Adding Subsidy During Contract Rebook Creates Asset Adjustment Transaction
Last updated on APRIL 21, 2017
Applies to:Oracle Lease and Finance Management - Version 12.2.5 and later
Information in this document applies to any platform.
During a Transfer and Assumption, any subsidy on the contract gets accelerated. Since a new subsidy cannot be added during the T&A process, the work around that is followed is: Complete the T&A, query the contract created on the new customer and rebook the contract. During the rebook, add in the required subsidy - and then complete the rebook process. But this is triggering an Adjustment transaction is Fixed Assets where it reduces the Cost of the asset by the amount of depreciation..
Adding Subsidy during Contract rebook creates Asset Adjustment transaction in Fixed Asset. The cost of the Asset in Fixed Asset should not be reduced by the amount of depreciation
The issue can be reproduced at will with the following steps:
1. Create an OP Lease Contract on Customer A
2. Contract Start Date is 12-Dec-2015 and term is 48 Months
3. Add in an Asset with an In-Service date of 12-Dec-2015. Asset cost = $409,000
4. Contract has a Subsidy associated (For Subsidy, Net on funding is set to 'Bill' and Accounting method is set to 'amortize')
5. Book the above contract
6. This creates an Asset in FA. Asset cost = $409,000
7. Process Depreciation in FA till 31-Mar-16. It creates depreciation transaction for the asset and YTD Depreciation shows up as 15,102.57
8. Process Billing and Accrual for the contract till 31-Mar-16
9. Query the Contract and process a Transfer and Assumption as on 12-Jan-2016. Customer on Contract is Customer B. Change the Bill to address and Asset location on the contract
10. No other changes are made during the T&A. Complete the T&A
11. New Contract created on Customer B - and the old Contract is now 'Abandoned'
12. The T&A process also accelerates the subsidy accrual process
13. The T&A process also triggers an Asset Adjustment in FA for $0. This is fine
14. Query the new Contract created on Customer B - and rebook the contract
15. Rebook Revision date is 12-Jan-16
16. Add in the Subsidy to the Contract on Customer B
17. Complete the rebook process - and the Contract status turns to 'booked'
18. This triggers an Adjustment transaction in FA. The Cost of the Asset changes from $409,000 to 393,897.43. This is a reduction of $ 15,102.57 in Asset Cost in FA - which is exactly equal to the YTD depreciation on the asset
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