Asset Management

Introduction

            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. 

Types of Asset 

• Current Assets
• Fixed Assets
• Leased Assets

          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.

             The assets which you are borrowed from others or took ownership for a certain period of time or property on contract can be stated as Leased Assets. Example a building you took for rent for a period of 1 year which you need to give back to the actual owner.

Process Flow:

The basic flow in PeopleSoft Asset Management is as follows:

1. Create an Asset
2. Calculate Depreciation
3. Create Accounting Entries
4. Close Depreciation
5. Generate Journals

1. Create an Asset: 

        An Asset can be created in 4 ways

• Online Creation (Navigate to Main Menu--> Asset Management --> Asset Transactions --> Owned Assets --> Express/Basic add)
• Through Project Costing 
• Through Accounts Payable
• Through File loading (Interface/ Excel to CI)

2. Calculate Depreciation:

Depreciation: The reduction in the value of an asset over the period can be stated as Depreciation. This can be calculated based on the cost and useful life of the asset. For example the cost of a Computer (Asset) is Rs. 36000/- and life (defined as per the accounting standards) of the asset is 36 months (3 years) then the Depreciation would be Cost/Life i.e. 36000/36 = 1000p.m.

                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. 

Navigation: Asset Management--> Depreciation--> Processing--> Calculate 

After running the process review the depreciation in the below navigation

Navigation: Asset Management--> Depreciation--> Review Depreciation Info --> Asset Depreciation

Accounting Entry Creation

                   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:

• Create Accounting Entries (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.

3. Create Accounting Entries:

            When the Accounting Entry Creation process runs, it looks at the combination of asset category, cost type, transaction type, and transaction code for each transaction. Recall our discussion about the accounting entry template setup. Based on the given combination, it selects the appropriate template and uses that information to create accounting entries. This process can be executed as many times as needed.
 
 Navigation: Asset Management--> Accounting Entries--> Create Accounting Entires

Process Name: AM_AMAEDIST

We can review the asset's accounting entries after the accounting entry creation process completes successful.

 Navigation: Asset Management--> Accounting Entries--> Review Financial Entries

4. Close Depreciation

               The Depreciation Close process creates the accounting entries for depreciation for an open accounting period. It uses the DPR (Depreciation) and PDP (Prior depreciation period) accounting templates.

Note: The Depreciation Close process should be run only once for each accounting period. No transaction activity should be performed after this process is run.

The Depreciation Close process offers two run options:

• Rerun Deprecation Close: When this option is selected and no accounting entries exist, the process creates the depreciation accounting entries. If the entries are already created, no action takes place.
  
• Reverse Posted Entries: When this option is selected and journal entries are already created, the process reverses these entries.
  Running the process with both of the previous options selected results in old accounting entries being reversed and new depreciation accounting entries created with new depreciation amounts.
  

Navigation: Asset Management--> Accounting Entries--> Close Depreciation

5. Generate Journals

              Once all the transactions are done and entries are created at the  subsystem level then the same needs to be sent to Ledger books. To do so we need to create the Journals for the subsystem entries by running the FS_JGEN process in the below navigation:

Navigation: General Ledger--> Journals--> Subsystem Journals--> Generate Journals

Note: Before running this Process  you need to setup the Journal Generator Template and an Accounting Definiton which will define your subsystem.

All the above mentioned steps explains  the basic flow of the Asset Management.


More On Asset Management

Asset Transaction Types
Configuring the Asset Management
Tables In Asset Management