CAPITAL PROJECT ACCOUNTING Supplier Invoice

A project related supplier invoice is created for a capital project. It is validated, accounted and entries are transferred to GL. So, a Supplier invoice debits an account XXXX. This should be a CIP account (construction in progress), which is an Asset type account in GL. When you capitalize the project, the system is populating the mass addition 'clearing account' field with the account debited by Projects (for Supplier invoice it is by AP). This will be the XXXX account. The Expense Account should be the account you intend to charge periodic depreciation costs. The Asset Account should be the account you intend to charge the value (the cost) of the asset in GL balance sheet. Both, expense and asset, accounts are derived from the asset category. If you have not defined asset categories, the system will use the default accounts from the system implementation setup. Usually when you create an asset in Projects, before capitalizing, you are expected to setup the asset category. Asset category derives accounting and depreciation method. The CIP Cost account and not CIP Clearing Account of account type 'Asset' should be used for charging the capital project related supplier invoices.

A scenario where different Expenditure Types are associated with different CIP Cost Account
Oracle generates multiple asset lines by summarizing the expenditures from a capital project based on - Grouping level (project or, top task, or lowest level task), grouping method (expenditure categories or types) and CIP accounts. if we create many supplier invoice transaction for the same project using different expenditure types (mapped to different CIP cost accounts Based on the setup), say YYYY as a different account, and there is asset assigned at project level, then you will get multiple asset lines in the Mass Addition table.

Account for supplier invoice transactions

In General, when you post the supplier invoice transactions from Oracle Payables to Oracle General Ledger before sending them to Oracle Projects. Workflow determines the accounts for the following journal entry for Oracle Payables: CIP Cost Accounts Payable Liability Dr

Cr

Account for expenditure items entered in Oracle Projects

Labor Cost CIP Cost Labor Cost Clearing/Payroll Liability Usage Cost CIP Cost Usage Clearing

Dr

Cr

Dr

Cr

Account for a capitalizable adjustment

After reviewing the costs in projects, you realize that you cannot capitalize some cost such as penalty which was charged using a SI in AP. You change the transaction from capitalizable to non-capitalizable in PA. Oracle Projects interfaces the supplier invoice adjustments to Oracle Payables when you run the Distribute Supplier Invoice Adjustment process. Oracle Payables posts the reversing entry for the adjustment to Oracle General Ledger.

Expense Account(eg. Penalty) CIP Cost

Dr Cr

Accounting for Asset Costs

Each asset line created by the Generate Asset Lines process has an associated general ledger account. After you capitalize (place in service), send, and post the asset line to Oracle Assets, you can run the Create Journal Entries process in Oracle Assets to create a journal entry to transfer the costs from the CIP account (associated with the asset lines) to the asset cost account (determined by the asset category assigned to the asset).

Asset Cost Account CIP Cost

Dr

Cr