CAPITALIZE TAX ON ASSETS

Asset Cost comprise of all the costs incurred until the asset is capitalized in the books (i.e., cost of the asset, freight for bringing the asset to the installation area, installation/erection costs,etc.). Recoverable taxes shouldn't be included in the cost for the assets as these taxes will be recovered over period of time. However, in case of Non-recoverable taxes levied on the assets, the non-recoverable taxes forms part of Asset cost and should be capitalized when asset is created in Oracle Assets.

By default, the taxes on assets are not transferred from Payables module to Fixed Assets Module and thus taxes on purchase of assets are never capitalized as per standard set-ups readily available on Oracle Instance. In case the business wants the Non-Recoverable Taxes to be included in the Asset Cost we have to do modify/update the setup in Payable's module to ensure the same.  The step by step approach is described with the supporting screen prints for better understanding.




Navigation: Setup > Accounting Setups > Sub ledger Accounting Setup > Post-Accounting Programs Query for Program Name 'Mass Additions Create'






Select the Assignment Definition ‘Oracle Standard’ Assignment Code







Select the ‘Copy Assignment’ to create a new assignment

Enter a new assignment code and assignment name. Enter a ledger if we only want to modify the assignment for one ledger







For the new assignment code, select the 'Accounting Class Assignments'
Insert a row, selecting ‘Non-Recoverable Tax’ from the LOV






The  ‘Mass Additions Create’ accounting class assignments is seeded by Oracle and cannot be updated. Be sure to enable the assignment definition, and assign it to the appropriate ledger. Tax lines will be transferred into the MERGED queue and can be reviewed in FA in the / Assets /Asset Workbench / Source Lines window.

Now we can proceed with normal invoice creation and run create mass addition program as usual
Create a new invoice





Key in the distribution details







Click on ‘Calculate Tax’ tab to get tax calculated on invoice line




Validate Invoice and initiate approval and complete approval procedure (if required).






‘Create Accounting – Final Post’ from ‘Actions’ tab






Submit ‘Mass Additions Create’ request from Others > Request > Run






Go to ‘Assets Responsibility’
Search for invoice in ‘Prepare Mass Addition’ window from Assets responsibility






Tax lines are showing as merged and are attached to Invoice line. We need to post only invoice line and all taxes will be included in asset cost.






Change the queue of Invoice line to ‘Post’ and fill the mandatory details.




Click ‘done’ after filling all mandatory fields.





Submit Run ‘Post Mass Addition’


Query for asset from ‘Asset Workbench’






Check ‘Financial Inquiry’ for the asset. Now, Asset cost is inclusive of non-recoverable tax.