Chapter 5. PeopleSoft Asset Management Module

The Asset Management module is part of the Asset Lifecycle Management solutions offered by PeopleSoft. In accounting terms, assets are categorized as current assets such as cash, accounts receivable from customers, investments, and so on, and fixed assets, such as vehicles, buildings, land, and so on. The Asset Management (or AM as it is commonly referred to) module is critical for an organization that needs to maintain and track a large number of fixed assets. It offers features that help us to add new assets, perform transactions during their useful life right through to their retirement, and record the accounting entry details in accordance with regulatory requirements.

In this chapter, we will familiarize ourselves with the following important AM topics:

• High-level overview of Asset Management processes

• Understanding important configurations, such as asset books, asset categories, asset profiles, and so on

• Capital acquisition plans

• Adding new...

Asset Management processes

Before we get into the process flow in the AM module, let's take some time to understand a few basic concepts.

Accounting standards treat the fixed assets differently from current assets. For example, when an organization buys stationery items such as pens and notepads, they are considered as business expenses and are immediately recognized. Similarly, other assets such as cash, securities, and so on are called current assets. On the other hand, assets such as machinery, buildings, and vehicles are known as fixed assets. Fixed asset purchases, although paid for fully, are considered as expenses over a period of time.

Any asset (we'll be referring to only fixed assets in this chapter) has a specified useful life. This is the duration for which an organization can reasonably use that asset for its business activities. For example, a car can have a useful life of eight years, while the same can be three years for a computer. Throughout the life of an asset, its initial...

Understanding important asset configurations

Although Asset Management needs various configurations to be completed for a successful implementation, we'll consider a few critical setups in the following section. These configuration activities are:

• Configuring asset books

• Configuring asset categories

• Configuring asset profiles

• Configuring cost types

• Configuring transaction codes

• Configuring accounting entry templates

• Configuring depreciation conventions

• Configuring depreciation schedules

• Configuring depreciation limits

Configuring asset books

An asset book is used to define cost and depreciation rules for assets. In real life, organizations may need to follow multiple accounting policies and conventions due to the different countries or states in which they operate. PeopleSoft allows us to configure as many books as are needed and assigned to an asset. This approach offers flexibility to process an asset in different ways to comply with multiple regulatory requirements.

Follow this navigation to...

Capital acquisition plans

As we briefly discussed earlier, capital acquisition plans are important to plan future asset acquisitions. We link them to assets once they are acquired to track the planned asset costs with the actuals. PeopleSoft allows us to create individual capital acquisition plans as well as high-level plans with multiple subsidiary plans for complex acquisitions.

Follow this navigation to create a new capital acquisition plan:

Asset Management | Asset Transactions | Capital Acquisition Planning | Create (CAP) Plan

The following screenshot shows the Details tab of the page:

• CAP Class: This field shows the PeopleSoft delivered options New, Necessity, Cost Reduction, and Expansion. When we create a new plan, the status has to be New.

• CAP Details: As you can see, the given plan has more than one entry, as we need to purchase two assets.

  • O riginal/Adjustment Switch: When a new plan is created, the value in this field must be Original. If we modify the existing plan, it...

Adding new assets

Recording an asset in the Asset Management system can be done in three different ways:

• Using online asset additions (manual)

• Uploading assets details using Excel spreadsheets

• Interfacing assets from external sources using Transaction Loader

Asset Management records two types of asset details:

• F inancial information: These details include all the elements needed for accounting transactions of an asset, such as asset cost, books, depreciation method, useful life, and so on.

• Physical information: These details include all the physical attributes such as tag (serial) number, manufacturer, and so on.

An important feature offered by the AM module is the capitalization threshold. Some organizations may need to capitalize their purchases as capital or non-capital depending on the asset cost. We can specify an amount threshold beyond which the system can automatically categorize the assets as capital. PeopleSoft offers the following categories for the assets:

• Capital assets: These...

Processing depreciation

So far we have seen the basic configurations for performing depreciation and basic depreciation concepts. Now let's see how PeopleSoft AM performs the depreciation processing. PeopleSoft delivers the batch process Depreciation Calculation (AM_DEPR_CALC). This selects the assets based on the input parameters, refers to the depreciation attributes specified for the asset, and calculates depreciation amounts.

Note

This process only populates values in the depreciation table. It does not create any accounting entries.

Running Depreciation Calculation process

Follow this navigation to execute the Depreciation Calculation process:

Asset Management | Depreciation | Processing | Calculate

The following screenshot shows the run control page where we can specify the parameters for the process:

As you can see, we can specify the values for Business Unit, Book, and Asset ID to narrow down the processing or leave these fields blank so that all assets are processed.

Click Run to...

Understanding asset adjustments

An organization encounters various situations where changes need to be made to the asset details. These changes can be related to the physical or financial data. Physical asset details changes are limited to physical attributes such as color, weight, and so on, and they don't affect the asset value or depreciation. On the other hand, changes to financial data such as asset cost, category, depreciation convention, and so on impact the depreciation calculations and have tax implications.

PeopleSoft offers the following options for asset adjustments:

• Addition: This option is used to make any additions to the asset cost. The COST table in asset management tracks all transactions for an asset. This option results in an additional cost line with the ADD transaction type in the COST table.

• Adjustment: This option is used when a change (positive or negative) needs to be made to the asset cost. Positive adjustment is similar to the addition option given previously...

Understanding asset retirements

Every asset needs to be retired at some point of its useful life. It can either serve its entire useful life and then retire or retire before completing its useful life. Consider two scenarios to understand this. A laptop may be retired at the end of its (hypothetical) useful life of five years. It is quite obsolete now and doesn't serve any useful purpose. On the other hand, a truck (with a hypothetical life of 10 years) can meet an accident just a year after its purchase and get completely damaged without any chance of repair. Thus it needs to be retired prematurely. We'll later see various methods by which we can dispose off the assets after retirement.

Just like asset transfers, we can retire assets fully or partially.

On the other hand, sometimes retired assets are brought back into service. This is known as reinstatement.

Manual asset retirement

Follow this navigation to access asset retirement page:

Asset Management | Asset Transactions | Asset Disposal...

Creating accounting entries

Because Asset Management is a part of financial applications, one of its important functions is to maintain accounting entries for various asset transactions. We saw that PeopleSoft offers the following delivered transaction types: ADD, ADJ, TRF, RCT, DPR, PDP, RET, LPY, and INF. These represent various transactions for which accounting entries are created.

In PeopleSoft AM, there are two different processes that create accounting entries:

• Accounting Entry Creation (AM_AMAEDIST), which creates accounting entries for all non-depreciation transactions

• Depreciation Close (AM_DPCLOSE), which creates accounting entries only for depreciation in an accounting period

Note

Every time a transaction such as asset addition, adjustment, transfer, and so on is performed, the system creates an open transaction. This transaction remains open till it is processed by one of the previous processes.

Accounting entry creation (AM_AMAEDIST) process

When the Accounting Entry Creation...

Loading reporting tables

We already discussed how PeopleSoft calculates depreciation using the Depreciation Calculation batch process. The AM module offers various delivered depreciation reports such as Depreciation by Period, Depreciation by Fiscal Period, and Depreciation Activity. In order to use these depreciation reports, we first need to execute a batch process known as Load Reporting Table (AMDPREPT).

Follow this navigation to run this process:

Asset Management | Financial Reports | Load Reporting Tables | Depr Reporting Table

The following screenshot shows the run control page used to specify the process parameters:

This process loads the depreciation details for assets in the Depreciation Reporting table (DEPR_RPT). All of the depreciation reports derive their data from this table, so it is important to load it using the batch process regularly.

• Use Open Trans : When this checkbox is selected, it instructs the system to process only the new open transactions. Recall that...

Reviewing open transactions

As we briefly saw earlier, open transactions are created when we perform asset additions or adjustments. Each asset open transaction can have multiple transaction types, such as addition, retirement, reinstatement, and so on, associated with it.

Open transaction review is important because it allows us to know the asset processing status.

Follow this navigation to review open transactions for an asset:

Asset Management | Depreciation | Open Transactions | Review

The following screenshot shows the open transaction details for an asset for the ADD (Asset addition) transaction type:

• Depreciation Calc Status : This field shows the status of depreciation performed for this asset. A status of Complete means that the depreciation has been calculated.

• Acctg Entry Creation Status : This field tell us if accounting entries have been created and sent to General Ledger.

• Reporting Process Status : This field indicates if depreciation details for this asset have...

Summary

The Asset Management module is used to maintain an organization's fixed assets. These assets are characterized by the need to capitalize and depreciate them. New assets can be added using online pages or loaded automatically using the delivered interface program known as Transaction Loader.

Assets can be linked to multiple asset books to ensure that they can be processed differently according to different accounting regulations. An asset profile sets the default rules for asset processing, such as the depreciation method to be used, which are inherited by assets using that profile. This significantly reduces the new asset data entry efforts. If needed, these default rules can be overridden for an individual asset.

PeopleSoft delivers a set of transaction types that describe all possible actions (such as addition, adjustment, retirement, and so on) that we can perform. Accounting templates define the accounts to be used for each combination of asset category, cost type, transaction...