Planning and accounting capital expenditure using Oracle Cloud ERP and EPM 

Fusion Practices

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Aug 16, 2022

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Often customers ask us which modules within Oracle Cloud offerings allow us to manage the capital spend, its accounting and forecasting. The answer is “horses for courses” because the real answer is distributed across Oracle PBCS, Oracle Cloud PPM and Oracle Cloud Fixed Assets.  

Purpose of each module is summarised below 

  • Oracle PBCS Capital Asset Planning Module (EPM)– To prepare a financial plan and setting up associated budgets within the system  
  • Oracle Fusion Project Costing (ERP) To track capitalisation project, enable project accounting and conversion on completion of the project  
  • Oracle Fusion Fixed Assets (ERP)– Record depreciation, transfers, impairment, revaluations, and other adjustments on fixed assets  

Now let’s go into the details   

Planning for existing and new capital assets   

Oracle PBCS offers a Capital Asset Planning module that allows the planning of existing and new capital assets, maintenance, transfers, and depreciation while analysing their impact on income, balance sheet, and cash flow, and full support for modelling lease agreements per IFRS 16. This module enables the user to plan for new standalone or existing assets with a framework that supports depreciation and amortisation calculations using different methods as required. It supports –  

  • Strategic decision-making like funding for investments,  
  • Buy v/s lease comparisons, etc.  

The module within PBCS is integrated with the financial module where balance sheet, income statement, and cash flow forecast/budgets are prepared. Existing fixed assets with appropriate data can be easily loaded from source systems to start the planning process for the user into PBCS 

Using Capital Asset Planning, users can perform tasks such as: 

  • Perform driver-based calculations to assess the influence of changes and additions on profit, cash flow, and funding  
  • Requesting and approving capital expense plans  
  • Anticipating the impact on the financial statement given transfers, impairments, retirements, and replacements  
  • Further the product allows you to define its custom elements to accommodate any specific requirements. Using out-of-the-box multidimensional functionality and flexible planning methods, the planning process can be designed to allow capital funding allocations and expenditure planning and modelling across specified key plan dimension intersections, such as capital asset, capital asset class, and project. Oracle Cloud allows users the full ability to calculated depreciation/amortisation of existing assets (tangible and intangible), with several Out of the Box depreciation/amortisation methods and conventions. Depreciation methods can be defined for assets, asset group, asset components and can be calculated by month, year, or any other time interval  

Project Accounting -  

  • Oracle Fusion Project Costing comes with inbuilt capabilities to support the capitalisation of projects at the end of completion  
  • Project Costing module has integration with Fusion Fixed Assets. All the costs incurred for the CIP project can be accounted and parked as CIP cost through Oracle Fusion Fixed Assets  
  • On completion of a project, CIP assets are converted into capitalised assets and an accounting engine within Oracle ERP Cloud automatically performs the accounting which transfers CIP cost into the capitalised cost.  
  • Resources can be allocated to capitalisation projects and utilisation can be monitored.  

  Asset Transactions – Oracle Fusion Fixed Assets comes with inbuilt capabilities to record transactions like depreciation, transfers, adjustments, impairment, revaluation, etc. against all the assets. 

Periods can be managed for fixed assets whereby as soon as all the transactions are completed, the system can calculate depreciation for the month and close the period.  Reports such as asset register, depreciation reserve report, CIP report, asset balances report, etc. are available as out of the box with Oracle Fusion Fixed Assets.  

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