Oracle Financials for India & Fixed

Assets Integration Transaction Flow

Author:

Vaishali Karanth, Souvik Mandal

Creation Date:

18-Mar-2016

Last Updated:

29-May-2016

Document Ref:
Version:

1.0

Organization: Oracle India Private Limited.

Document Control

Change Record

Date

Author

29-May-16 Vaishali Karanth

& Souvik Mandal

Vers Change Reference

ion
1A

Initial Version

Reviewers

Name

Position

Pavan Raparla
Jai Thakkar

SME, India Localization

Manager, Product Support

Name

Position

Audience

Internal & External Audience

Contents
Objective ......................................................................................................................................... 4
Scope ............................................................................................................................................... 4
Fixed Assets functionality for Oracle Financials for India (OFI) - India Localization ....................... 6
Setup Flow ................................................................................................................................... 6
Base FA Setup ........................................................................................................................... 6
Localization FA Setup ............................................................................................................... 8
Transaction Flow ........................................................................................................................... 10
Asset Addition............................................................................................................................ 10
Simulation with example .............................................................................................................. 13
Block of Asset Migration ............................................................................................................... 18
India- Claim Modvat on Retired Assets ........................................................................................ 19
India- Mass Additions Create ........................................................................................................ 19

Objective
This exclusive data model deliverable will help the users and the implementation partners to understand
in detail, the total Oracle Financials for India (OFI) India Localization & Oracle Fixed Assets (FA)
integration functionality.

Scope
OFI-FA Functionality can be classified into following major categories and its subcategories:

Setup Flow
o Base FA Setup
o OFI FA Setup
Transaction Flow
o Base FA Transaction & impact on OFI for those transactions

Asset Addition

Asset Retirement

Relevant Concurrent Programs with functionality

o India - Income Tax Act Fixed Asset Schedules
o India - Depreciation Detail Report
Procure To Pay (P2P) Cycle for Asset Items
o India - Claim Modvat On Retired Assets
o India - Mass Additions Create

Fixed Assets functionality for Oracle Financials for India (OFI) India Localization
Businesses in India, Under the Income Tax Act, have to compute depreciation using the Written
Down Value method. The depreciation percentage has to be applied on the Block Of Assets and no
depreciation can be claimed on individual assets.

Setup Flow
Base FA Setup
A. Define Asset Book:a. Enter details in Calendar Tab.

b. Enter Details in Natural Accounts Tab.

c. Save the details.

B. Assigning Asset Category to the Asset Book:-

a. Query the existing category with which you want to attach the asset book.

b. Once data is fetched, add new book to that category.

c. Click Default Rules Button and mandatory fields as below.

d. Save the details.

Localization FA Setup
A. Define Block Name:a.
Query by JAI_BLOCK_OF_ASSETS.

b.

You will be able to find the list of block of assets which are currently present in the
lookup.

You can modify existing block of assets and you can add new block of assets which
you are going to use in transaction in future.
d. Once done, save the details.
c.

B. Define Period Wise Depreciation Information:-

a. In this form, period wise depreciation rate is required to be defined. As per current
statute, if the date placed in service is in the first half of the financial year, then
depreciation for an asset block can be claimed up to 100% of the allowable
depreciation; whereas if the date placed in service is in the second half of the financial
year, then depreciation for an asset block can be claimed up to 50% of the allowable
depreciation. This setup can be done in this form.
b. Query for the required year start and year end date.

c. Data will be fetched if setup is already done. Otherwise, you can add new details.

Here, applicable depreciation Rate for first half is 100% whereas 50% is for 2

nd

half.

C. Attach the block of asset to the book and define Depreciation Rates:a. Mention Book in Book Name section for which you are going to do the setup.
Automatically, that will show you all the blocks attached and their depreciation rate.
b. OFI supports only CORPORATE BOOK and NOT TAX Book.

c.

You can insert new row for new financial year. The existing records cannot be
modified. Once the opening balance for the block is entered for any financial
year, the user cannot change it. They cannot enter the previous year balances or
subsequent year balances also.
d. If the User wants to adjust Opening Written down value of a Block after an Income
tax assessment is finished for a Particular year. The adjustment amount can be
entered here in Adjustments section and Opening WDV value will be adjusted
accordingly.

Transaction Flow
Asset Addition
a. Enter new asset details.

b. Click Continue in the above screen which will take you to below screen where
you enter the asset cost, Date placed in service and other mandatory
information.

c. Click on Continue and in the next screen enter the Expense account and
Location Details and click on Done button.

Attach the asset to the Block of Assets

a. Select the Asset book to which you want to add the asset and click on New
button.

b. The assets which need to be assigned to the block will get listed in the
below screen. It will fetch ONLY those assets which belong to the date range
defined in the above Block of Assets form.

c. Select the block to which each of these assets needs to be linked and then save.

Execute India - Income Tax Act Fixed Asset Schedules Concurrent Program
a. This report calculates closing WDV for each block at the end of
the period mentioned in the report parameter.
b. Although system allows the user to run the 'India - Income tax act fixed
assets schedule' program on day to day basis, it is strictly recommended to
run this program once towards the year end, as this would create the
opening WDV balance record of the Block of Assets for the next fin year.
c. For calculating closing WDV, following is the rule followed:Closing WDV= (Opening WDV + Additions during the year Deduction &
Sale in the year**) Depreciation
Depreciation Amount = (Opening WDV + Additions during the year Deduction
& Sale in the year)*depreciation rate %
** Deduction & Sale in the year = Proceeds of sale - cost of removal. Cost
Retired will not be considered in Deduction & Sale in the year for
calculating closing WDV as per Bug 20075754. This change is in line with
Section 43(6) of Income tax Act.
Execute India - Depreciation detail report
a. This report provides information on depreciation calculated for each asset.
b. In this report, depreciation will be calculated, but closing wdv will be mentioned as
per calculation happened in India - Income Tax Act Fixed Asset Schedules
Concurrent Program.

Simulation with example

1.1 Adding a new Asset during first half of the fiscal year worth 20000.

1.2 Addition during Second Half of the financial year.

Like how an asset is added in the case 1.1, add an asset in the Base Fixed Asset with a date
placed in service as 2002-10-31.

Once the assets is assigned to the Block, Now the next step would be to run the below
two concurrent
1. India - Income Tax Act Fixed Asset Schedules

th

The TESTING 3 asset is added with a Date placed in service as 30 April 2002 and the cost of the asset
is 20000. The depreciation rates for the block TEST is 20%. So the depreciation amount for the Asset
TESTING 3 will be 20000 * 20% = 4000
st

The TESTING 4 asset is added with a Date placed in service of 31 Oct 2002 and the cost of the asset
is 40000. The depreciation rate for the block is 20%. Since the asset is added in the second half of the
fiscal year only 50% of the depreciation rate will be charged. So depreciation amount is = (40000 *
(20%/2)) = 4000.
The abstract of India - Income Tax Act Fixed Asset Schedules output

Next step would be to run the India - Depreciation detail report

The report abstract will be as follows

Now, we can see that in the Block assignment screen, closing balance is updated for the current fiscal
year and a row is inserted for the next fiscal year with the opening balance as the closing balance of
last financial year

Whenever business incurs any additional expense for asset, that expense amount can be added to the
asset cost and in base FA this is called cost adjustment. When a cost adjustment transaction is
performed in base FA, the same cost will get reflected even in OFI forms as well as Reports.
For e.g initially asset was created with a cost of 20000. So the India - Income Tax Act Fixed Asset
Schedules report will show 20000 as cost. Later an additional cost adjustment of 10000 was done on
the same asset. So now the report will show the cost as 30000 and even depreciation will be calculated
on this cost. Same will be the case with India - Depreciation detail report.
2. Retirement:To retire the asset the navigation is Oracle Fixed Assets > Assets > Asset work bench
> Retirement.
Enter the values in retirement date, cost retired, pro and cost to be retired, proceeds of
sale etc. and save the transaction

Then run the calculate gain and loss program.

The next step would be to run the

2.1 India - Income Tax Act Fixed Asset Schedules: - The abstract of report will be as follows

Opening WDV for the block Car is = 95000

Deduction & sale = 500 which is entered as proceeds of sale while retiring the asset

Total is = Opening WDV - Deduction & sale i.e. 95000-500 = 94500

Depreciation During the year = (Opening WDV - Deduction & sale)*10%=9450
Closing WDV = Opening WDV- Deduction & sale Depreciation = 95000-(500+9450) = 85050
1.1 India - Depreciation detail report:- The abstract of report will be as follows

Opening WDV for the block Car is = 95000

Deduction & sale = 10000 which is entered as cost of retired while retiring the asset. The
amount which is entered as proceeds of sale during retirement i.e. 500 will also appear
under Deduction & sale column. However it will not be considered in total
Total is = Opening WDV - Deduction & sale i.e. 95000-10000 = 85000
Depreciation During the year = (Opening WDV - Deduction & sale)*10%=8500
*Closing WDV = Opening WDV- Deduction & sale Depreciation = 95000-(500+9450) = 85050
*Closing WDV updated here will as it is calculated in India - Income Tax Act Fixed Asset
Schedules report.

Block of Asset Migration

During migration of the assets from Legacy system to oracle Application, the recommended way to
migrate / like the assets to the block of assets is to
o

Define the blocks / financial year starting from the oldest date placed in service of the asset
which you have to migrate.

Then link the assets based on its date placed in service for each year and then run
the localization reports.
For example, if the assets are added right from the year 1980, then, first define the Block of
Assets for the financial year 1980. Then assign all the assets which have DPIS of 1980 to the
block of assets in India block of Assets" form. Run the program India Income Tax Act Fixed
Assets Schedule for the year 1980. This will calculate the localization depreciation for the block
of assets and will arrive at the closing balance for the year 1980.This also, will create another
record in the Block Of Assets Screen for the year 1981 giving the opening balance equal to the
Closing Balance of the year 1980. Now we can upload all the assets falling in the year 1981 and

Then run the India Income Tax Act Fixed Assets Schedule report. The same steps need to be
followed for all the fiscal years until we reach the current financial year.

India- Claim Modvat on Retired Assets

For Capital Goods, the Cenvat claim is allowed only to the extent of 50% of the Excise amount in
the same financial year. The balance claim could be made in the subsequent years in one or
more installments. Localization product is designed with this rule in mind and the system does
not allow a Cenvat claim above 50% against a Receipt in the financial year in which it was
received.
However, in the Notification No. 5/2002-Central Excise (N. T.) dated 1
March 2002, the rule has been modified as below:
" 2) (a) The CENVAT credit in respect of capital goods received in a factory at any point of time in a
given financial year shall be taken only for an amount not exceeding fifty per cent of the duty paid
on such capital goods in the same financial year:
Provided that the CENVAT credit in respect of capital goods shall be allowed for the whole
amount of the duty paid on such capital goods in the same financial year if the said capital goods
are cleared as such in the same financial year. "
So India Claim Modvat on Retired assets program needs to be run to claim the assets which are
placed in service and retired in same fiscal year.
For e.g
o Create A PO to buy a capital Item and with an Excise of 10% on PO in April-16
period o Create a receipt for the above PO and claim CENVAT
o Create an ERS invoice from the above receipt.
o Validate the AP invoice, create accounting and transfer accounting to GL.
o Run the Mass Additions create program. This will interface all the third party invoice
details / amounts which are having CGIN Item.
o From the FA super user responsibility, create an Asset by changing the status to POST
and entering the required information.
o Run depreciation and close couple of periods in same fiscal year and in Aug-16 retire the
asset and run the calculate gain loss program and then create accounting
o Now to claim the remaining 50% of CENVAT on the above receipt, India Claim
Modvat on Retired assets program needs to be run.

India- Mass Additions Create

This concurrent program would be invoked for interfacing the Non recoverable tax amounts to the Asset
Cost.