made on base of best practices in The Netherlands.
This document is focused on setup related options that affect the content
and structure of journal entries.
Other topics that are not in the scope of this document:
1. New developments in future releases are not taken into account. This
document is solely based on Release 11.5/ 11i.
2. The setup of the accounting flexfield.
3. Reporting issues and tools like FSG and Oracle discoverer.

4. Specific intercompany and consolidation issues.
5. Technical specifications of tables and programs that support the

accounting process in Oracle Applications.
Structure
For each application you will find a separate chapter. Each chapter has
the following content:
1. Each chapter starts with assumptions that have been made. Most
assumptions are made on base of best practice in The Netherlands.
2. In the second part the events of the application are described. An

event is a trigger that causes a journal entry in General Ledger. The
events will be used to categorize the accounts and journals that are
described in the next parts.
3. The third part gives an overview of the accounts that are part of the
setup of the application. For each account a relation is made to one or
more events. A second table, with the same accounts, gives an
overview in which forms the setup of that account has to take place.
4. The fourth part shows for each event the structure and content of the
journal. This information is presented in a table.
5. Finally each chapter ends with notes.
A separate chapter is introduced to cover encumbrance accounting.

Encumbrance accounting is related to Purchasing, Oracle Payables and
General Ledger.
Related documents
1. Fast Forward documents

2. Accountingflow in Oracle R11I voor Canon Consumer Imaging
Group by Luuk de Kok. Version 1, dated 21 augustus 2001.
3. Oracle Payables User Guide, Release 11i, january 2000.
4. Unlocking the Mystery of Encumbrance Accounting by Victoria
Leavy.
Oracle Payables
In this chapter accounting issues are described for the application Oracle
Payables. This application covers the purchase invoice and payment
processes. To be able to reconcile the payments it is best practice to
implement Cash Management as well. The accounting entries that are a
result of reconciliation are processed by Oracle Payables.
For encumbrance related issues see chapter Encumbrance Accounting.
Assumptions
1. The Account for Payment option is set to Both. This means accounting
entries will be created at the time of payment (creation) and at the
time of payment reconciliation by using Cash Management. In previous
releases of Oracle Applications this feature was handled by the Allow
Reconciliation Accounting option.
2. The Account for Gain/Loss option is set to Both as well. This means that
foreign currency losses and gains are recorded at the moment of the
payment issue and at the moment of the payment clearing.
3. Automatic Withholding Tax Payables is not used.
4. The accounting method is set to Accrual Basis Accounting. This means

you create accounting entries for invoices and payments by using the
liability account. (Cash Basis Accounting only creates accounting
entries for the payment)
5. The Automatic Offset Method is set to Balancing. This means the

liability accounts will have the same balancing segment value as the
accounts that are entered in the invoice distributions.
6. The pooled bank account option is set on yes. This means the bank
account is shared by multiple balancing segment values.
7. Interest Invoicing makes it possible to create an interest invoice for an

overdue invoice at the time of payment. Separate accounts are used to
record the accounting entries. This feature is not commonly used in the
Netherlands and therefor not recorded as an event in this chapter.
8. Tax and freight are included.
Events
AP Event name GL Source GL Category Notes

Even
t nr.
1 Invoice Payables Purchase Invoice When adjusting or cancelling an

invoice the same accounts are
used. Only debit / credit will be
reversed.
AP Event name GL Source GL Category Notes

Even
t nr.
2 Prepayment Payables Purchase Invoice When adjusting or cancelling a

prepayment the same accounts
are used. Only debit / credit will
be reversed.
3 Prepayment application Payables Purchase Invoice When unapplying a prepayment
the same accounts are used. Only
debit/ credit will be reversed.
4 Payment Payables Payment When adjusting or voiding a
payment the same accounts are
used. Only debit/ credit will be
reversed.
5 Payment maturity Payables Payment This event takes only place when
the Account for Payment When
Payment is Issued option is
enabled.
6 Reconciliation Payables Reconciled When unreconciling a payment
Payment the same accounts are used. Only
debit/ credit will be reversed.
Accounts
Type 1 2 3 4 5 6
Liability Liability X X X X
Expense Expense X
Prepayment Asset X X
Future dated payment Asset X
PO rate variance gain Revenue X
PO rate variance loss Expense X
Discount Expense X
Realized gain Revenue X
Realized loss Expense X
Rounding Expense
Freight Expense X
Intrest invoice Expense
expense
Intrest invoice liability Liability
Cash clearing Asset X X X
Cash Asset X
Bank charges Expense X
Bank errors Expense X
Tax Asset X
Financia Payable Supplie Bank Payables Tax Invoice

ls options r /Site accou document
options nt s
Liability * X X X
Expense** X
Prepayment X X
Future dated payment X X X X
*
PO Rate variance gain X
PO Rate variance loss X
Financia Payable Supplie Bank Payables Tax Invoice

ls options r /Site accou document
options nt s
Discount * X
Realized gain * X X
Realized loss * X X
Rounding */*** X
Freight X X
Interest invoice X
expense
Interest invoice X
liability
Cash clearing * X X
Cash * X
Bank charges * X X
Bank errors * X X
Tax X X
*These are the accounts for which automatic offsets are created.
**This account is generated by Account Generator when the invoice is

related to a project.
***The rounding account will be used when:
1. You use multiple curencies and the payment currency does not
round within the payment currency precision.
2. The functional currency amounts of payments do not equal the

amount recorded as the liability.
3. You have enabled automatic offsets and the cash account is

pooled, and you have rounding errors.
Whether the future dated payment account is used from the supplier site
or the payables document is defined by the Payables Option ‘Use Future
Dated Payment’.
1
Accounting entries
AP-1 Invoice
Accounting entry Debit Credit
Expense (or AP Accrual)* X

Tax X
Freight X
Liability X
PO rate variance gain/ loss** (X) (X)
Invoice Price variance* (X) (X)
* This will be the AP Accrual account in case the AP invoice is matched to

a Purchase Order and the item used on the Purchase order is an inventory
item. The AP Accrual account is an organization parameter and is can be
found in the Oracle Purchasing and Inventory Chapter.
** These accounting entries can only be created when an invoice is

matched to a purchase order.
AP-2 Prepayment
Prepayment X
Liability X
AP-3 Prepayment Application
Prepayment X
Liability X
When applying an invoice to a prepayment, the prepayment has to be

paid. Only then the prepayment is available.
AP-4 Payment
Liability X
Cash clearing X
Discount X
Realized gain/ loss (X) (X)
In case of a future dated payment the future dated payment account is

used instaead of the cash clearing account. At time of maturity the future
dated payment is credited. Discount and realized gain/ loss is recorded at
the time of maturity.
PA-5 Payment maturity
Future dated Payment X

Cash clearing X
Discount X
PA-6 Reconciliation
Cash X
Cash clearing X
Bank charges X
Bank errors X
Notes
1. Automatic offset only efects the accounts that are marked with *. Other
accounts can only be balanced by manual entries in Oracle General
ledger.
2. Automatic offset is only relevant when more than one balancing

segment value is used in an Operating Unit.
3. Automatic offset does not support Interest invoicing. However Interest

invoicing is not common practice in The Netherlands.
4. The pooled bank account option is only relevant when more than one
balancing segment value is used in an Operating Unit.
5. Future dated payments are not common practice in The Netherlands.

This functionality makes a difference between issuing of a payment
and the moment a payment is mature. Only when a payment is mature
(status of the payment is Negotiable) it is possible to clear the payment
by using Cash Management. To use this feature the option Use Future
Dated Payment Account has to be set to Payment Document or
Supplier Site.
6. Never change accounting options in the payment Accouting Payables

Options form. This could create inconsistent accounting entries in the
system.
7. The PO Rate Variance Gain and Loss accounts are only used in case
you match an invoice with a purchase order that involves inventory
items.
8. The expense clearing account in previous releases of Oracle

Applications does not exist anymore in Release 11i.
Oracle Receivables
Receivables. This application covers the sales invoice and collection
processes. To be able to reconcile the receipts it is best practice to
implement Cash Management as well. The accounting entries that are a
result of reconciliation are processed by Oracle Receivables.
Two main types of receipts can be distinguished:
1. Cash receipt. This is a receipt that potentially is linked to an

outstanding item. When the outstanding item (and the related liability
account) can not be found a default liability account will be used.
2. Miscellaneous receipt. This is a receipt that is not related to an

outstanding item. Instead of using a liablity account, any type of
account can be used. These account are related to receivable activities.
Assumptions
1. Clearance method = By Matching
2. The accounting method is set to Accrual Basis Accounting. This means

you create accounting entries for transactions and receipts by using
the liability account. (Cash Basis Accounting only creates accounting
entries for the receipt)
3. No unallocated receipts are recorded.
4. Receipt remittance by using the Factoring method is not in the scope.
Events
AR Event name GL Source GL Category Remarks

Even
t nr.
1 Invoice (regular) Receivables Sales Invoices

2 Bill in arrears invoice Receivables Sales Invoices Determined by the invoicing rule
that is used in the more tab of the
transactions window. The revenue
recognition program creates the
accounting entries.
3 Bill in advance Invoice Receivables Sales Invoices Determined by the invoicing rule
that is used in the more tab of the
transactions window. The revenue
recognition program creates the
accounting entries.
AR Event name GL Source GL Category Remarks

Even
t nr.
4 Debit memo Receivables Debit Memos

5 Credit memo Receivables Credit Memos This event takes place by using
the Credit transactions windows.
6 Apply credit memo to Receivables Credit Memo
invoice Applications
7 On-account credit Receivables Credit Memos On account credits are credits
that are not applied to a specific
transaction. This event takes
place by using the Credit
transactions windows or by
applying a receipt.
8 Adjustment Receivables This event takes place when using
a separate window. It can be
positive or a negative adjustment.
9 Deposit Receivables A deposit is being created by
using the Transactions window.
10 Invoice applied to deposit Receivables Sales Invoices Application takes place by filling
out the field Commitment in the
Transactions window.
11 Guarantee Receivables A guarantee is being created by
using the Transactions window.
12 Invoice applied to Receivables Sales Invoices Application takes place by filling
guarantee out the field Commitment in the
Transactions window.
13 Applied receipt Receivables Trade Receipts This is event includes a discount.
Also valid for receipts on a deposit
and guarantee.
14 Unapplied receipt Receivables Trade Receipts
15 Unidentified receipt Receivables Trade Receipts This is the case when a (cash)
receipt has no customer. These
can not be applied.
16 Change from unidentified Receivables Trade Receipts
to unapplied
17 Change from on account Receivables Trade Receipts
to applied
18 On account receipt Receivables Trade Receipts This is the case when a (cash)
receipt has a customer but cannot
be related to a specific
transaction.
19 Miscellaneous receipt Receivables Misc Receipts This receipt is not matched to an
invoice. The revenue account is
derived from the receivable
activity.
20 Receipt with discount Receivables Trade Receipts
21 Receipt (to be remitted) Receivables Trade Receipts Create a receipt that needs to be
remitted by the bank (‘incasso
tape’)
22 Remittance of the receipt Receivables Remittance
23 Reconciliation of the Receivables Using Cash Management
remitted receipts
Accounts
Type 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Realized gain Revenue X

Realized loss Expense X
Unallocated Revenue Revenue
Cross currency Expense
rounding
Header rounding Expense
Cash Asset X X
Bank charge Expense X X
Type 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Receipt confirmation Asset

Remitted receipt Asset
Factored receipt Asset
Short term debt
Unapplied receipt Asset X X
Unidentified receipt Asset
On account receipt Asset
Receivable Asset X X X X X X X X X X X X
Revenue Revenue X X X X X X X X
Clearing Asset
Unbilled receivable Revenue X X X
Unearned revenue Revenue X X X X X
Tax Liability X X X X X X X
Freight Revenue X X X X X X X
Earned discount Revenue
Unearned discount Revenue
Adjustment (write-off) Expense X
Bank Error Expense X X
Finance Charge Revenue X
Misc. Cash Revenue
Type 1 16 17 18 19 20 21 22 23
5
Realized gain Revenue

Realized loss Expense
Unallocated Revenue Revenue
Cross currency Expense
rounding
Header rounding Expense
Cash Asset X X X X X
Bank charges Expense X X
Receipt confirmation Asset X X
Remitted receipt Asset X X
Factored receipt Asset
Short term debt
Unapplied receipt Asset X X X X
Unidentified receipt Asset X X
On account receipt Asset X
Receivable Asset X X X
Revenue Revenue X
Clearing Asset
Unbilled receivable Revenue
Unearned revenue Revenue
Tax Liability
Freight Revenue
Earned discount Revenue X
Unearned discount Revenue X
Adjustment (write-off) Expense
Bank error Expense X X
Finance Charge Revenue
Misc. cash Revenue X
System Bank Trans. Custo Sales Rep Tax Receivable

options accounts Types mer activity
Site
Realized Gain X
Realized Losses X
Unallocated Revenue X
Cross currency X
rounding
Header rounding X
Cash X
System Bank Trans. Custo Sales Rep Tax Receivable

options accounts Types mer activity
Site
Bank charges X
Confirmed receipts X
Remitted receipts X
Factored receipts X
Short term debt X
Unapplied receipts X
Unidentified receipts X
On account receipts X
Receivable * X X X
Revenue * X X X
Clearing * X X
Unbilled receivable* X X
Unearned revenue* X X
Tax * X X X X
Freight * X X X
Earned discount X
Unearned discount X
Adjustment (write-off) X
Bank Error X
Finance Charge X
Misc. Cash X
* These are accounts that can be managed by Auto Accounting.

1
Accounting entries
AR-1 Invoice regular
Receivable X
Revenue X
Tax X
Freight X
AR-2 Bill in arrears invoice
Unbilled Receivable X
Revenue X
Tax X
Freight X
Depending on the Bill in arrears rule the revenue will be taken in different
periods and the journal entry above will be generated each time.
Revenue X
Tax X
Freight X
Receivable X
At the final period the unbilled Receivable is transferred to Receivable. At

that time the sales invoice will be generated and send to the customer.
The amount of the Receivable entry is the total of all the Unbilled
receivable entries that have been recorded in the previous periods.
AR-3 Bill in advance invoice
Receivable X
Unearned revenue X
Tax X
Freight X
Unearned revenue X
Revenue X
At the first period the total receivable amount is recorded and an invoice
is sent to the customer. The revenue will be recorded in the coming
periods as it is defined in the Bill in advance invoicing rule.
Unearned revenue X
Revenue X
AR-4 Debit memo
Receivable X
Revenue X
Tax X
Freight X
Receivable X
Finance charge X
AR-5 Credit memo
Receivable X
Revenue X
Tax X
Freight X
AR-6 Apply credit memo to invoice
Receivable X
Receivable X
AR-7 On-account credit
Receivable X
Revenue X
An on-account credit can be a credit on Revenue, Tax or Freight. The

journal entry above is a credit on Revenue.
AR-8 Adjustment
Receivable X
Adjustment X
The entry above is a postive adjustment. Adjustment must be seen as a

write-off. Adjustment entries can be made in combination with receipts.
AR-9 Deposit
Receivable X
Unearned revenue X
AR-10 Invoice applied to deposit
Receivable X
Revenue X
Tax X
Freight X
Unearned revenue X
Receivable X
AR-11 Guarantee
Unbilled receivable X
Unearned revenue X
AR-12 Invoice applied to guarantee
Receivable X
Revenue X
Tax X
Freight X
Unearned revenue X
Unbilled receivable X
AR-13 Applied receipt
Cash X
Bank charge X
Bank error X
Receivable X
Unapplied receipt X
Unapplied receipt X
The moment of creating this journal entry is dependent on the setting

Clearance Method in Receipt classes. When the method is set to Directly
the entry is created at the time of processing the receipt. If the method is
set to By Matching the entry is created at the time of clearing the receipt
by Oracle Cash Management.
AR-14 Unapplied receipt
Cash X
Bank charge X
Bank error X
Unapplied receipt X
AR-15 Unidentified receipt
Cash X
Bank charge X
Bank error X
Unidentified receipt X
AR-16 Change from unidentified to unapplied
Unidentified receipt X
Unapplied receipt X
AR-17 Change from unidentified to unapplied
Receivable X
Unapplied receipt X
AR-18 On account receipt
Cash X
Bank charge X
Bank error X
On account X
Unapplied receipt X
Unapplied receipt X
AR-19 Miscelleneous receipt
Cash X
Misc. cash X
A miscelleneous receipt is a receipt that is not related to an outstanding

item.
AR-20 Receipt with discount
Cash X
Receivable X
Receivable X
Revenue X
Receivable X
Discount (earned/ unearned) X
AR-21 Receipt (to be remitted)
Receipt confirmation X
Unapplied receipt X
Unapplied receipt X
Receivable X
AR-22 Remittance of the receipt
Remitted receipt X
Receipt confirmation X
AR-23 Reconciliation of the remitted receipts
Cash X
Remitted receipt X
Notes
1. The profile option AR: Use Invoice Accounting for Credit Memos
determines the way accounting entries for credit memos are
generated. If this option is set to Yes then Receivables credits the
original transaction. When the option is set to No, Receivables uses
AutoAccounting to determine the accounts.
2. When entering a credit memo you have to choose a Ruling Method and
a Split Term Method. The options for both are FIFO, LIFO and prorate.
These rules do not effect the journal entries themselves. The methods
determine what element of the invoice has to be credited.
3. The accounts Factored receipt and Short term debt are only used for
remittances when using the factoring method.
4. The journals AR-20, AR-21 and AR-22 are related to the “Incasso”
functionality. This is common practice in the Netherlands.
Oracle Inventory, Purchasing and Order Entry
In this chapter accounting issues are described for Oracle Purchasing and
Inventory. Only actual journal entries are included in this chapter.
Encumbrances are handled in a separate chapter.
Assumptions
1. Inventory is not used in a manufacturing environment. Goods are

received, moved between organizations and sold.
2. Receiving of goods is done in two steps. The first step is receiving

the goods for inspection. The second step is to deliver the goods to
the inventory or other department .
Events
INV Event name GL Source GL Category Remarks

Even
t nr.
1 Receipt of Purchasing Accrual/ Receiving The category depends on the way

inventory item receipt accounting is handled. The
category accrual is used when the
method is period end. Receiving is used
when the receipt journal is generated
directly.
2 Receipt of expense Purchasing Accrual/ Receiving The same.
item
3 Deliver Purchasing Accrual/ Receiving The same.
4 Return to vendor Purchasing Accrual/ Receiving The same.
(goods not in
stock)
5 Return to vendor Purchasing Accrual/ Receiving The same.
(goods in stock)
6 Sales order Inventory Inventory
shipment
7 Cycle count Inventory Inventory
adjustment
8 Miscelleneous Inventory Inventory
Transfer
9 Interorg. Transfer Inventory MTL
10 Subinventory Inventory MTL
Transfer
Accounts
Type 1 2 3 4 5 6 7 8 9 10
Receiving Inspection Asset X X X X

Purchase Price Expense X X
Variance
Receivable Asset X
Payable Liability X
Intrasit Inventory Asset X
Material Asset X X X X X X X
Outside Processing Asset
Material Overhead Asset
Overhead Asset
Resource Asset
Expense Expense X
Invoice Price Variance Expense
Inventory AP Accrual Liability X X X X
Sales Revenue
Cost of Goods Sold Expense X
(COGS)
Cost Variance Expense
Account
Cycle count Expense X
adjustment
Scrap Expense X
Other Organizatio Subinvento

n ry
Receiving Inspection X
Purchase Price X X
Variance
Receivable X X
Payable X X
Intrasit Inventory X
Material X X
Outside Processing X X
Material Overhead X X
Overhead X X
Resource X X
Expense X X X
Invoice Price Variance X
Inventory AP Accrual X
Sales X
Cost of Goods Sold X
Cost Variance X
Account
Cycle count X
adjustment
Scrap X
Accounting entries
INV-1 Receive to Inspect
Receiving inspection X
Inventory AP Accrual* X
* This account will be posted Debit when matching an AP Invoice to the related Purchase order.
INV-2 Deliver to Inventory
Material* X
Purchase Price Variance (X) (X)
* In case of the use of an expense item on the related Purchase order, this account will be an
expense item.
INV-3 Return to Vendor (Goods not in stock)
INV-4 Return to Vendor (Goods in stock)
Material X
Purchase Price Variance (X) (X)
INV-5 Receive an Expense Item
Expense account X
INV-6 Sales Order Shipment
COGS X
Material X
INV-7 Cycle count adjustments
Cycle count adjustment (X) (X)

Material (X) (X)
INV-8 Misc. transfer
Scrap X
Material X
INV-9 Interorg transfer
Material (Organization A) X
Material (Organization B) X
Receivable (Organization B) X
Transfer Cost X
Intransit X
Payables (Organization A) X
INV-10 Subinventory transfers
Material (A) X
Material(B) X
Notes
Oracle Fixed Assets

Before we go into the details of Events, Assumptions, Accounts en
Accounting Entries, this chapter gives a global introduction of the
terminology used within assets concerning functionality that influences
the construction of journal transactions.
CIP versus Capitalized transactions.

Assets supports three types of Assets, “Capitalized”, “CIP” and
“Expensed”; every Assets has a corresponding status.
1. “Expensed” has no Asset journals as a result; the cost of assets

has been taken (as expenses in the P&L) in the period the
purchase invoice was distributed in general Ledger.
2. “CIP” Assets are not Yet depreciated;
3. And “Capitalized”
Assets support the following Events: for, “Capitalized” and “CIP”
transactions;
• Additions ;
• Depreciation ;
• Adjustments ;
• Transfers ;
• Reclassifications ;
• Revaluation’s ;
• Retirements and ;
• Tax accounting.
Depending on the type of an Asset, the transaction will be a CIP

transaction or a Capitalized transaction.
In the third part of this chapter where we will describe the journal
transactions. For “Additions” the journals for “CIP” and “Capitalized” will
be discussed separately , for all other events Capitalized type will be
described. The big difference with CIP is that CIP assets will not
depreciate, and has no “accumulated deprecation” to account for in all
other events.
Asset “Corporate”, “Tax” and “Budget” books types

You cannot allow general ledger posting for your budget books.
Asset books of the Type “Tax” and “Corporate” produce journal lines if
you allow G/L Posting for this Asset Book.
Expensed versus Amortized Adjustments;

An adjustment might influence the historical depreciation calculation in
retrospect. The correction can be taken (expensed) in the current asset
period, or can be spread over the remainder of an asset life (amortized).
Both Adjustments types are part of the Dutch’s best practice. The
difference is not really the journal (witch accounts are hit), but the
difference is the way the amounts are calculated.
The only difference in the accounts that are hit is the depreciation journal.
Depreciation journals for Expensed adjustments have one extra journal
line; The depreciation expense (adjustment) line which represents the
part of the depreciation expense that is a result of the adjustment. It is
the depreciation expense for the current period as a result of the
adjustment on top of the normal periodic depreciation.
Prior period transactions versus Current Period transactions;

Any transaction can be relevant for depreciation as of the period the
transaction was made in. But it can also influence the depreciation of any
number of prior periods in the same fiscal year. If a transactions is
subject to prior period effect. It does not influence the journal from the
prior period addition , adjustment, transfer, reclassification or retirement
itself, but the depreciation transaction as a result of a prior period
transaction is different as a depreciation transaction as a result of current
period transaction
Assumptions
Not all functionality of Oracle Fixed Assets is will be discussed in the

remainder of this chapter. For the Dutch best practice the following
assumptions are made:
Depreciation Method Set up:

• depreciate an asset in the year it is retired is set to Yes
Depreciation Books > Calendar Set up:
• depreciate assets in their first year of life is set to  No
Depreciation Books > Accounting rules Set up:
• Allow Amortize changes is set to  Yes
• Allow Revaluation is set to  Yes
• Revalue accumulated Depreciation =  Yes , because
the “No”-option will transfer the accumulated depreciation to
the revaluation reserve on every revaluation. Amortization of
Revaluation Reserve or Retire Revaluation reserve = Yes, there
are not both no.
• revaluation of fully reserved asset is not limited; (empty)
Depreciation Books > Natural Accounts Set up:
• Every account field, has a separate value;
• only exception is the gain and loss account for COR =
(Cost of removal) it can be 1 value. The same goes for POS
(Profit of Sale) and NBV (Net Book Value) retired.
• Intercompany Receivables and Payables clearing
account numbers are specific accounts for Assets, they can
have the same value.
• The default Account generator Account is a balance
sheet account with al other segment set to zero value (not
applicable);
Tax-book setup
• there are no Tax books defined;
• Investment Tax Credits are not used;
• life extension factor = (1,0) ; and no life extension
ceiling ;
• No Asset cost, Depreciation, Revaluation and Expense
Ceilings are used
• Deferred Income Tax Liability; is not used
• no Adjustment Current Earnings depreciation rules and
Books are used.
Events
The Asset accounts for General Ledger transactions are a result of the
recognized Events, Assumptions made in previous paragraphs, and the
Account generator set up.
Per Event FA-1, FA-2 ext, the most common variations of the relevant
accounting entries a mentioned in the Remark section of the table below.
Event Event name GL Category Remark

number
Prefix=FA
1 Payables, Project  Purchase Different originate from

and third party Invoice  Payables; Create Mass Additions
create Mass  Projects  Projects; Create Mass Additions ???
Additions.  User defined  SQL-loader
2 Asset Mass Addition N/a  PS This event is mentioned because it
Line Deletions specifically has no GL transaction as a result.
The transaction should be made manually or
be avoided by only deleting Mass addition
lines if you also delete a corresponding Mass
addition credit line.
3 Additions  Addition Different Journals for Additions because of:

 CIP Addition  (3a) Capitalized and (3b) CIP Additions
 Current and Prior period additions;
 (3c) Single and merged Additions
 (3d) is the prior period effect of this
transaction
4 Capitalization of CIP CIP Addition Different Journals for capitalization because of:
Assets  Capitalization’s (4a) in the period and (4b)
After the period the asset was added.
 Change Asset type to CIP (4c) De-
capitalization; PS (It can only be don as a
current period transaction)
5 Periodic Depreciation Different Journals for Depreciation because of:
Depreciation  (5a) Depreciation for Assets without
adjustments and amortized adjustments, or
 (5b) with Expensed adjustments;
 (5c); Depreciations for Revaluated Assets and
Parameter: Amortize Revaluation Reserve =
Yes
6 Adjustments Adjustments Different Journals for Additions because of:
CIP Adjustment  6a) Expensed adjustment of recoverable cost
;
 6b) Amortized adjustment of recoverable
cost ;
 6c) Transfer of Source lines from assets
added in a prior period witch result in
transfer of cost, transfer of depreciation, and
transfer of expense.
 (6d) Transfer of Source lines from assets
added in the current periods or
 (6e) Adding mass addition lines to an existing
Asset.
Ps. Depreciation Method, Life Adjustments, Rate
Adjustments and capacity Adjustments do not
directly result in journal transactions. Depending
on the effect they have on the depreciation the
will influence the amounts of the depreciation
transaction (amortized or Expensed)
7 Transfer Transfer Different Journals for Additions because of:
 As a CIP transfer  (7a) The transfer between cost centers results
assignment in transfer of cost and depreciation for
transfer current period transfers;
 Or as number  (7b) for the prior period expense part in a
Event Event name GL Category Remark

number
Prefix=FA
of unit prior period transfer.

adjustment  (7c)The transfers between balancing
segments
8 Reclassification Reclass & Different Journals for Reclassification because of:
CIP Reclassification  (8a) Current Reclassification, and
 (8b) Prior period Reclassification’s;

09 A Retirement Retirement Different Journals for Retirement because of:
CIP Retirement  Whether Cost of removal and Proceeds of sale
amount are entered on retirement: 9a) for
expensing the Net book value retired Gain
(9b) for clearing the COR clearing account,
(9c) for clearing the POS clearing account,
(9d) for retiring a revaluation reserve
 (9b) entries for retirement gain an loss
accounts on 1 P&L account;
 (9c) Retire Revaluation Reserve = Yes/no
09 B Reinstatements Retirement Different Journals for Reinstatements because of:
CIP Retirement  (10a) Number of periods since Retirement
 (10b) entries for retirement gain an loss
accounts on 1 P&L account;
 (10c) Retire Revaluation Reserve = Yes/no
10 Revaluations Adjustments ??? Different Journals for Depreciation because of:
CIP  (11b) Revalue Accumulated Depreciation =
Adjustments ??? Yes (NO = move the accumulated
Depreciation to the Revaluation reserve on
revaluation’s. (11c)
 Retire Revaluation Reserve = Yes/no (look at
the retirement transaction)
Accounts
Asset uses modifiable Account generator definitions to generate all the

required account code combinations (CCID’s) .
Ass Ass Ass Mas Retrieved through Account Generator

et et et s (*1) definitions
l possible Asset Accounts Boo Cate Addi
k gory tion
Line
Category Account
Names
Asset Cost X Yes
Asset Clearing X X No. At leased not always:
 For manual additions, Oracle Assets gets the
clearing account from the category (Account
Generator)
 For mass additions, the clearing account
comes from your source system.
 (for details exceptions on Account generator rules)
Asset Manual, chapter Accounting
CIP – Cost X Yes
CIP – Clearing X X No. At leased not always ;
( Identical to the Asset clearing account).
Depreciation Reserve X Yes
Revaluation Amortization X Yes
Revaluation Reserve X Yes
Asset Account Names

Depreciation Expense X Yes,
but not on Reclassification (for details exceptions on
Account generator rules) Asset Manual, chapter
Accounting
Book Account Names

Depreciation Adjustment X Yes
Net Book Value Retired Gain X Yes
Net Book Value Retired Loss X Yes
Proceeds of Sale Gain X Yes
Proceeds of Sale Loss X Yes
Proceeds of Sale Clearing X Yes
Cost of Removal clearing X Yes
Cost of Removal Gain X Yes
Cost of Removal Loss X Yes
Intercompany Accounts Payable X Yes
Intercompany Accounts X Yes
Receivable
Revaluation Reserve Retired X Yes
Gain
Revaluation Reserve Retired X Yes
Loss
Deferred Depreciation Expense X Yes
Deferred Depreciation Reserve X Yes
(*1) Account generator

Account generator uses a Two-step generation process to generate all
the required segment values using 4 Sources, for the potent ional 23
different accounts per asset; The Account generator workflow process is
divided into 3 parts using 3 different account name groups.
Account name groups

Every one of the 23 account names belongs to only 1 Account name
group this results in:
• The Category Accounts names.
• Asset Account Name, and
• Book Account names.
Sources
Seeded there are 3 specific rules that generate all the segments of the 23
account names. The sources used in these rules are:
• specific natural account values per account name located on the
Asset book definition;
• specific account-code-combinations per account name located on
the Asset category definition per account book;
• a specific account-code-combinations Located on the Asset
assignment definition;
• and default Account generator values located on the Asset book
definition.
Generation of asset CCID segments in a nutshell

Seeded the generation works as described below;
• the balancing segment (it is always retrieved from the Asset level)
• the Natural Account uses a different source per account name (as
described in the
• All other segments get their value sourced from the default
Account generator values located on the Asset book definition.
Account name - Depreciation Expense – works different, all
segments are retrieved from the Asset Assignment definition.
Two-step procedure
The derivation for asset Accounts is a two-step procedure.
• The fist time any account is needed for the accounting of a
particular asset. account generator will generate the account and
store these values per asset/per account name in an interim table
for assets ;
• Every time accounting event for an asset after this first generation
Asset will use the stored CCID values from the interim table.
Accounting Entries
If an asset is depreciated, “Depreciation expense” is always a part of the

accounting entry for a particular asset in a given asset period. To make
the examples easier to understand the “Depreciation expense” line is
excluded of the Accounting entries below. If you look into the examples in
the Asset User guide, chapter accounting, the “Depreciation expense”
lines are always there.
For the ease of comprehension of the entries you will not miss the
“Depreciation expense” line. It will only disturb the comprehension
process. When you will check the accounting entry against the system or
the manual you will notice the difference. Please note that the system and
manual are correct, we took the liberty of skipping this line to simplify the
examples.
1 ) Relevant non Asset transaction

FA-1 Create Mass addition lines
Asset Clearing X
Payables or CIP projects X
This transactions is a result of Payables or Project “Create Mass

Addition lines” programs. If you are feeding the Mass addition lines
through the Mass addition open interface from a third party system
you will have to influence the credit account in this transaction to fit
your needs in the flow of your financial transactions.
2 ) Delete Mass Additions transaction

FA-2 Delete Mass addition lines
N/a X
N/a X
This Asset transaction has no GL effect (no GL - transactions as a

result). So if you do delete asset within the Mass Addition
functionality, Make sure you delete a debit and credit line from
mass additions for the same amount. So have Payables (AP) or
Project (PA) reverse incorrect transactions so can delete both the
debit and the credit line in Asset Mass Additions.
If you delete mass addition lines in asset without the reversal in AP

and PA your “Asset Clearing account” will not balance at period end.
3) Additions
FA-3a Capitalized Addition
Asset Cost X
Asset Clearing X
This is the normal situation, an automated addition through Mass

additions (from Payables, Projects or third party software) or a
manual additions (detailed or quick) through the additions forms of
the Asset Menu.
FA-3b Construction in Progress Addition
CIP Cost X
CIP Clearing X
Idem As for 3a, but now the asset has the status CIP.
FA-3c Capitalized Addition (as a result of Merged Mass addition Lines)
Asset Cost X
Asset Clearing (mass addition line 1) X
Asset Clearing (mass addition line 2) X
Asset Clearing (mass addition line 3) *1) X
Idem As for 3a, but now the capitalized asset has been merged
within Mass Additions. PS this can also be in the case for a CIP Asset.
(1) For “Addition” journals from mass additions. the Accounting

entry will always hit the clearing account as mentioned in the
Mass addition Line, no matter what Account generator has
defined.
FA-3d Addition (prior period effects)
Depreciation Expense (Adjustment) X

Depreciation Reserve X
This entry occurs when the date placed in service is in a period

witch lies before the current Assed period. The missed depreciation
is expensed in the financial that corresponds with the current asset
period.
4 ) Capitalization’s (status Asset changes from CIP tot Capitalized)
FA-4a Capitalization (in the same FA-period the CIP Asset was added as CIP)
Asset Cost X
CIP Clearing X
Financially, in GL It is as if the assed has never had the status CIP.

The CIP Cost Account is not hit this event. CIP Clearing must be hit
because payable has hit this account as well.
FA-4b Capitalization (in a FA-period after the CIP Asset was added as CIP)
Asset Cost X
CIP Cost X
When you capitalize an asset in a period after the period you added
it, Oracle Assets creates journal entries that transfer the cost from
the CIP cost account to the asset cost account. The clearing account
has already been cleared. No further corrections needed because
Assets are not depreciated until there capitalized.
FA-4c De-Capitalization (in the period the asset was entered)
CIP Cost X
Asset Clearing X
5) Depreciations
There are 4 different depreciation accounting entries: (FA-5a) depreciation
entries for assets without adjustments or for assets with amortized
adjustments. (FA-5b), depreciation entries for assets with expensed
adjustments. Both type’s can be with or without (FA-5c) for the
amortization of a revaluation reserve.
FA-5a Depreciation (for Asset without or Amortized adjustments )
Depreciation Expense X
The amount of this journal is influenced by a large number of

setting (Asset setup) but the only setting that influence the journal
structure is expense/or amortization of adjustments. If there are
amortized adjustments the adjustment will be spread over the
remainder of the asset live.
FA-5b Depreciation (for Asset with Expensed adjustments )
Depreciation Expense (adjustment) X
If adjustments are expensed the adjustment will influence the P&L

in the period the adjustment was made, this on top of normal
depreciation.
FA-5c Amortizing revaluation reserve
Revaluation Amortization X
Revaluation Reserve X
Is only possible if the asset is revaluated and the Asset depreciation

book checkbox “Amortize Revaluation Reserve” is set to yes.
6) Adjustments
There are 4 different accounting entries for the many different possible
adjustments to an asset Cost, Method, Life rate an capacity Adjustments.
They all result in the same accounting entries. A cost adjustment includes
any adjustment that affects the recoverable cost, i.e., a change in cost,
salvage value, depreciation, or depreciation expense,. The (4) are
• (FA-6a) - manually performed cost adjustment in the Books window;
• (FA-6b) - Transfer of Source Lines entered in prior periods;
• (FA-6c) - Transfer of Source Lines entered in the current period.
• (FA-6d) - cost adjustment by adding a mass addition to an existing
asset using Mass Additions.
Changes to assets that have not been depreciated and changes to CIP
assets do not result in “Adjustment” entries since no depreciation
has been taken.
If you change financial information after you have run depreciation, you
must choose whether to expense or amortize the adjustment. For both
situations you could get the extra adjusting journal entry.
Expensed Adjustment
For expensed adjustments, Oracle Assets recalculates depreciation using
the new information and expenses the entire adjustment amount in the
current period. Expensing the adjustment results in a one–time adjusting
journal entry.
Amortized Adjustment
For amortized adjustments, Oracle Assets spreads the adjustment amount
over the remaining life or remaining capacity of the asset. You can set up
your amortized adjustments to have a retroactive start date by changing
the default amortization start date(usually the system date) to a date in a
previous period. Any adjustment amount missed since the amortization
start date is taken in the current period.
FA-6a Recoverable cost Adjustment
(adjustment *1)
(1) This line is only there if the adjustment is expensed. Or

Amortized with a retroactive date.
FA-6b adding mass addition to an existing asset using Mass Additions
Asset Cost X
Asset Clearing X
FA-6b Adjustment (transfer of source lines of assets added in prior period)
Accounting entry Asset Debit Credit
Asset Cost New *1 X

Asset Cost Old X
Depreciation Expense New X
Depreciation Expense Old X
(adjustment) *2
Depreciation Reserve New X
Depreciation Reserve Old X
This could be the case if additions ended up with an incorrect asset.

And these lines are transferred to the appropriate assets that have
had depreciation in prior asset periods.
(1) New and Old refer to the source and destination Asset, Asset
generates accounting entries for both assets.
(2) This line is only there if the adjustment is expensed. Or
Amortized with a retroactive date.
FA-6c Adjustment (transfer of source lines of assets added in the current period
Asset Cost (destination Asset) X

Asset Clearing ( source Asset) X
This could be the case if additions ended up with an incorrect

asset. And these lines are transferred to the appropriate asset that
has no depreciation.
7) Transfers
FA-7a Transfer (between Cost Centers)
Accounting entry Cost Debit Credit
center
Asset Cost New X

(*1)
Asset Cost Old X
Depreciation expense New X
(*2 )
Depreciation expense Old X
(1) Depreciation for the new cost center in the current period
(2) The realized expenses in the past are optionally transferred to

the new balancing segment (=prior period effect). The transfer
has to be realized as a prior period transaction.
FA-7b Transfer (between Balancing Segments)
Accounting entry Balancin Debit Credit

g
Segmen
t
Asset Cost New X

(*1)
Intercompany Accounts Payables New X
( *2)
Intercompany Accounts From X
Receivable
Asset Cost From X
Depreciation Reserve From X
Depreciation expense New X
( *3 )
Depreciation expense From X
(1) Depreciation for the new balancing segment in the current

period
(2) This journal hits the “Asset Intercompany Account Payables”

and “Asset Intercompany Account Receivables” to create a
journal transaction that is in balance per Balancing segment.
(3) The realized expenses in the passed are optionally transferred to

the new balancing segment (=prior period effect). The transfer
has to be realized as a prior period transaction
8) Reclassifications
FA-8 Reclassifications
Accounting entry Categor Debit Credit

y
Asset Cost Old X

Asset Cost New X
Accounting entry Categor Debit Credit

y
Depreciation Expense (this Old X

period)
Depreciation Reserve (-/- this New X
period)
Oracle Assets does not adjust for prior period expenses when you
reclassify Assets
9) Retirements And Reinstatements

FA-9A Retirements
(*1) Accounting entry Debit Credit
(1) *1 Asset Cost X

(1) Depreciation Reserve X
(1) Depreciation Expense *2 X
)
(1) Net Book Value Retirement *3 (X)
(Gain) )
(Loss) )
(2) Proceeds of Sale Clearing *4 (X) (X)
)
(2) Proceeds of Sale (Gain) *3 *4 (X)
) )
(2) Proceeds of Sale (Loss) *3 *4 (X)
) )
(3) Cost of Removal (Gain) *3 *4 (X)
) )
(3) Cost of Removal (Loss) *3 *4 (X)
) )
(3) Cost of Removal Clearing *4 (X) (X)
)
(4) Revaluation Reserve *5 X
)
(4) Revaluation Reserve Retired *3 *5 (X)
(Gain ) )
(Loss) ) )
(1) This accounting entry is build from four separate parts:

• Retirement of Asset Book Value,
• Expense the proceeds of sale,
• Expense the cost of removal,
• Retirement of the value of the Revaluation reserve
(*2) The Depreciation expense will be reversed from retirement
date up the current period if it is a prior period retirement.
(*3) (part 1-4) The (Gain) accounts will be hit, if the sum of the
P&L elements is a positive revenue. The (Loss) accounts are hit
if the sum is a negative result; The P&L elements are ( NBV
retired, Revaluation reserve retired, cost of removal and
proceeds of sale) .
If all Gain and loss account have the same value (= the same
account) Assets will summarize retirement P&L accounts to one
line. If not separate lines will be account for 4 different account
names.
(*4) (Part 2-3) The accounting for proceed of sales (POS) and Cost of
removal (COR) depend on the amount mentioned for POS and
COR fields in the retirement FORM; => ( No amount = no
transactions)
(*5) (Part 4)This accounting entry is only possible if the asset is

revaluated and the Asset depreciation book checkbox “Retire
Revaluation Reserve” is set to yes.
FA-9B Reinstatements ( reversal of retirement *1)
(*1) Accounting entry Debit Credit
(1) *1 Asset Cost X

(1) Depreciation Reserve X
(1) Depreciation Expense *2 X
)
(Gain) )
(Loss) )
(2) Proceeds of Sale Clearing *4 (X) (X)
)
(2) Proceeds of Sale (Gain) *3 *4 (X)
) )
(2) Proceeds of Sale (Loss) *3 *4 (X)
) )
(3) Cost of Removal (Gain) *3 *4 (X)
) )
(3) Cost of Removal (Loss) *3 *4 (X)
) )
(3) Cost of Removal Clearing *4 (X) (X)
)
(4) Revaluation Reserve *5 X
)
(Gain ) )
(Loss) ) )
(1) All remarks on retirements are also relevant for Reinstatements

(remarks FA-9A (1 trough 5). But the accounting entries have
switched Debit and Credit with the transactions FA-9A for
Retirements.
(2) Depreciation Expense will also be hit if there are periods in

between retiring and reinstating. (For the depreciation of missed
periods)
10) Revaluation
FA-10 Revaluation
Asset Cost X
Revaluation Reserve (*1) X
(1) This journal is as presented her only when the Asset Book
checkboxes Revaluation allowed, and revalue “Depreciation
Reserve” are both set to yes.
(2) For other variation of revaluation journals look at the examples

made in “Journal entries for revaluations” in the chapter
Accounting of the Asset user Guide.
Notes
FA-1) Setup requirements in Fixed Assets Relevant to Accounting entries

from Assets
FA-2) Common setup choices that influence “FA Account generator”;
FA-3) Common customizations on for FA Account generator”;
FA-4) Customized Account generator definitions;
FA-5) Asset Accounting Gotcha’s
FA-6) How do Asset journals, end up in General ledger;
FA-7) Recoverable cost, versus other adjustments;
FA-8) Tax accounting
FA-1) Setup requirements in Fixed Assets Relevant to Accounting entries from Assets
• If you want to create journal entries from your tax book, your tax book
must have the same account structure, general ledger calendar, and
functional currency as the associated corporate book. And you must
enter a different set of books for your tax book and the associated
corporate book.
• You cannot create journal entries from your budget book.
• The create mass additions process only imports mass addition
lines for Assets charged to accounts that are already set up in your
asset categories. And are defined as an Asset account (Account
type). So the clearing account you use in Payables must be used in
the asset Setup as clearing account on one of the Asset categories.
And asset-clearing accounts must be set op in GL as an Asset
account-type.
• If You are working with more than 1 SOB an more than 1 Operating
Unit Payables must be tied to the same general ledger set of books
as the corporate Asset book for which you want to create mass
additions in Oracle Assets, and You cannot create mass additions
for tax books.
FA-2) Common setup choices that influence “FA Account generator”;

The setup choices mentioned below are common in a Dutch
implementation:
• All Potential Asset Accounts have their own value in the flex field
segment natural Account.
• Default account combination has “00000-0000-xxxxx-00000” on
all segments except company and account. The natural account
(xxxxx) is a balance sheet account.
• Common Modifications are the adjustment to the Asset book
account into two type (P&L) and (Balance sheet), where the
balance sheet accounts have no Cost center, and all the (P&L)
Accounts do have a cost enter, as for depreciation expense.
FA-3) Common customizations on for FA Account generator”;

The customizations mentioned below are common in a Dutch
implementation:
• The Cost center is derived from the asset Expense Account
• The Balance sheet accounts are generated separately forms P&L
Accounts in the Account generator process for book control
accounts (because of the required value “n/a” on balance sheet
accounts. And the “Cost center value” for all P&L accounts.
• Standard derivation from account generator
o By default, Oracle Assets creates journal entries without
cost center level detail, except for depreciation expense.
o Using the default assignments, it creates journal entries
using the balancing segment from the distribution line in
the Assignments window and the account segment.
o The Account Generator gets the other segments from the
default segment values you entered for the book.
o You can modify the default Account Generator process so
that Oracle Assets creates journal entries to a different
detail level.
FA-5) Asset Accounting Gotcha’s

FA-5.1) Period names of Asset Calendar must map identically to
the defined GL calendar names.
So check the GL calendar definition before defining an Asset

depreciation calander!!!
FA-5.2) Customized Account generator definitions
Patches can overwrite customized Account Generator definitions,

If you do not notice this, you’re Asset accounting is incorrect!!!
• Make sure you have tested and approved all transaction before
you go in production. (See remark “Account generator determines
General ledger accounts only ones for every asset.”)
• Save a copy of the approved and accepted “Workflow definitions:

for FA Account generator” on a local ore common disk, (not only in
the database), before you go in production. Applying Patches can
overwrite workflow definitions.
• Re-save the your customized “Workflow definitions: for FA Account

generator” after every alteration
FA-5.3) Account generator determines General ledger accounts

only ones for every asset.
The values are generated only ones; Account Generator is a two-step

process. In the first step (the initial “Generate accounts” run), the
accounts are generated for every new Asset). Account generator stores
the result of the process in FA_DISTRIBUTION_ACCOUNTS; fixed assets will

use these accounts.
So you must get the initial run correct. Correcting the Accounts
generated in a production situation is not a simple task. !!!
Changes to Account Generator have no effect on the existing Asset

distributions, it does influence new asset (distributions). To change the GL
accounting for assets you need to force re-generation of the asset
Accounts:
So Make sure you’re customized Account generator process is

saved in the production database before you run the “Asset
depreciation run” or “Generate Accounts” for the first time. !!!
• Production environment (Database);

o Force Oracle Assets to create new distribution
lines (rows in; FA_DISTRIBUTION_ACCOUNTS) by. “Mass
Transfers”.
• Test and implementation environments (Database);
o TRUNCATE FA_DISTRIBUTION_ACCOUNTS, and
rerun Generate Accounts process.
FA-6) How do Asset journals, end up in General ledger;

The Generate Account, and "Create Journal" programe's that are a part of
the Depreciation run, generate, create and transfer the Asset Journal
transactions to GL.
Up to Release 11i Asset was/is a little different from other modules. The
journal does not have to be imported in General ledger. The accounting
entries end up unposted General Ledger without having to “Import any
asset transactions” in GL.
FA-7) Recoverable cost, versus other adjustments (Life time-; Depreciation Method-,
Rate- and Capacity Adjustments.)
Recoverable cost Adjustments
Adjustments to the “Asset recoverable cost (1)” can be a result of an

asset cost adjustment in an Asset form and the transfer of source lines
(2) from one asset to the other. But it can also be a cost adjustment by
adding a “Mass addition line” to an existing Asset.
All these “Recoverable Cost Adjustments” result in a different Asset

Cost and the resulting journal transactions all hit the Asset Cost
Account of the relevant Asset Category.
All other adjustments
Other Adjustments (depreciation method, depreciation rate or capacity

adjustments) do not result in a different journal. But the adjustments
influence the outcome of the depreciation calculation.
1
Recoverable cost Adjustments is the amount that needs to be recovered by depreciation (ea. The
recoverable cost is the portion of the asset cost that can be depreciated. It is the current cost less
the salvage value.
2
Transfer of source lines = is the transfer of lines that initiated the value (Asset Cost) of the asset;
(ore part of this value). Source line transfers change the asset cost, depreciation reserve and
expense of old and the new asset.
FA-8) Tax accounting

Tax Accounting is not an issue for the majority of Dutch companies
because they will account the depreciation in their “Company Asset
Depreciation Books” in a manner that will be accepted by the Dutch fiscal
authorities. Therefore usually Tax-books will not be required. As a result
we will not discuss the influence of tax related functionality for the asset
journal transactions.
• There is no regulation for Asset cost-, Depreciation-, Revaluation-
and Expense Ceilings;
• Functionality as “Investment Tax credits” are not used since the
“WIR” regulated is abandoned in Holland.
• Adjustment Current Earnings depreciation rules and Books are not
used in Holland;
• There is no regulation that would introduce the use of life
extension factor; or life extension ceilings;
• Revaluation of fully reserved asset is not common practice;
• Deferred Income Tax Liability; is sometime used because there are
some regulations for accepted economic life, but these rules are
also common practice for the commercial valuation of assets.
Oracle Project Accounting
Project Accounting. Before getting to the assumptions and a description of
the accounting entries it is important to know the basic elements of
Project Accounting. Elements that influence the generation of accounting
entries are described below.
Project Type
The project type determines how Oracle Projects processes costs
(expenditure items) for a project. It provides defaults for and controls
project entry and processing. You must associate each project type with a
project type class:
1. Use the Indirect project type class to collect and track

expenditure item costs and labor hours for overhead activities.
2. Use a Capital project type class to collect and track costs and
labor hours for asset development activities that you plan to
capitalize as one or more assets.
3. Use a Contract project type class to collect and track costs, labor
hours, revenue, and billing for services performed for and reimbursed
by a client
Distribution Rule
The project type determines which revenue distribution rule appears as
the default value for this field. It also determines which other revenue
distribution rules you can choose from. Oracle Projects predefines the
following revenue distribution rules:
1. Cost/Cost Accrue revenue and bill using the ratio of actual cost to
budgeted cost.
2. Cost/Event Accrue revenue using the ratio of actual cost to

budgeted cost , and bill based on events.
3. Cost/Work Accrue revenue using the ratio of actual cost to

budgeted cost , and bill as work occurs.
4. Event/Event Accrue revenue and bill based on events.
5. Event/Work Accrue revenue based on events, and bill as work

occurs.
6. Work/Event Accrue revenue as work occurs, and bill based on

events.
7. Work/Work Accrue revenue and bill as work occurs.
Costing
Costing is the processing of expenditures to calculate their cost to each
project and determine the GL accounts to which the costs will be posted.
Costing is performed for the following types of expenditures:
Expenditure type Remark
Labor
Expense Reorts
Usages
Miscellaneous Transactions
Burden Transactions
Supplier Invoices from
Oracle Payables
Expenditures submitted
from Self-Service Expenses/
Self-Service Time
Imported expenditures
Adjusted expenditures in
Oracle Projects which need
re-costing
Burdening (Cost Plus Processing)

Burdening (also known as cost plus processing) is a method of calculating
the burden costs by applying one or more burden cost components to the
raw cost amount of each individual transaction.
Revenue–Based Cost Accrual

Cost accruals are the accounting transactions to account for expenses in
the same accounting period in which revenue is generated. Cost accruals
are also referred to as Cost of Goods Sold or Cost of Sales.
With cost accruals, you initially account for the costs incurred as an asset
in a cost work in process (WIP) account. You determine whether you
account raw or burdened cost as the cost WIP. When you accrue revenue,
the costs are recognized as expense by using cost accruals.
Cross–Charge
Allow charges from other operating units
Intercompany Billing
Intercompany billing, a processing option within the cross charge feature,
generates invoices for work performed between two organizations.
Inter–Project Billing.
Inter–project billing generates invoices for work performed between two
projects.
Borrowed and Lent

The borrowed and lent method creates accounting entries to pass costs or
share revenue without generating internal invoices.
Events
Examples of events include an invoice reduction, a performance bonus, or
a revenue write–off.
Autoaccounting
Oracle Projects creates many different accounting transactions
throughout its business cycle (when posting labor cost debits and labor
revenue credits, for example). You can use AutoAccounting to specify how
to determine the correct general ledger account for each transaction.
Account generator
When you enter project information in Purchasing and Payables, account
generator create account code combinations for use in purchasing
requisitions, purchase orders, and payables supplier invoices.
Assumptions
1. Capital Projects (integration with Oracle Fixed Assets) are not

defined. Only projects with the type of Indirect (Overhead, internal
projects) and the type of Contract are used.
2. The expenditure types Labor, Usage and Expense reports are used.
Not used are Burden transactions, Cross Charging, WIP tranactions
and Borrowed and Lent.
3. Concerning revenue accounting the revenue as well as the invoice

are based on distribution rules. There is no revenue based on Cost
accrual and percent complete. Borrowed and Lent is not used
either.
Events
PA Event Event name GL Category Remark

number
1 Create Timecards Labor Cost Through Expenditure batches or Import Through

Self Service Time
2 Create expense Distribute and Transfer to Accounts Payables
Reports
3 Create Usage Logs Usage Cost
4 Create Miscellaneous
Miscellaneous Transactions
Transactions
5 Breate Burden Burden Cost
Transactions
6 Create purchase Purchase Orders Project Related information entered in Oracle
Orders Purchasing.
7 Create Adjustments Mass Adjustments functionality
8 Create Supplier Purchase Invoices The account is generated by Account Generator

Invoices (Workflow builder)
9 Create Revenue The Invoice is transferred to Account Receivables

Revenue/Invoices and the revenue is transferred to GL
10 Create WIP WIP
Project AutoAccounting functions and processes
Each accounting transaction is identified by an AutoAccounting function.

AutoAccounting functions are components of programs that you submit to
generate accounting entries. The Following functions are mostly used:
Funtion/ Account Part of which processes Remark
Labor Cost Account -Distribute Labor Costs Determines cost account for all labor
-Interface Labor Cost to GL items, including straight time and
overtime
Labor Cost Clearing -Distribute Labor Costs Determines clearing account for labor
Account -Interface Labor Cost to GL costs
Labor Revenue Account -Generate Draft Revenue Determines revenue account for labor
-Interface Revenue to GL items
-Interface Invoices to Receivables
Expense Report Cost -Distribute Expense Reports Costs Determines cost account for expense
Account report items
Expense Report Liability -Interface Expense Reports Determines liability account for expense
Account report costs
Expense Report Revenue -Generate Draft Revenue Determines revenue account for
Account -Interface Revenue to GL expense report items
Misc Trans Clearing -Distribute Usage/Miscellaneous Costs Determines clearing account for
Account -Interface Usage and Miscellaneous Costs Miscellaneous Transaction Items
to GL
Misc Trans Cost Account -Distribute Usage/Miscellaneous Costs Determines cost account for
Miscellaneous Transaction Items
Misc Trans Revenue -Generate Draft Revenue Determines revenue account for
Account -Interface Revenue to GL Miscellaneous Transaction Items
Usage Cost Account -Distribute Usage/Miscellaneous Costs Determines cost account for usage
items
Usage Cost Clearing -Distribute Usage/Miscellaneous Costs Determines clearing account for usage
Account -Interface Usage and Miscellaneous Costs costs
to GL
Usage Revenue Account -Generate Draft Revenue Determines revenue account for usage
-Interface Revenue to GL items
Revenue and Invoice -Generate Draft Revenue Determines accounts to track revenue
Accounts -Interface Revenue to GL and receivable
Supplier Invoice Cost -Distribute Supplier Invoice Adjustments Determines cost account for adjusted
Account Costs supplier invoice items
Supplier Invoice Revenue -Generate Draft Revenue Determines revenue account for
Account -Interface Revenue to GL supplier invoice items
Event Revenue Account -Generate Draft Revenue Determines revenue account for
-Interface Revenue to GL revenue events
Accounting entries
Below are some examples of accounting entries that can be made. Not
all the transactions are descriped but the most common one’s.
PA- Labor cost Account
Labor expense X
Payroll clearing X
PA - Miscellaneous Transaction
cost account for Miscellaneous Transaction X

clearing account for Miscellaneous X
Transaction
PA - Burden Transaction
cost account for Burden Transaction X

clearing account for Project Burden X
Transaction
PA - cost account for usage

cost account for usage X

Usage Cost Clearing Account X
PA – Expense account
Expense account X
Payables liability X
PA – Event Revenue accounting Write on/manual/Automatic
Asset account X
revenue account X
PA – Unbilled Receivable
asset account(unbilled receivables account) X

Revenue account X
PA – Accounts Receivable
asset account (usually an accounts X

receivable account)
unbilled receivables asset account or the X
unearned revenue liability account
PA – Unearned Revenue Account
receivables asset account X

liability account X
Notes
There are some functions which can hold more the one transaction. This
can be usefull if you have different accounting rules for the same
function. For example the Labor Cost Account function has multiple
transactions: Indirect Private Labor, Indirect Public Labor, Private Billable
Labor, Private Non–Billable Labor, Public Billable Labor, Public Non–Billable
Labor, All Labor, All Capital, All Contract, All Indirect, Private Capital,
Private Non–Capital, Public Capital, Public Non–Capital.
If you only have one accounting rule for labor costs you can set up the
“All Labor” transaction. However if you want to make an accounting-
difference between “Indirect” and “Contract” projects you have to set up
“ Contract, All” and “Indirect, All “ .
Encumbrance Accounting
In this chapter encumbrance accounting issues are described.

Encumbrance accounting is supported by Oracle Purchasing, Oracle
Payables and Oracle General Ledger.
Compared to actual accounting as described in the chapters before,

almost no system accounts are involved. More complex is the
encumbrance process itself. It is not just one journal at a certain point of
time but a serie of moments at which encumbrance amounts are posted,
liquidated and posted again.
Assumptions
1. It is possible to enter Encumbrance journals in Oracle General

Ledger directly. However this is not common practice and will not
be covered in this chapter as an event. Usually encumbrances are
created from events in Oracle Purchasing and Payables.
2. Encumbrance journals are categorized by a type. It is common to

define the type of Commitment for Requisitions and the type of
Obligation for Purchase Orders and Invoices. When the types for
Invoice and Purchase Order are the same no additional
encumbrance journal will be generated at the time of approving a
matched invoice.
3. The charge account and the budget account have the same value.
In the Accounts and Accounting entries chapters these accounts
are identified together as the expense account.
Events
Eve Event name GL GL Category Encumbranc Remarks

nt Source e Type
nr.
1 Requisition Purchasin Purchases Commitment When reserving or approving

g a Requisition.
2 Cancel Requisition Purchasin Purchases Commitment
g
3 Purchase order Purchasin Purchases Obligation/ When reserving or approving
g Commitment a Purchase Order.
4 Cancel Purchase order Purchasin Purchases Obligation
g
5 Invoice (unmatched) Payables Purchase Invoice When approving the invoice.
Invoice
6 Invoice (matched) Payables Purchase Invoice/ When posting the journals
Invoice Obligation from AP to GL.
7 Receipt Purchasin Receiving Obligation When posting the journals
g from Purchasing to GL.
Accounts
Type 1 2 3 4 5 6 7
Reserve for Asset X X X X X X X

Encumbrance
Expense Expens X X X X X X X
e
Req/ PO/ Set of

Invoice Books
Reserve for X
Encumbrance*
Expense** X
* This account is always generated in General Ledger when posting the

journals.
** At a requisition and PO this account is generated by Account generator.

When entering an invoice in AP this account is only generated by
Account generator when a project is involved.
Accounting entries
ENC-1 Requisition
Expense (Commitment) X
Reserve for Encumbrance (Commitment) X
ENC-2 Cancel requisition
ENC-3 Purchase order
Expense (Obligation) X
Reserve for Encumbrance (Obligation) X
ENC-4 Cancel Purchase order
ENC-5 Invoice (unmatched)
The debit entry of the Expense account takes place after the invoice is
approved and the concurrent program Program – Create Journals is ran.
The credit entry of the Expense account takes place when the program
Transfer Journals to GL is ran.
ENC-6 Invoice (matched)
The debit entry of the Expense account has already taken place in Oracle
Purchasing. Because the encumbrance type for Purchase orders and
Invoices is both Obligation (Assumptions) no debit entry takes place when
the matched invoice is approved.
ENC-7 Receipt
This journal entry only takes place when receipt accounting is

implemented.
Notes
1. To import encumbrance journals in Oracle General Ledger the

program Create Journals has to be run. This is NOT the case for
encumbrance journals that are triggered by the events Invoice
(matched & unmatched) and Receipt. These are imported by the
program Import Journals. The reason is that the timing of these
journals is related to the actual journals.
2. An encumbrance journal will be balanced by the Reserved for

Encumbrance Account. This happens when the journals are posted
in General Ledger.
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PJM

The available Oracle information and documentation is fragmented and

As part of the Practice Development project of Oracle The Netherlands a

The purpose of this document is to create an overview of the accounting

1. the determination of the system accounts takes place in a structured

2. the document can be used as project documentation and information

This document covers the following applications: General Ledger,

Other topics that are not in the scope of this document:

2. The setup of the accounting flexfield.

3. Reporting issues and tools like FSG and Oracle discoverer.

4. Specific intercompany and consolidation issues.

5. Technical specifications of tables and programs that support the

2. In the second part the events of the application are described. An

5. Finally each chapter ends with notes.

A separate chapter is introduced to cover encumbrance accounting.

1. Fast Forward documents

For encumbrance related issues see chapter Encumbrance Accounting.

3. Automatic Withholding Tax Payables is not used.

4. The accounting method is set to Accrual Basis Accounting. This means

5. The Automatic Offset Method is set to Balancing. This means the

7. Interest Invoicing makes it possible to create an interest invoice for an

8. Tax and freight are included.

AP Event name GL Source GL Category Notes

1 Invoice Payables Purchase Invoice When adjusting or cancelling an

AP Event name GL Source GL Category Notes

2 Prepayment Payables Purchase Invoice When adjusting or cancelling a

Financia Payable Supplie Bank Payables Tax Invoice

Financia Payable Supplie Bank Payables Tax Invoice

**This account is generated by Account Generator when the invoice is

***The rounding account will be used when:

2. The functional currency amounts of payments do not equal the

3. You have enabled automatic offsets and the cash account is

Accounting entry Debit Credit

Expense (or AP Accrual)* X

* This will be the AP Accrual account in case the AP invoice is matched to

** These accounting entries can only be created when an invoice is

Accounting entry Debit Credit

AP-3 Prepayment Application

Accounting entry Debit Credit

When applying an invoice to a prepayment, the prepayment has to be

Accounting entry Debit Credit

In case of a future dated payment the future dated payment account is

PA-5 Payment maturity

Accounting entry Debit Credit

Future dated Payment X

Accounting entry Debit Credit

Accounting entry Debit Credit

2. Automatic offset is only relevant when more than one balancing

3. Automatic offset does not support Interest invoicing. However Interest

5. Future dated payments are not common practice in The Netherlands.

6. Never change accounting options in the payment Accouting Payables

8. The expense clearing account in previous releases of Oracle

Two main types of receipts can be distinguished:

1. Cash receipt. This is a receipt that potentially is linked to an

2. Miscellaneous receipt. This is a receipt that is not related to an

1. Clearance method = By Matching

2. The accounting method is set to Accrual Basis Accounting. This means

3. No unallocated receipts are recorded.

4. Receipt remittance by using the Factoring method is not in the scope.

AR Event name GL Source GL Category Remarks

1 Invoice (regular) Receivables Sales Invoices

AR Event name GL Source GL Category Remarks

4 Debit memo Receivables Debit Memos