Total Reserve Is Bigger Than Adjusted Recoverable Cost After Full Retirement with Following Month Prorate Convention for Impairment Asset (Doc ID 2067532.1)

Last updated on JANUARY 18, 2023

Applies to:

Oracle Assets - Version 12.1.3 and later
Information in this document applies to any platform.

Symptoms

After performing Full Retirement with following month prorate convention for Impairment asset, Total Reserve is wrongly bigger than Adjusted Recoverable Cost.
Total reserve should NOT be bigger than Adjusted Recoverable Cost.

- Total Reserve = Deprn Reserve + Impairment Reserve
- Adjusted Recoverable Cost = Cost - Depreciation Limit Amount

Steps to Reproduce
1. 2014-01 *** Addition

    Cost                       : 120000
    YTD depreciation           : 0
    Accumulated depreciation   : 0
    Date in Service            : 01-APR-2013
    Depreciation method        : STL 12 month
    Salvage value              : 0
    Depreciation limit amount : 1
    * Begining of April

2. 2014-02 *** Impairment

    Impairment amount   : 5000

3. 2014-03 *** Full Retirement with following month prorate convention

    Date Retired        : 31-MAR-2014
    Cost retired        : 120000
    Prorate convention : *Following Month

4. 2014-03 *** Run Depreciation without period close

    Current behavior
    FA_ADJUSTMENTS ***
    SOURCE_TYPE_CODE ADJUSTMENT_TYPE FLAG ADJUSTMENT_AMOUNT
    ---------------- --------------- ---- -----------------
    RETIREMENT       COST            CR              120000
    RETIREMENT       EXPENSE         DR                5000 <--Wrong
    RETIREMENT       IMPAIR RESERVE DR                5000
    RETIREMENT       RESERVE         DR              115000 <--Wrong

    FA_DEPRN_SUMMARY ***
    PC      DEPRN_AMOUNT YTD_DEPRN DEPRN_RESERVE DEPRN_ADJ IMPAIRMENT
    ------- ------------ --------- ------------- --------- ----------
      24165            0         0             0                    0
      24166       100000    100000        100000     90000          0
      24167        10000    110000        110000         0       5000
      24168         5000    115000             0      5000          0

    [Calculation]
    Total Reserve
        = Deprn Reserve + Impairment Reserve
        = 115000 + 5000
        = 120000

    Adjusted Recoverable Cost
        = Cost - Depreciation Limit Amount
        = 120000 - 1
        = 119999

    [Result]
    Total Reserve is Bigger Than Adjusted Recoverable Cost.

    Expected behavior
    FA_ADJUSTMENTS ***
    SOURCE_TYPE_CODE ADJUSTMENT_TYPE FLAG ADJUSTMENT_AMOUNT
    ---------------- --------------- ---- -----------------
    RETIREMENT       COST            CR              120000
    RETIREMENT       EXPENSE         DR                4999 <--Correct
    RETIREMENT       IMPAIR RESERVE DR                5000
    RETIREMENT       RESERVE         DR              114999 <--Correct
    RETIREMENT       NBV RETIRED     DR                   1 <--Correct

    FA_DEPRN_SUMMARY ***
    PC      DEPRN_AMOUNT YTD_DEPRN DEPRN_RESERVE DEPRN_ADJ IMPAIRMENT
    ------- ------------ --------- ------------- --------- ----------
      24165            0         0             0                    0
      24166       100000    100000        100000     90000          0
      24167        10000    110000        110000         0       5000
      24168         4999    114999             0      4999          0

    [Calculation]
    Total Reserve
        = Deprn Reserve + Impairment Reserve
        = 114999 + 5000
        = 119999

    Adjusted Recoverable Cost
        = Cost - Depreciation Limit Amount
        = 120000 - 1
        = 119999

    [Result]
    Total Reserve is equal to Adjusted Recoverable Cost.