Asset with JP-STL Does Not Become Fully Reserved After Impairment Although Net Book Value Becomes Zero (Doc ID 2070110.1)

Last updated on APRIL 15, 2016

Applies to:

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

Symptoms

Asset with JP-STL method does not became fully reserved after posting impairment although net book value becomes zero.

1. Posting impairment for asset with JP-STL method
2. Total reserve(= deprn reserve + impairment reserve) has reached adjusted recoverable cost and net book value becomes zero.
3. However, it does not became fully reserved(= fa_books.period_counter_fully_reserved did NOT become a not null).

NOTE: This issue does NOT occur when adjusted_cost is a negative value or Zero.  Since asset with JP-STL becomes fully reserved when adjusted_cost is a negative value after posting Impairment.  Please refer to Adjusting Salvage Value After Posting Impairment for Japanese Straight Line (JP-STL) (Doc ID 1905124.1)

In other words, this issue occurs only when Salvage value is less than Depreciation limit amount.

Minimum Adjusted Cost after posting Impairment in JP-STL
Adjusted Cost
    = Cost - Deprn Reserve - Impairment Reserve - Salvage Value
    = Cost - Max of (Deprn Reserve + Impairment Reserve) - Salvage Value
    = Cost - Adjusted Recoverable Cost - Salvage Value
    = Cost - (Cost - Depreciation limit amount) - Salvage Value
    = Cost - Cost + Depreciation limit amount - Salvage Value
    = Depreciation limit amount - Salvage Value

Depreciation limit amount <= Salvage Value  --->  "Adjusted Cost = Depreciation limit amount - Salvage Value" is a negative value or Zero.
Depreciation limit amount > Salvage Value --->  "Adjusted Cost = Depreciation limit amount - Salvage Value" is NOT a negative value or Zero, so this issue occurs.


Steps to Reproduce
1.  2018-03 *** Addition
   
    Cost                       : 28942416
    YTD depreciation           : 552200
    Accumulated depreciation   : 16246771
    Date in Service            : 01-APR-2003
    Depreciation method        : JP-STL 21YR
    Salvage value              : 1394455
    Depreciation limit amount  : 95% (=1447121) Point : Salvage value(=1394455) is less than Depreciation limit amount(=1447121)


2.  2018-03 *** Override

    Period Name         : 2018-03
    Deprn Amount        : 50204
    Used by             : DEPRECIATION
    Status              : Post


3.  2018-03 *** Impairment

    Impairment date     : 01-MAR-2018
    Impairment amount   : 11198320


fa_books ***
header_id_in cost     adjusted_cost deprn_method salvage_value
------------ -------- ------------- ------------ -------------
      737059 28942416      27547961 JP-STL 21YR        1394455
      737099 28942416         52666 JP-STL 21YR        1394455

allowed_deprn_limit_amount period_counter_fully_reserved
-------------------------- -----------------------------
                   1447121                              
                   1447121                              <--Wrong.  It should be Not a null

fa_deprn_summary ***
counter deprn_amount ytd_deprn deprn_reserve impairment_reserve
------- ------------ --------- ------------- ------------------
  24215            0    552200      16246771                  0
  24216        50204    602404      16296975           11198320


Total reserve
    = deprn_reserve + impairment_reserve
    = 16296975 + 11198320
    = 27495295

Adjusted recoverable cost
    = Cost - allowed_deprn_limit_amount
    = 28942416 - 1447121
    = 27495295


It should be fully reserved and set period_counter_fully_reserved because total reserve has reached adjusted_recoverable_cost and net book value becomes zero.

Cause

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