The UK Local Authority Revaluation and Impairment Enhancements

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The UK Local Authority Revaluation and Impairment Enhancements For Release 12.1.x
Technical Brief (Doc ID 1321454.1)
In this Document
Abstract
History
Details
1. Overview
Revaluation Loss
Reversal of a Revaluation Loss
Consumption of Economic Benefit (CEB) Impairments
General Fund: Revaluation Loss or Impairment Loss Neutralising Accounting Entries
2. Guidance for new R12.1.x implementations of the UK Local Authority Revaluation and Impairment
enhancements.
Prerequisites:
Implementation Steps:
3. Guidance for UK Local Authorities using prior release of the UK Local Authority Revaluations and Impairments
feature.
Prerequisites:
4. Guidance for existing Oracle Assets implementations transitioning to UK Local Authority Revaluation and
Impairment enhancements.
Prerequisites:
5. Set Up
Create and Assign UK Local Authority Application Accounting Definition to a Specific Subledger Accounting
Method (SLAM).
Enable the UK Local Authority Accounting Option
Add Additional Account Information to Asset Categories
6. Managing Consumption of Economic Benefit Impairments
Prerequisites:
Define and Upload Impairments
Review Impairment Results and Post
Rollback Impairments
Delete Impairments
7. Managing Revaluation Gains and Revaluation Losses
Prerequisites:
Performing Revaluation Loss
8. Examples of Accounting Entries
Revaluation Loss
Example 1: Revaluation Loss
Example 2: Revaluation Loss on Prior Impaired Asset
Revaluation: Reversal of Revaluation Loss
Example 3 - Revaluation: Reversal of Prior Revaluation Loss
Impairment Loss
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Example: Consumption of Economic Benefit Impairment

Example 2: Impairment Loss on a Previous Revalued Asset
Summary
References
APPLIES TO:
Oracle Assets - Version 12.1 and later

Information in this document applies to any platform.
ABSTRACT
This Technical Brief describes the UK Local Authority Revaluation and Impairment Enhancements in Oracle Assets
Release 12.1.x.
HISTORY
Author: Oracle Development

Create Date April 7, 2011 Document created.
Update Date May 13, 2011 Document published.
Expire Date
DETAILS
1. Overview
By March 31, 2011 UK local authorities are to account for their fixed assets in accordance with guidelines as detailed in
the Code of practice on local authority accounting in the United Kingdom 2010/11 based on International Reporting
Standards, released by CIPFA in December 2009, also referred to as the 'Code'. The move to the Code from the UK
GAAP-based SORP resulted in changes to the accounting entries related to revaluations and impairments for property,
plant and equipment assets.
The following revaluation and impairment functionality has been enhanced in Oracle Assets to address the fixed asset
revaluation and impairment requirements for tangible property, plant and equipment assets, as per the 'Code':
Revaluation Loss (new feature)

Reversal of Revaluation Loss (new feature)
Consumption of Economic Benefit (CEB) Impairment (changed feature)
The Revaluation and Impairment functionality for Fixed Assets in Oracle Assets now addresses the following
requirements:
Revaluation Loss
When the carrying amount of an item of property, plant and equipment is decreased as a result of a revaluation, i.e. a
significant decline in an asset's carrying amount during the period that is not specific to the asset (as opposed to an
impairment), the decrease shall be recognised in the Revaluation Reserve up to the credit balance existing in respect of
the asset (i.e. up to its historical cost) and thereafter in the Surplus or Deficit on the Provision of Services account.
A revaluation loss is treated as a revaluation and as a consequence any accumulated depreciation and accumulated
impairment is written off against the gross carrying amount. The revaluation loss itself is posted as a net credit against
the cost account, thus the asset cost account balance after the revaluation loss equals the new net book value.
Additionally, the revaluation reserve account is never to become a negative (Debit) balance. Therefore, any revaluation
loss that exceeds the revaluation reserve balance is posted to the Profit and Loss account.
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Reversal of a Revaluation Loss
Any revaluation gain is to be used to reverse any previous revaluation loss on the same asset charged to the
Comprehensive Income and Expenditure Statement (adjusted for depreciation which would have been charged if the
revaluation loss had not occurred).
The key principles of a reversal are:
The revaluation gain is used to reverse the revaluation loss previously charged to the Comprehensive Income
and Expenditure statement account. The reversal is adjusted for depreciation to take account of the depreciation
impact on the prior revaluation loss i.e. the previous revaluation loss is neutralised or negated.
The reversal goes back to the point where the original revaluation loss took place. Note this can be no earlier
that April 1, 2007 when the Revaluation Reserve was first introduced.
Original revaluation loss may be reversed up to the value of the asset prior to the original value before the
revaluation loss. Any remaining gain is treated as a revaluation gain (i.e. a Credit to the Revaluation Reserve
account).
The accounting entries for the reversal mirror the original entries of the revaluation loss charged to the
Comprehensive Income and Expenditure statement account and the reversal of the depreciation adjustment will
mirror the accounting entries for depreciation.
The reversal will always be against the historic cost revaluation loss first (if applicable).
If the revaluation gain is lower than the original revaluation loss, resulting in a loss remaining, a pro-rata of the
annual depreciation adjustment and a record of the balance of the remaining revaluation loss not reversed is
tracked on the asset in lieu of any future revaluation gain.
Consumption of Economic Benefit (CEB) Impairments
Previous SORP guidance required an impairment loss due to the clear consumption of economic benefit on a revalued
asset to be recognised in Surplus or Deficit on the Provision of Services account previously called the Income and
Expenditure Account. Since the new 'Code' makes no distinction between impairments due to the clear consumption of
economic benefit and other impairments, all impairment losses on revalued assets are to be recognised in the
Revaluation Reserve up to the balance in the Revaluation Reserve. Thus when an impairment loss occurs, the
revaluation reserve balance is first cleared and any remaining impairment loss is posted to the impairment expense
account regardless of the cause of the impairment.
As a result, the accounting treatment for impairments is no longer based on the impairment classification type. Though
it is still required to track and report impairments by impairment classification type, the recording and accounting
entries are now the same for all classification types.
General Fund: Revaluation Loss or Impairment Loss Neutralising Accounting Entries
When posting a revaluation loss or impairment loss additional accounting entries are required for the neutralisation of
the revaluation or impairment loss amount that has been recorded in Profit and Loss accounts.
The neutralising accounting entries consist of:
Debit Credit
Capital Adjustment (for Revaluation /Impairment Loss

Amount)
General Fund (For Revaluation / Impairment Loss

Amount)
Note: General Fund account is also referred to as Housing Revenue Account (HRA) or Movement in Reserves
Statement.
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Conversely, when posting a revaluation gain which results in the reversal of a previous revaluation loss or impairment
loss, the neutralising entries previously recorded for the original loss are reversed.
The accounting entries to reverse the original loss neutralising entries consist of:
Debit Credit
General Fund (For Revaluation/Impairment Loss Amount)
Capital Adjustment (for Revaluation/Impairment Loss

Amount)
2. Guidance for new R12.1.x implementations of the UK Local Authority Revaluation and Impairment
enhancements.
The following details in sequential order, the steps required for new R12.1.x implementations of the UK Local Authority
Revaluation and Impairment enhancements for UK Local Authorities.
Prerequisites:
The implementation should be the first activity carried out in the new period.
During the implementation process, no asset transactions are to be posted or processed in the current open
period.
No pending transactions are to exist for the Asset book. If you have any asset data in the Mass Additions
interface table it is acceptable, as long as you do not post these transactions in a current open period until after
all the implementation steps have been completed.
1. Create and assign UK Local Authority Application Accounting Definition to a Subledger Accounting Method (SLAM) for
Oracle Assets, see the Set Up section of this document.
2. Create an Asset book. For more information, see the Defining Depreciation Books section of Oracle Assets User
guide.
3. Enable the UK Local Authority Accounting option. For more information, see the Set Up section of this document.
4. Assign the asset book to Asset categories. For more information, see the Defining Depreciation Books section of
Oracle Assets User guide.
5. Assign additional account information to Asset categories. For more information, see the Set Up section of this
document.
6. Load your asset records.
Note:
If your assets are loaded with a revaluation reserve, it must be a positive balance (e.g. a Credit balance), in
accordance with the UK local authority accounting guidelines
7. Execute the Calculation of Capital Adjustment / General Fund Accounts Balances for UK Local Authority Accounting
Implementation program and report for each asset book.
Execute the Calculation of Capital Adjustment / General Fund Accounts Balances for UK Local Authority Accounting
Implementation program in order to create the current balances for Capital Adjustment and Statement of Movement on
General Fund Balance accounts at the asset level.
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You can execute the program at:
Summary or Detail level

Preview or Final mode
The Summary level provides the total balances by category and asset book. The Detail level provides the asset
numbers as well.
The logic used to create the account balances:
Capital Adjustment Account: The Capital Adjustment account is a balance sheet account with an asset account
type. The Capital Adjustment account reflects the total depreciation for an asset, (Debit), Impairment loss
expense (Debit) and amortisation of revaluation reserve (Credit). The ending balance of the Capital Adjustment
account for the asset at the end of the asset's life equals to the fixed asset's original cost.
General Fund Account: The General Fund account is a balance sheet account with either a liability or owner's
equity account type. The General Fund account reflects the total depreciation for an asset (Credit) and
Impairment loss expense (Credit).
The program requires the following parameters:
Asset Book
Summary Mode
Report Mode
The report displays the following information in the header section:
Report Name
Asset Book
Implementation Period
Report Date
Report Mode
Page Number
The report displays the following columns within the report body:
Asset Number
Asset Description
Date Placed in Service
Category Name
Current Cost*
Depreciation Reserve*
Capital Adjustment*
General Fund*
Revaluation Reserve*
Accumulated Impairment*
* These are amount columns and display the balances at the end of the implementation period.
Report totals are available at Category and Book levels.
Note: Customers are to ensure that the appropriate account balances at the end of their implementation period
(latest closed period) are up to date in the General Ledger for the Capital Adjustment and Statement of Movement
on the General Fund accounts. The balances that are generated by the Calculation of Capital Adjustment / General
Fund Accounts Balances for UK Local Authority Accounting Implementation program are generated at the end of the
implementation period and are stored at the Asset level in Oracle Assets only. The program does not create
accounting entries for the General Ledger at the end of the implementation period. Only once you start processing
transactions on your existing assets or for new assets in subsequent periods will neutralising accounting entries be
generated by the application for depreciation, revaluation losses, impairment losses and revaluation amortisation.
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8. Optional: Execute the Implementation Exception Report for UK Local Authority Accounting program and report.
A requirement of the implementation of the guidelines for revaluations is that the asset's revaluation reserve balance is
to be set to zero on April 1, 2007 and going forward, the asset's revaluation reserve balance cannot be negative. As a
result, the Implementation Exception Report for UK Local Authority Accounting program was developed to:
Identify existing asset records that do not meet above conditions.

Identify and list assets whose revaluation reserve balance are currently negative and validate whether the
revaluation reserve balance on April 1, 2007 was zero.
Display an error message, if any transactions were posted to the current open period.
Asset Book
Display Mode
All
Exception
The report displays the following information at summary level:
Category Name
Total Asset Count
Exceptions Asset Count
Total at Book Level
Asset Category
Asset Number
Current Revaluation Reserve Balance
Revaluation Reserve Balance on April 1,2007
Status
Note: If any exceptions are identified and you still decide to proceed, you could risk that your revaluation reserve
beginning balances are incorrect and hence will continue to be incorrect for the remaining life of the asset.
3. Guidance for UK Local Authorities using prior release of the UK Local Authority Revaluations and
Impairments feature.
Note:
This section covers the implementation of the new UK Local Authority Revaluation and Impairment enhancements
for UK Local Authorities who have been using the prior version of the UK Local Authority Accounting Revaluation
and Impairment feature for Oracle Assets.
The following details in sequential order, the steps required for UK Local Authorities currently using the prior release of
the UK Local Authority Revaluation and Impairment feature.
Prerequisites:
If you are an existing R11i customer who used the UK Local Authority Accounting Revaluation and
Impairment feature successfully you will first need to upgrade to R12.1.x before carrying out any
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of the implementation steps below.

period.
interface it is acceptable, as long as you do not post these transactions in a current open period until after all
the implementation steps have been completed.
1. Confirm UK Local Authority specific Application Accounting Definition to a Subledger Accounting Method (SLAM) for
Oracle Assets is assigned.
2. Confirm UK Local Authority Accounting option is enabled for the existing asset book or select for new asset books.
For more information, see the Set Up section of this document.
document.
4. Guidance for existing Oracle Assets implementations transitioning to UK Local Authority Revaluation
and Impairment enhancements.
The following details in sequential order, the steps required for existing Oracle Assets customers to transition to the
new R12.1.x UK Local Authority Revaluations and Impairment feature when they have existing corporate and tax book
asset data.
Prerequisites:
If you are an existing R11i Oracle Assets customer you will first need to upgrade to R12.1.x before
carrying out any of the implementation steps below.
The implementation should be the first activity carried out in the new period.
period.
interface table it is acceptable, as long as you do not post these transactions in a current open period until after
all the implementation steps have been completed.
1. Create and assign UK Local Authority Application Accounting Definition to a Subledger Accounting Method (SLAM) for
Oracle Assets, see the Set Up section of this document.
2. Enable the UK Local Authority Accounting option. For more information, see the Set Up section of this document.
document.
For each Asset category within the Asset book, assign the Capital Adjustment and General fund accounts to be used.
The UK Local Authority Accounting for Revaluations and Impairments feature supports the use of different Capital
Adjustment and General Fund accounts for asset categories. Manually, assign the Capital Adjustment and General fund
accounts for the Asset categories in the book that are to use different accounts. If the same accounts are to be used
for all categories within the book, then execute the Category Implementation report specified in step 4 below. For more
information, see the Setup section of this document.
4. Execute the Category Implementation for UK Local Authority Accounting program and report.
The UK Local Authority Accounting for Revaluations and Impairments feature supports the use of different Capital
Adjustment and General Fund accounts for asset categories. When implementing the feature, you can manually update
the Capital Adjustment and General Fund accounts for the asset categories in the Asset book or run the Category
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Implementation for UK Local Authority Accounting program for mass update of the accounts to the remaining asset
categories that you did not update manually. The program automatically updates the Capital Adjustment and General
Fund accounts for all categories that do not already have Capital Adjustment and General Fund accounts defined for
the Asset Book.
Once the Category Implementation for UK Local Authority Accounting program is executed in Final mode, the accounts
are assigned to the category and cannot be changed. Therefore, it is recommended that you first review the
assignments by executing the program in Preview mode.
Asset Book
Capital Adjustment Account
General Fund Account
Run Mode
Report Name
Report Date
Asset Book
Page Number
Category Name
Capital Adjustment Account
General Fund Account
Revaluation Amortisation Account
Impairment Expense Account
Impairment Reserve Account
Status (for each category if qualified for implementation process)
5. Execute the Impairment and Revaluation Implementation Report for UK Local Authority Accounting program.
In order to ensure the accuracy of existing impairment and revaluation data, execute the Impairment and Revaluation
Implementation Report for UK Local Authority Accounting program.
The program can be executed in either Preview or Final mode.
Asset Book
Report Mode
Report Name
Asset Book
Report Date
Report Mode
Page Number
The report displays the following columns for Impairment data:
Asset Number
Asset Description
Asset Category
Impairment Name
Impairment Comment
New Impairment Classification Type
Impairment Amount
The report displays the following columns for Revaluation data:
Asset Number
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Asset Description
Asset Category
Mass Revaluation Id
Revaluation Amount
Revaluation Reason
For existing revaluations and impairments that do not contain a reason, the text from the Comment field is copied into
the Reason field.
The report processes impairments for a specific asset book going back to April 1, 2007. Ideally, you must ensure that
the Comments column for existing impairments contains one of the following impairment prefixes:
CPP
CEB
UNC
The prefix indicates the Impairment Classification type and need to be captured to accommodate the new data model.
If you enter a prefix different from any of the above, the Impairment Classification type is set to Other.
This report also processes the revaluations for a specific asset book going back to April 1, 2007.
To support the data model, all assets and categories, which were revalued or revalued in the Preview mode, will be
processed to update the revaluation type to Percentage.
6. Execute the Calculation of Capital Adjustment / General Fund Accounts Balances for UK Local Authority Accounting
Implementation program and report for each asset book.
Execute the Calculation of Capital Adjustment / General Fund Accounts Balances for UK Local Authority Accounting
Implementation program in order to create the current balances for Capital Adjustment and Statement of Movement on
General Fund Balance accounts at the asset level.
You can execute the program at:
Summary or Detail level

Preview or Final mode
The Summary level provides the total balances by category and asset book. The Detail level provides the asset
numbers as well. The report processes revaluations and impairments for a specific asset book going back to April 1,
2007.
Ideally, you must ensure that the Comments column for existing impairments contains one of the following impairment
prefixes:
CPP
CEB
UNC
The prefix indicates the Impairment Classification type and needs to be captured to accommodate the new data model.
If you enter a prefix different from any of the above, the Impairment Classification type is set to Other.
The logic used to create the account balances:
Capital Adjustment Account: The Capital Adjustment account is a balance sheet account with an asset account
type. The Capital Adjustment account reflects the total depreciation for an asset, (Debit), Impairment loss
expense (Debit) and amortisation of revaluation reserve (Credit). The ending balance of the Capital Adjustment
account for the asset at the end of the asset's life equals to the fixed asset's original cost.
General Fund Account: The General Fund account is a balance sheet account with either a liability or owner's
equity account type. The General Fund account reflects the total depreciation for an asset (Credit) and
Impairment loss expense (Credit).
Asset Book
Summary Mode
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Report Mode
Report Name
Asset Book
Implementation Period
Report Date
Report Mode
Page Number
Asset Number
Asset Description
Date Placed in Service
Category Name
Current Cost*
Depreciation Reserve*
Capital Adjustment*
General Fund*
Revaluation Reserve*
Accumulated Impairment*
* These are amount columns and display the balances at the end of the implementation period.
Report totals are available at Category and Book levels.
Note: Customers are to ensure that the appropriate account balances at end of their implementation period (latest
closed period) are up to date in the General Ledger for the Capital Adjustment and Statement of Movement on the
General Fund accounts. The balances that are generated by the Calculation of Capital Adjustment / General Fund
Accounts Balances for UK Local Authority Accounting Implementation program are at the end of the implementation
period and they are stored at the Asset level. The program does not create accounting entries for the General
Ledger at the end of the implementation period. Only once you start processing transactions on your assets or for
new assets in subsequent periods, neutralising accounting entries are generated by the application for depreciation,
impairment losses, and revaluation amortisation.
7. Optional: Execute the Implementation Exception Report for UK Local Authority Accounting program and report.
A requirement is that the asset's revaluation reserve balance is to be to zero on April 1, 2007 and going forward, the
asset's revaluation reserve balance cannot be negative. As a result, the Implementation Exception Report for UK Local
Authority Accounting program was developed to:
Identify existing asset records that do not meet above conditions.

Identify and list assets whose revaluation reserve balance are currently negative and validate whether the
revaluation reserve balance on April 1, 2007 was zero.
Display an error message, if any transactions were posted to the current open period.
Asset Book
Display Mode
All
Exception
The report displays the following information at summary level:
Category Name
Total Asset Count
Exceptions Asset Count
Total at Book Level
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Asset Category
Asset Number
Current Revaluation Reserve Balance
Revaluation Reserve Balance on April 1,2007
Note:
If any exceptions are identified and you still decide to proceed, you could risk that your revaluation reserve
beginning balances are incorrect and hence will continue to be incorrect for the remaining life of the asset.
5. Set Up
To set up the UK Local Authority for Revaluation Loss and Impairments enhancement, complete the following setup
tasks:
Create and assign UK Local Authority Application Accounting Definition to a specific Subledger Accounting
Method (SLAM)
Create a new SLAM by creating a copy of the seeded application Standard Accrual SLAM
End Date the Standard Application Accounting Definition assignment for Assets
Enable the UK Local Authority Application Accounting Definition for Assets
Assign the new SLAM to your Ledger
Create and Assign UK Local Authority Application Accounting Definition to a Specific Subledger Accounting
Method (SLAM).
In R12, an application subledger accounting method is used to define the accounting definitions for Oracle Assets. To
enable and use the seeded UK Local Authority specific accounting definitions, for the UK Local Authority Revaluation
and Impairment feature, you must update the Applications Accounting Definition Assignment for Assets for your ledger.
The steps to create and assign the UK Local Authority specific SLAM:
1. Navigate to Oracle General Ledger Accounting Setup Manager:

General Ledger ->Setup->Financials->Account Setup Manager-> Accounting Setup-> Open
2. Search and select the Associated Primary Ledger for the Asset Book for which UK Local Authority Accounting feature
will be enabled.
3. Click Update Accounting Options for the associated Primary Ledger
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4. In the Primary Ledger Section, Click 'Update' for the Setup Step Define and update the journal processing options for
your Ledger. The Update Ledger: Ledger Definition Page is displayed.
5. Scroll down the Ledger Definition page to the Subledger Accounting Section: Subledger Accounting Method field.
6. Click Open Subledger Accounting Method button to open the Subledger Accounting Methods window for the
STANDARD_ACCRUAL SLAM.
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7. Click Copy button to open the Copy Subledger Accounting Method window to make a copy of the STANDARD
ACCRUAL SLAM.
8. In the Method Code field, enter the name for the new accounting definition.
9. In the Name field, enter in a name for the Subledger Accounting Method, this will be the name that is displayed
when assigning the method to a ledger.
10. In the Description field, enter in a description of the accounting methods.
11. In the Chart of Accounts section, enter in a specific Transaction or Accounting chart of accounts the SLAM is to be
used or leave blank. If entered, only components defined with the same or no charts of accounts are available for
assignment to the new subledger accounting method. The accounting chart of accounts, if entered, must match the
chart of accounts of the ledger that this new subledger accounting method is to be assigned.
12. Click Done to create a copy and display your version of the SLAM.
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13. Enter in the end date date in the End Date field for the original Application Accounting Definition Assignment for the
Assets application.
14. Insert a new row and enter in Assets in the Application Field, select United Kingdom Local Authority in the Name
field, and date in the Start Date field the new SLAM is to take effect.
15. Click Save icon, to save your work.
16. Select SLAM UK in the Subledger Accounting Method field on the Update Ledger: Ledger Definition window to
assign the new SLAM to your ledger.
17. Click Finish to apply the new assignment. A confirmation window will appear confirming the ledger update is
complete.
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18. Click Close Window to Exit.
To enable and use the UK Local Authority Accounting for Revaluations and Impairments feature in any of your
accounting or tax books, you must enable the UK Local Authority Accounting option.
The steps for enabling the UK Local Authority Accounting option are:
1. Navigate to the Book Controls window.
2. Create a new book or query an existing book. For more information, see the Defining Depreciation Books section of
Oracle Assets User guide.
3. Open the Accounting Rules tab.
4. Select the UK Local Authority Accounting check box.
5. The system automatically enables the Allow Revaluations region and the necessary revaluations rules to perform
revaluations for the UK Local Authority Accounting:
Retire Revaluation Reserve

Revalue Fully Reserved Assets
Amortise Revaluation Reserve
Note:
If you select the UK Local Authority Accounting check box, changes to the revaluation rules within the Allow
Revaluations region will be prohibited.
6. Save your work.
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After enabling the UK Local Authority Accounting option for the book, assign the book to the relevant assets categories
and add additional required accounting information.
The steps for adding additional account information are:
1. Navigate to the Asset Categories window. For more information, see the Setting Up Asset Categories section of
Oracle Assets User Guide.
2. Query the asset category to be updated.
3. In the Book field, select your book from the list of values.
4. For the books that the UK Local Authority Accounting option is enabled, the system displays the following additional
fields for setting up account assignments for the Revaluation Loss, Capital Adjustment and Statement of Movement of
General Fund Balance accounts:
Capital Adjustments
General Fund
Revaluation Loss
5. In the Capital Adjustment and General Fund fields, enter the appropriate balance sheet accounts to be used when
creating the neutralising accounting entries. In the Revaluation Loss field, enter in the account revaluation losses are to
be recorded. The system performs the following account type validation on the entered accounts:
Revaluation Loss: Expense

Capital Adjustment: Asset
General Fund: Liability or Owner's Equity
6. Save your work.
Note: If you have not previously performed asset impairments for fixed assets, ensure that you also enter
Accumulated Impairment and Impairment Expense accounts for each asset category.
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6. Managing Consumption of Economic Benefit Impairments
The UK Local Authority Revaluation and Impairments feature enables you to manage fixed asset impairments based on
the revised regulatory requirements for UK local authorities. When performing impairments, users will continue to
define the processing options within the Impairment Web ADI spreadsheet. However, the key driver for the processing
sequence for impairments will no longer be based on the classification type of the impairment. All impairments
regardless of impairment classification type will be processed and accounted using the methodology for impairment
classification types of Change in Property Prices / Other.
Prerequisites:
Enable the UK Local Authority Accounting for Revaluation and Impairments feature. For more information, see the Set
Up section of this document.
Note:
Impairments are defined at the asset level only.

Impairments are performed through the Web ADI Impairments user interface. You must not perform
impairments through the Mass Revaluations window, as now a negative revaluation in the Mass Revaluation
window is considered a revaluation loss and will be accounted as such.
Consumption of Economic Benefit impairments are not eligible for linking to Revaluations for impairment
reversal.
An asset can have only one posted impairment event per period. If a second impairment is required, the first
posted impairment must be rolled back prior to uploading the second impairment.
To ensure proper accounting treatment, the Generate Accounts process, invoked during the depreciation
process, must be executed and should not be disabled or canceled.
The steps for performing impairments are:

To define and upload impairments:
1. Navigate to the Asset Impairment window.

Navigation: Assets > Impairment > Create and Post
2. Click the New Impairment button. The system launches the WEB ADI interface and prompts you to begin the
download process.
3. Click the Open button in the File Download pop-up window to begin file download of the Impairment spreadsheet.
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4. Click the Enable Macros button in the Microsoft Excel pop-up window. A download window appears and the system
will begin the actual download and creation of the spreadsheet.
5. Close the window when prompted. The Impairment spreadsheet is ready for input.
6. In the Book field, enter or select the asset book of the asset to be impaired from the list of values.
7. In the Impairment Name field, enter a name for the impairment event.
8. In the Impairment Date field, enter the date for the impairment. The system populates the User Entered Date field
when the worksheet is uploaded.
9. In the Status field, select the Preview option from the list of values. By selecting the Preview option when the
spreadsheet is uploaded, Oracle Assets submits the Impairment Preview process to the concurrent request manager to
generate the Asset Impairment report for the records with the Preview status. Use the report to preview the
impairment results before posting.
10. Enter the necessary information in the following fields:
Cash Generating Unit: If Applicable, enter the name of Cash Generating Unit.
Asset Number: Enter the asset number or select it from the list of values.
Net Selling Price: If applicable, enter the Net Selling Price amount.
Value in Use: If applicable, enter the Value in Use amount.
Impairment Loss: Enter the Impairment Loss amount or it leave blank if the Net Selling Price or Value in Use
fields are populated. When the Net Selling Price or Value in Use field is populated, the system calculates
impairment loss.
Goodwill Amount and Asset: If applicable, enter the Goodwill Amount and Asset.
Comments: Enter a description about the impairment in this field.
11. The following fields are specific to the asset books that use the UK Local Authority Accounting for Revaluations and
Impairments feature and are not used when defining impairments for assets of non-UK Local Authority Accounting
asset books.
Classification Type: Indicates the type of impairment being defined. Select one of the following impairment
classification types from the list of values:
- Select Consumption of Economic Benefit if the impairment is fully attributed to an event such as demolition or
vandalism.
- Select Change in Property Prices if the impairment is fully attributed to a change in property price that is only specific
to that asset and not a general market trend.
- Select Other if the cause of the impairment is not due to consumption of economic benefit or change in property
prices.
Reason Description: Enter the reason or cause for impairment.

Impairment Account: Enter the natural account number for the impairment loss expense account if you want to
select a specific impairment loss expense account for the impairment classification type or leave blank to use the
impairment expense account assigned for the asset category.
Split Indicator: If the impairment is the result of a combination of events, such as both consumption of
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economic benefit and change of property prices, set the Split Indicator option to Yes. The accounting for the
impairment components is similar as if the impairment is fully attributed to a specific event. Each component is
accounted for separately based on its classification type.
If the Split Indicator is set to Yes, enter in the required information for each split in the following fields:
- Split: Classification Type

- Split: Reason Description
- Split: Loss Percent
- Split: Impairment Account
Note:
Impairments can be split into two or three components. Each component is assigned a percentage allocation of the
impairment loss. The sum of the percentage allocation of the impairment loss for all components must equal 100%.
12. Upload the impairments to Oracle Assets by selecting the Upload option from the Oracle menu.
13. The Upload Parameters window is displayed. Accept the default settings and click Upload. If errors are encountered
during the upload process, an error message is displayed in the Messages Column of the spreadsheet.
Note:
Ensure that the Validate Before Upload check box is selected.
14. On completion, use the Request ID number displayed to query and review the impairment results using the Asset
Impairment report.
After successfully uploading the impairments to Oracle Assets, review the Asset Impairment report generated during
the upload process. Confirm that the impairment details uploaded and results are correct. If the results are correct,
commit the results to the system by posting the impairments.
The steps for reviewing and posting the results are:
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1. To review the Asset Impairment report, navigate to the View Request window and enter in the Request ID.
2. Select View Output to display the report.

In addition to the impairment details entered, the report includes the following information:
New Net Book Value of the asset after the effects of the impairment.
Split Impairment Loss amounts as calculated using percentages entered.
Summary Totals for all the impairment records defined in the spreadsheet for the following columns: Current Net
Book Value, Net Selling Price, Value in Use, Impairment Loss and New Net Book Value.
3. To post the impairment, navigate to the Asset Impairment window.

Navigation: Assets: Impairment > Create and Post
4. Query the impairment by Asset Book or Asset Number. For more information about running a Query, see Oracle
Assets user guide. The system displays the impairment records for the search criteria entered. Only impairments that
are in the Previewed status can be posted.
5. Select the check box for the impairment to be posted.
6. Click the Post button. The system asked you to confirm your selection.
7. Click the Yes button. The system launches a concurrent program and posts the impairment to Oracle Assets.
Rollback Impairments
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Impairment transactions can only be rolled back in the fixed assets period that they were posted. Once the fixed assets
period is closed, the transactions cannot be rolled back.
To rollback an impairment transaction:
1. Navigate to the Create and Post Impairments window.

Navigation: Assets > Impairments > Create and Post
2. Query for the impairment to be rolled back. For more information about running a Query, see Oracle Assets user
guide. The system displays the impairment records for the search criteria entered.
3. Select the check box for the impairment to be rolled back.
4. Click the Rollback button.
5. Click Yes to confirm the rollback
Note:
After an impairment transaction is rolled back, the transaction cannot be posted again.
Delete Impairments
The steps for deleting an Impairment transaction are:
1. Navigate to the Create and Post Impairments window.

Navigation: Assets > Impairments > Create and Post
2. Query the impairment to be deleted. For more information about running a Query, see Oracle Assets user guide. The
system displays the impairment records for the search criteria entered.
3. Select the check box for the impairment to be deleted.
4. Click the Delete button.
5. Click Yes to confirm.
7. Managing Revaluation Gains and Revaluation Losses
The UK Local Authority Revaluation and Impairment enhancements enable you to manage fixed assets revaluations and
revaluation losses.
Revaluation gains and revaluation losses can be performed on an asset category or individual asset level.
Prerequisites:
Enable the UK Local Authority Accounting for Revaluation and Impairments feature. For more information, see the Set
Up section of this document.
Note:
Revaluation Losses are not allowed on fully reserved asset since the Net book value is equal to zero. The
asset first must be revalued prior to recording a revaluation loss.
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Revaluation gains and revaluation losses can be performed in the same period as an impairment transaction
only before the impairment is posted to the asset and not after an impairment event has been posted. Once
the impairment is posted to the asset, the impairment will have to be reversed before the revaluation loss
can be performed.
Performing Revaluation Loss
The steps for performing a revaluation gain or revaluation loss are:
1. Navigate to the Mass Revaluations window.

Navigation: Assets > Mass Revaluations
2. In the Book field, select the asset book that you want to process from the list of values.
3. In the Comments field, enter the reason or other information about the revaluation. This is a required field.
4. The Mass Transaction Number, Revaluation Date, and Status fields are populated by the system.
5. In the Rules region, the following fields are defaulted based on the values that were assigned to the asset book
during setup:
Revalue Fully Reserved Assets

Life Extension Factor
Maximum Revaluations
Life Extension Ceiling
Note:
You cannot revalue CIP assets. Only once the CIP asset is capitalised, can you revalue the asset.
6. In the Category or Asset Number field, select the asset category or individual asset from the list of values.
7. In the Reason field, provide a description for the revaluation loss. This is a required field.
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Note:
In R12, Revaluation gains and revaluation losses can now be performed on assets that are added in the current
period. Revaluation gains and revaluation losses are not processed on assets that are:
Fully retired
With pending retirements
8. If you enter a value for the Asset Number field, from the list of values for the Value Type field select one of the
following options:
Amount: This is the incremental amount increase or decrease to the asset's current net book value based on the
professional valuation.
Net Book Value: This is the new Net Book Value. This can only be a positive value. The new Net Book Value will
automatically be compared to the current Net Book Value by the Oracle Asset system to determine if the
revaluation results in a revaluation gain or loss
Percentage: This is the percentage increase or decrease to the asset's current net book value based on the
professional valuation.
Note:
The Link button is disabled for revaluation loss rows as you cannot reverse a prior impairment if you are processing
a revaluation loss. You can only reverse a prior impairment if you are processing a revaluation gain.
9. In the Value field, enter an amount based on the option that was selected for the Value Type field. The format of the
Value field is based on the Value Type selection and the Currency Precision definition for the base currency as defined
for the GL Ledger linked to the selected Asset Book.
10. If you select an asset category in the Category field, the value for the Value Type field is automatically set to
Percentage and cannot be changed.
11. If you want to define override rules for the asset or category that are different than the default set for the book,
select the Rules Overridden check box and then click the Override Rules button. The system displays the Override Rules
window that you can use to override defaults for the asset or category.
12. Once you have defined the revaluation gain or revaluation loss criteria, process the revaluation gain or losses and
preview the revaluation results prior to committing them. To process and preview the revaluation losses, click the
Preview button on the Mass Revaluation form. The Revaluation concurrent program is submitted, a Request ID is
displayed and the Mass Transaction Number field is populated. When the process is complete, the transaction status is
changed to Preview on the Mass Revaluation window. Use the Request ID to query and display the Revaluation Preview
report in the Request window.
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13. After verifying the information provided in the Revaluation Preview report, navigate to the Mass Revaluations
window and query your revaluation using the number that was provided in the Mass Transaction Number field.
14. If the Preview results are correct, click the Run button to process and commit the revaluation results. If the results
are incorrect, make the necessary changes to the revaluation criteria and press Preview to process the changes.
15. Once the revaluation gain or revaluation loss is executed in the run mode, the revaluation gain or revaluation loss is
committed and the status on the Mass Revaluation Transaction record is changed to Completed and cannot be updated.
8. Examples of Accounting Entries
This section highlights the logic and new accounting entries generated for the UK Local Authority Revaluation and
Impairment enhancements. It does not reflect all the accounting entries created by Oracle Assets for the asset.
Revaluation Loss Neutralising Accounting Entries
Under the revised guidelines, any debit entry to an Income or Expenditure account that impacts a profit and loss
account is to be neutralised. This includes revaluation- and impairment losses. The effect of the revaluation- or
impairment loss charge on expense is to be neutralised by booking an accounting entry to the Capital Adjustment and
Movement in Reserves Statement (General Fund/Housing Revenue Account) account. The neutralising entry is
generated and posted in conjunction with the revaluation loss accounting entry for the asset.
The accounting entry uses the Capital Adjustment and General Fund accounts assigned to the asset's category.
The neutralising accounting entry consists of:
Debit Credit
Capital Adjustment (Revaluation or Impairment Loss

Expense Amount)
General Fund (Revaluation or Impairment Loss Expense

Amount)
Revaluation Loss
Revaluation losses are a result of a business trend and are not specific to the asset, for instance a temporary change in
property price values due to a down turn in the real estate market. This is different from an asset impairment which is
specific to the asset, i.e. damage due to fire. A revaluation loss is treated as a revaluation where any accumulated
depreciation and accumulated impairment loss on the balance sheet account is written off against the gross carrying
amount. The revaluation loss itself is posted as a net credit against the cost account, thus the cost account balance
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after the revaluation loss equals the new net book value.
Where:
Current Net Book Value (CNBV) = Cost + Cost Adjustments + Revaluations - Accumulated Depreciation -
Accumulated Impairments - Retirements
New Net Book Value (NNBV) = Asset value as deemed by professional valuation
Revaluation Amounts = NNBV - CNBV. The resulting value is positive in order to be considered a
revaluation gain. If the value is negative, it is a revaluation loss.
Note:
CNBV does not include depreciation for the current open period of the Revaluation Date when processing
revaluation gains or revaluation losses.
The accounting entries generated for revaluation loss are dependent on whether the asset has been previously
revalued and/or impaired.
Example 1: Revaluation Loss
You want to perform a revaluation loss for Building #1 that has not been previously revalued and the balance in the
Revaluation Reserve account for this asset is zero. Building #1 was purchased on April 1, 2010 and recorded into Oracle
Assets with the following details:
Building #1 Details Date
Cost 200,000
Life 10 Months
Depreciation Method STL - 10 Months
Prorate Convention Monthly
Monthly Depreciation 20,000
Salvage Value 0.00
On May 1, 2010, a professional valuation was performed on Building #1 and incurred a revaluation loss of 36,000 due
to decline in the real estate market.
On May 1, 2010, the accounting for the building is as follows:
Cost 200,000
Accumulated Depreciation 20,000
Accumulated Impairment 0.00
Cost Adjustment 0.00
Salvage Value 0.00
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Retirements 0.00
Remaining Life 9 Months
Professional Valuation: New Net Book Value 144,000
Current Net Book Value (CNBV) = Cost + Cost Adjustments + Revaluations - Accumulated Depreciation - Accumulated
Impairments - Retirements
CNBV = 200,000 + 0.00 + 0.00 - 0.00 - 20,000 - 0.00 - 0.00

CNBV = 180,000
NNBV = 180,000 - 36,000

NNBV = 144,000
Revaluation Amount = NNBV - CNBV
Revaluation Amount = (36,000)
When booking a revaluation loss on the asset, a Debit accounting entry to the Accumulated Depreciation account is
made to reverse the accumulated depreciation to date on the asset and set the account balance to zero and a Credit
accounting entry is posted to the fixed asset cost account. This will cause the fixed asset cost to be equal to the new
net book value.
The effect of the revaluation loss is illustrated in the following table:
Period Cost Depreciation Accumulated Asset CNBV Asset NNBV Revaluation

Expense Depreciation (End of Loss
Period)
Apr-10 200,000 20,000 20,000 180,000
Revaluation 20,000 180,000 144,000 (36,000)

Loss
May-10 144,000 16,000 16,000 128,000
Jun-10 144,000 16,000 32,000 112,000
Jul-10 144,000 16,000 48,000 96,000
Aug-10 144,000 16,000 64,000 80,000
Sep-10 144,000 16,000 80,000 64,000
Oct-10 144,000 16,000 96,000 48,000
Nov-10 144,000 16,000 112,000 32,000
Dec-10 144,000 16,000 128,000 16,000
Jan-11 144,000 16,000 144,000
The following accounting entries are generated to record the revaluation loss:
Account Description Debit Credit
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Accumulated Depreciation (Current 20,000

Balance)
Revaluation Loss Expense 36,000

(Revaluation Amount)
Fixed Asset Cost (Revaluation Amount 56,000

+ Accumulated Depreciation)
Note:
If the result of (Revaluation Amount - Accumulated Depreciation) is positive, then the Fixed Asset Cost
account is debited.
If the result of (Revaluation Amount - Accumulated Depreciation) is negative, then the Fixed Asset Cost
account is credited.
Revaluation Loss Neutralising Accounting Entry
The following accounting entry is booked to record the Revaluation Loss neutralising accounting entry:
Capital Adjustment Account 36,000 *
General Fund Account 36,000
* Amount posted to the Revaluation Loss account = 36,000
Depreciation and Depreciation Neutralising Accounting Entries:
The following accounting entry is booked to record the depreciation expense and its corresponding neutralising entries
for the period:
Depreciation Expense 16,000 *
* Depreciation is recalculated and is based on the revalued net book value. NNBV / Remaining
depreciation periods (144,000 / 9 = 16,000)
The following is the neutralising depreciation accounting entry:
Capital Adjustment 16,000
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General Fund 16,000
Example 2: Revaluation Loss on Prior Impaired Asset
You want to perform a revaluation loss on Building #2 that has been previously impaired and there is a balance in the
Accumulated Impairment account for this asset. Building #2 was purchased on April 1, 2010 and recorded into Oracle
Assets with the following details:
Cost 200,000
Life 1 Years
Depreciation Method STL - 1 yr
Salvage Value 0.00
On May 1, 2010, a professional valuation was performed on Building #2 and the building's value had decreased by
36,000 due to an impairment. The monthly depreciation after the impairment is 13,067.
Cost 200,000
Accumulated Depreciation 16,667 *
Revaluation 0.00
Salvage Value 0.00
Retirements 0.00
Professional Valuation: Impairment 36,000
* Excludes depreciation for May 2010.
When determining the impairment loss amount, the current period's (May 2010) depreciation is included in the CNBV
calculation.
Where:
Current Net Book Value (CNBV) = Cost + Cost Adjustments + Revaluations - Current Period Depreciation
- Accumulated Depreciation - Accumulated Impairments - Retirements
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Impairment Amount = NNBV - CNBV is negative
Note:
CNBV includes depreciation for the current open period of the Impairment Date when processing an
impairment loss.
-- Accumulated Depreciation - Accumulated Impairments - Retirements
CNBV = 200,000 + 0.00 + 0.00 - 16,667 - 0.00 - 16,667 - 0.00 - 0.00

CNBV = 166,666
Impairment Amount = Provide by professional valuation

Impairment Amount = 36,000
New Net Book Value (NNBV) = CNBV - Impairment Amount

NNBV = 130,667
The following accounting entries are generated to record the impairment loss without an existing revaluation reserve
balance for all impairment classification types:
Impairment Loss Expense (Expensed 36,000

Impairment Loss Amount)
Accumulated Impairment (Expensed 36,000

The following is the impairment loss neutralising accounting entry:
General Fund (Expensed Impairment 36,000

Loss Amount)
for the period (May 2010):
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*Since the current month depreciation is considered in the CNBV calculation, depreciation is not
recalculated until the following month. CNBV / Remaining depreciation periods (183,333 / 11 = 16,667)
General Fund 16,667
On Oct 1, 2010, another professional valuation was performed and the building's value had decreased its market value
by 50,000 due to decline in the general real estate market.
On Oct 1, 2010, the accounting for the building is as follows:
Cost 200,000
Accumulated Impairment 36,000
Salvage Value 0.00
Retirements 0.00
Impairment Loss Amount 36,000
Professional Valuation - New Net Book Value 28,400
CNBV = 200,000 + 0.00 + 0.00 - 0.00 - 85,600 - 36,000 - 0.00
CNBV = 78,400
NNBV = 28,400
The effect of the revaluation is illustrated in the following table:
Period Cost Depreciation Accumulated Asset Asset Revaluation Accumulated

Expense Depreciation CNBV NNBV Loss Impairment
(End of
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Period)
Apr-10 200,000 16,667 16,667 183,333
Impairment 166,667 130,667 36,000
May-10 200,000 16,667 33,333 130,667 36,000
Jun-10 200,000 13,067 46,400 117,600 36,000
Jul-10 200,000 13,067 59,467 104,533 36,000
Aug-10 200,000 13,067 72,533 91,467 36,000
Sep-10 200,000 13,067 85,600 78,400 36,000
Revaluation 85,600 78,400 28,400 50,000

Loss
Oct-10 28,400 4,733 4,733 23,667
Nov-10 28,400 4,733 9,467 18,933
Dec-10 28,400 4,733 14,200 14,200
Jan-11 28,400 4,733 18,933 9,467
Feb-11 28,400 4,733 23,667 4,733
Mar-11 28,400 4,733 28,400 -
When booking a revaluation loss on the asset with a prior impairment, an entry to the Accumulated Depreciation and
Accumulated Impairment accounts will be made to set the accounts balance to zero.
Accounting entries are:
Accumulated Depreciation (Entire 85,600

current balance in the account)
Accumulated Impairment (Entire 36,000



- (Accumulated Depreciation +
Accumulated Impairment))
Note:
If the result of (Revaluation Amount - Accumulated Depreciation - Accumulated Impairment) is positive, then
debit the Fixed Asset Cost account.
If the result of (Revaluation Amount - Accumulated Depreciation - Accumulated Impairment) is negative,

then credit the Fixed Asset Cost account.
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*Amount posted to the Revaluation Loss account = 50,000
for the period:
*Depreciation is recalculated and is based on the revalued net book value. NNBV / Remaining
General Fund 4,733
Revaluation: Reversal of Revaluation Loss
Under the new 'Code', when revaluing an asset upward which has previously incurred a revaluation loss, the revaluation
gain is to reverse the previous revaluation loss and its depreciation adjusted as if the revaluation loss had not occurred.
As a result, when recording the revaluation gain, the following will occur:
The revaluation gain will reverse all revaluation losses up to the revaluation gain amount with any remaining
revaluation gain booked to the revaluation reserve.
The revaluation gain will reverse revaluation losses previously charged to the Comprehensive Income and
Expenditure statement accounts. The reversal is adjusted for depreciation to take in account the depreciation
that would have been charged had the loss not taken place. Basically, the previous revaluation loss is neutralised
or negated.
The reversal goes back to the point where the original revaluation loss took place. Note: This can be no earlier
than April 1, 2007 when the Revaluation Reserve was first introduced.
If the revaluation gain is lower than the original revaluation loss, resulting in a loss remaining, a pro-rata of the
annual depreciation adjustment and a record of the balance of the remaining revaluation loss not reversed is
tracked on the asset and is used in lieu of any future revaluation gain.
Example 3 - Revaluation: Reversal of Prior Revaluation Loss
You want to perform a revaluation for Building #3 which has a previous revaluation loss recorded. Building #3 was
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purchased on April 1, 2010 and recorded into Oracle Assets with the following details:
Cost 200,000
Life 1 Years
Salvage Value 0.00
36,000. The monthly depreciation after the revaluation loss is 13,394.
Cost 200,000
Revaluation 0.00
Salvage Value 0.00
Retirements 0.00
When determining the revaluation loss amount, the current period's (May 2010) depreciation is excluded in the CNBV
calculation.
Where:
Revaluation Amount = NNBV - CNBV is negative
Note:
CNBV excludes depreciation for the period of the Revaluation Loss Date.
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CNBV = 200,000 + 0.00 + 0.00 - 16,667 - 0.00 - 0.00
CNBV = 183,333
Revaluation Amount = Provide by professional valuation
New Net Book Value (NNBV) = CNBV - Revaluation Amount
NNBV = 147,333
The following accounting entries are generated to record the revaluation loss:
Accumulated Depreciation (Current 16,667

Balance)


+ Accumulated Depreciation)
Note:
If the result of (Revaluation Amount - Accumulated Depreciation) is positive, then the Fixed Asset Cost
account is debited.
If the result of (Revaluation Amount - Accumulated Depreciation) is negative, then the Fixed Asset Cost
account is credited.
Revaluation Loss Neutralising Accounting Entry
* Amount posted to the Revaluation Loss account = 36,000
for the period:
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General Fund 13,394
On October 1, 2010, another professional valuation was performed and the building's value had increased to 150,000.
On October 1, 2010, the accounting for the building is as follows:
Cost 147,333
Salvage Value 0.00
Retirements 0.00
CNBV = 147,333 + 0.00 + 0.00 - 0.00 - 66,970 - 0.00 - 0.00
CNBV = 80,364
NNBV = 150,000
Revaluation Amount = 69,636
When recording revaluation gains on an asset with a prior revaluation loss, it is a requirement to reverse the previous
revaluation losses. With this reversal, the asset depreciation is adjusted as if the revaluation loss had not occurred on
the asset.
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Steps to determine the revaluation loss reversal amount to be applied to the revaluation gain.
Determine Revaluation Loss Depreciation Impact
Revaluation Loss Depreciation Impact = Revaluation Loss * Depreciation Impact Factor
Depreciation Impact Factor = (Remaining asset life (time periods) at time of Revaluation Loss -
Remaining asset life (time periods) at the revaluation gain) / Remaining asset life (time periods) at time
of revaluation loss
= 36,000 * (11 - 6)/11
= 36,000 * .454545
= 16,364
Determine Net Revaluation Loss impact
Net Revaluation Loss = Revaluation Loss - Revaluation Loss Depreciation Impact
= 36,000 - 16,364
= 19,636
Determine Revaluation Loss Reversal Amount
If (Revaluation Amount - Net Revaluation Loss) > 0

Then
Revaluation Loss Reversal Amount = Net Revaluation Loss
Else
Revaluation Loss Reversal Amount = Revaluation Amount
= 19,636
Determine amount to be booked to Revaluation Reserve
Revaluation Reserve = Revaluation Amount - Revaluation Loss Reversal Amount
= 69,636 - 19,636
= 50,000
The effect of the revaluation is illustrated in the following table:
Period Cost Depreciation Accumulated Asset Asset Revaluation Revaluation Revaluation

Expense Depreciation CNBV NNBV Reserve Amortisation Loss
(End of
Period)
Apr-10 200,000 16,667 16,667 183,333
Revaluation 16,667 183,333 147,333 36,000

Loss
May-10 147,333 13,394 13,394 133,939
Jun-10 147,333 13,394 26,788 120,545
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Jul-10 147,333 13,394 40,182 107,152
Aug-10 147,333 13,394 53,576 93,758
Sep-10 147,333 13,394 66,970 80,364
Revaluation 66,970 150,000 50,000 8,333
Oct-10 150,000 25,000 25,000 125,000 41,667 8,333
Nov-10 150,000 25,000 50,000 100,000 33,333 8,333
Dec-10 150,000 25,000 75,000 75,000 25,000 8,333
Jan-11 150,000 25,000 100,000 50,000 16,667 8,333
Feb-11 150,000 25,000 125,000 25,000 8,333 8,333
Mar-11 150,000 25,000 150,000 - - 8,333
The following accounting entries are created to record the revaluation and the effects of the reversal of the revaluation
loss.
Accounting entries are:
Accumulated Depreciation (Entire 66,970


- (Accumulated Depreciation +
Accumulated Impairment))
Revaluation Loss (Revaluation Loss 19,636

Reversal Amount)
Revaluation Reserve (Revaluation 50,000

Amount)
Note:
If the result of (Revaluation Amount - Accumulated Depreciation - Accumulated Impairment) is positive, then
debit the Fixed Asset Cost account.
If the result of (Revaluation Amount - Accumulated Depreciation - Accumulated Impairment) is negative,

then credit the Fixed Asset Cost account.
The following accounting entry is booked to record the reversal of the original Revaluation Loss Neutralising Entry:
General Fund (Amount of the 36,000 *

Revaluation Loss)
Capital Adjustment (Amount of 36,000

Revaluation Loss)
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*This is the gross amount booked to the revaluation loss account originally
The following accounting entry is booked to record the depreciation impact portion of the reversal of the revaluation
loss:
Depreciation Expense (Revaluation 16,364

Loss Depreciation Impact)

(Revaluation Loss Depreciation
Impact)
The following accounting entry is booked to record the neutralising entries for the depreciation impact portion for the
reversal of the revaluation loss:
General Fund (Revaluation Loss 16,364

Depreciation Impact)
Capital Adjustment (Revaluation Loss 16,364

Depreciation Impact)
At the end of the month, the following accounting entry is booked to record the amortisation of the
Revaluation Reserve for the month:
Revaluation Reserve 8,333 *
* Revaluation Reserve / Remaining Life (50,000/6 = 8,333)
At the end of the month, the following accounting entry is booked to record the depreciation expense and its
corresponding neutralising entries for the period:
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General Fund 25,000
Impairment Loss
Impairment loss occurs when a professional valuation on an asset is less than the asset's current net book value. With
the new 'Code' for UK Local Authorities, the accounting treatment for impairment losses is no longer based on
impairment classification type.
The following examples provide the accounting entries that are generated for an asset impairment loss on an asset with
no revaluation reserve balance and regardless of impairment classification type.
Example: Consumption of Economic Benefit Impairment
You want to perform an impairment loss for Building #4 that has not been previously impaired or revalued. Building #4
was purchased on April 1, 2010 and recorded into Oracle Assets with the following details:
Cost 200,000
Life 1 Years
Salvage Value 0.00
36,000 due to poor management and neglect. The monthly depreciation after the impairment is 13,067.
Cost 200,000
Revaluation 0.00
Salvage Value 0.00
Retirements 0.00
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Professional Valuation: Impairment 36,000
* Excludes depreciation for May 2010.
When determining the impairment loss amount, the current period's (May 2010) depreciation is included in the CNBV
calculation.
Where:
- Accumulated Depreciation - Accumulated Impairments - Retirements
Impairment Amount = NNBV - CNBV is negative
Note:
CNBV includes depreciation for the current open period of the Impairment Date for
impairment processing.
Current Net Book Value (CNBV) = Cost + Cost Adjustments + Revaluations - Current Period
Depreciation - Accumulated Depreciation - Accumulated Impairments - Retirements
CNBV = 200,000 + 0.00 + 0.00 - 16,667 - 16,667 - 0.00 - 0.00

CNBV = 166,666
Impairment Amount = Provided by professional valuation

Impairment Amount = 36,000
New Net Book Value (NNBV) = CNBV - Impairment Amount

NNBV = 130,667
The effect of the impairment is illustrated in the following table:
200,000
Period Cost Depreciation Accumulated Asset Asset Revaluation Impairment Accumu
Expense Depreciation CNBV NNBV Loss Loss Impairm
(End of
Period)
Apr-10 200,000 16,667 16,667 183,333
Impairment 166,667 130,667 36,000 36,000
May-10 200,000 16,667 33,333 130,667 36,000 36,000
Jun-10 200,000 13,067 46,400 117,600 36,000
Jul-10 200,000 13,067 59,467 104,533 36,000
Aug-10 200,000 13,067 72,533 91,467 36,000
Sep-10 200,000 13,067 85,600 78,400
Oct-10 200,000 13,067 98,667 65,333 36,000
Nov-10 200,000 13,067 111,733 52,267 36,000
Dec-10 200,000 13,067 124,800 39,200 36,000
40 of 45 3/20/2024, 7:14 PM
Jan-11 200,000 13,067 137,867 26,133 36,000
Feb-11 200,000 13,067 150,933 13,067 36,000
Mar-11 200,000 13,067 164,000 - 36,000
The following accounting entries are generated to record the impairment loss without an existing
revaluation reserve balance for all impairment classification types:
Impairment Loss Expense 36,000

(Expensed Impairment Loss
Amount)

(Expensed Impairment Loss
Amount)
The following is the impairment loss neutralising accounting entry:
General Fund (Expensed 36,000

At the end of the month, the following accounting entry is booked to record the depreciation expense and
its corresponding neutralising entries for the period (May 2010):
* Since the current month depreciation is considered in the CNBV calculation, depreciation
is not recalculated until the following month. CNBV / Remaining depreciation periods
(183,333 / 11 = 16,667)
General Fund 16,667
Example 2: Impairment Loss on a Previous Revalued Asset
This example is related to an asset impairment loss where the asset has had a revaluation and there is an
existing revaluation reserve balance.
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On April 1, 2010, you purchased Building #5 and recorded into Oracle Assets with the following details:
Cost 200,000
Life 10 months
Depreciation Method STL - 10 months
Salvage Value 0.00
On May 1, 2010, a professional valuation was performed on Building #5 and the building's value had
increased. The building was revalued to a net book balance of 216,000. With a new monthly depreciation
of 24,000, revaluation reserve balance of 36,000, a monthly revaluation reserve amortisation amount of
4,000, and a remaining life of 9 months.
On October 1, 2010, a professional valuation was performed on Building #5 and the building's value had
decreased due damage from rioting in the area. The buildings value is now 42,000 resulting in an
impairment of 30,000.
On October 1, 2010, the accounting for the building is as follows:
Cost 216,000
Revaluation Reserve 16,000 **
Salvage Value 0.00
Retirements 0.00
Remaining Life 4 months
Monthly Revaluation Reserve Amortisation 4,000
* Accumulated Depreciation at end of September 2010.

** Revaluation Reserve at end of September 2010.
When determining the impairment loss amount, the current period's (October 2010) depreciation is
included in the CNBV calculation.
Current Net Book Value (CNBV) = Cost + Cost Adjustments + Revaluations - Current Period
Depreciation - Accumulated Depreciation - Accumulated Impairments - Retirements
CNBV = 216,000 + 0.00 + 0.00 - 24,000 - 120,000 - 0.00 - 0.00

CNBV = 72,000
New Net Book Value (NNBV) = provided by professional valuation

NNBV = 42,000
Impairment Amount = NNBV - CNBV

Impairment Amount = (30,000)
42 of 45 3/20/2024, 7:14 PM
The effect of the impairment is illustrated in the following table:
Period Cost Depreciation Accumulated Asset Asset Revaluation Revaluation

Expense Depreciation CNBV NNBV Reserve Amortisation
(End of
Period)
Apr-10 200,000 20,000 20,000 180,000
Revaluation 20,000 180,000 216,000 36,000 4,000
May-10 216,000 24,000 24,000 192,000 32,000 4,000
Jun-10 216,000 24,000 48,000 168,000 28,000 4,000
Jul-10 216,000 24,000 72,000 144,000 24,000 4,000
Aug-10 216,000 24,000 96,000 120,000 20,000 4,000
Sep-10 216,000 24,000 120,000 96,000 16,000 4,000
Impairment 72,000 42,000 12,000 4,000
Oct-10 216,000 24,000 144,000 42,000
Nov-10 216,000 14,000 158,000 28,000
Dec-10 216,000 14,000 172,000 14,000
Jan-11 216,000 14,000 186,000 -
The following accounting entries are generated to record the impairment with a prior revaluation reserve
balance:
Revaluation Reserve (Up to the 12,000

amount of the Impairment Loss)
Impairment Loss Expense 18,000

(Impairment loss not covered by
the Revaluation Reserve balance)

(Impairment loss amount)
Note:
Revaluation Reserve: When determining the amount of the revaluation reserve available, the
current month revaluation reserve amortisation is taken in account. For example, the Revaluation
Reserve balance is reduced by the current month's amortisation. The remaining balance is then
applied to the impairment loss amount to determine the amount to be booked to the impairment
loss account.
Account Details Data
Revaluation Reserve 16,000
Current Month Amortisation 4,000
Available Revaluation Reserve 12,000
Amount to Book to the Impairment Loss Account 30,000 - 12,000 = 18,000
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Impairment Loss Neutralising Accounting Entry:
Any debit to the Impairment Loss account must have a corresponding neutralising entry to the Capital
Adjustment and Statement of Movement in Reserves Statement (General Fund/Housing Revenue)
accounts. As a result, the following neutralising entry is also created:
Capital Adjustment (Expensed 18,000

impairment loss amount)
General Fund (Expensed 18,000

impairment loss amount)
The following entry is booked to record the depreciation expense and its corresponding neutralising
entries for the period:
* Since the current month depreciation is considered in the CNBV calculation, depreciation
is not recalculated until the following month. CNBV / Remaining depreciation periods
(96,000 / 4 = 24,000)
General Fund 24,000
Revaluation Reserve Amortisation Accounting Entry:
The following entry is booked to record the amortisation of the revaluation reserve for the impairment
period which was deducted when determining the available revaluation reserve:
Revaluation Reserve 4,000
Capital Adjustment Account 4,000
_________________
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SUMMARY
REFERENCES
PATCH:11853917
PATCH:11853930
NOTE:1330877.1 - Which Patch Needs to Be Applied to Obtain the UK Local Authorities Revaluation and Impairment
Enhancements for Release 12.1.x?
NOTE:1317061.1 - Assets Consolidated Patch for 12.1.X
NOTE:1315562.1 - UK Local Authorities Revaluation And Impairment Enhancements Release 12.1.x
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Example: Consumption of Economic Benefit Impairment

Oracle Assets - Version 12.1 and later

Author: Oracle Development

Revaluation Loss (new feature)

Reversal of a Revaluation Loss

The key principles of a reversal are:

Consumption of Economic Benefit (CEB) Impairments

General Fund: Revaluation Loss or Impairment Loss Neutralising Accounting Entries

The neutralising accounting entries consist of:

Capital Adjustment (for Revaluation /Impairment Loss

General Fund (For Revaluation / Impairment Loss

General Fund (For Revaluation/Impairment Loss Amount)

Capital Adjustment (for Revaluation/Impairment Loss

6. Load your asset records.

You can execute the program at:

Summary or Detail level

The logic used to create the account balances:

The program requires the following parameters:

The report displays the following information in the header section:

Report totals are available at Category and Book levels.

Identify existing asset records that do not meet above conditions.

The program requires the following parameters:

The report displays the following information at summary level:

of the implementation steps below.

The program requires the following parameters:

The report displays the following information in the header section:

The program can be executed in either Preview or Final mode.

The program requires the following parameters:

The report displays the following information in the header section:

The report displays the following columns for Impairment data:

The report displays the following columns for Revaluation data:

You can execute the program at:

Summary or Detail level

The logic used to create the account balances:

The program requires the following parameters:

The report displays the following information in the header section:

Report totals are available at Category and Book levels.

Identify existing asset records that do not meet above conditions.

The program requires the following parameters:

The report displays the following information at summary level:

1. Navigate to Oracle General Ledger Accounting Setup Manager:

3. Click Update Accounting Options for the associated Primary Ledger

10. In the Description field, enter in a description of the accounting methods.

15. Click Save icon, to save your work.

18. Click Close Window to Exit.

Enable the UK Local Authority Accounting Option

1. Navigate to the Book Controls window.

3. Open the Accounting Rules tab.

4. Select the UK Local Authority Accounting check box.

Retire Revaluation Reserve

6. Save your work.

Add Additional Account Information to Asset Categories

The steps for adding additional account information are:

2. Query the asset category to be updated.

Revaluation Loss: Expense

6. Save your work.

6. Managing Consumption of Economic Benefit Impairments

Impairments are defined at the asset level only.

The steps for performing impairments are:

Define and Upload Impairments

Define and Upload Impairments

To define and upload impairments: