Oracle Assets uses the prorate convention to determine how much depreciation to take in the first and last year of an asset's life, based on when you place the asset in service. Since assets can be acquired at any time in a given period, there must be a convention for determining how much depreciation to take in each instance. The prorate convention and the date placed in service determine the prorate date.
Note: For assets to depreciate properly, prorate conventions must account for every date in the fiscal year.
Oracle Assets uses the prorate date to determine the prorate period in your prorate calendar. If you retire the asset before it is fully reserved, then Oracle Assets uses the prorate date from the retirement convention to determine how much depreciation to take in the asset's last year of life.
If you retire an asset before it is fully reserved, Oracle Assets uses the retirement convention to determine how much depreciation to take in the last year of life based on the retirement date.
Attention: Remember that the prorate convention, retirement convention, and depreciation method work together to produce the depreciation amounts. You must set up depreciation rates for each prorate period.
Oracle Assets allows you to create your own prorate conventions.
In this example, you create a prorate convention called Half-Quarter, in which you divide each quarter into two periods. This prorate convention requires you to create a total of eight prorate periods (two per quarter):
| Prorate Convention | Period | Prorate Date | # of Prorate Periods |
|---|---|---|---|
| Half-Quarter | 01-JAN-1998 to 15-FEB-1998 | 15-FEB-1998 | 8 |
| Half-Quarter | 16-FEB-1998 to 31-MAR-1998 | 31-MAR-1998 | 8 |
In this example, you create a prorate convention called Following Half-Year, in which the prorate date is the first day of the following period:
| Prorate Convention | Period | Prorate Date | # of Prorate Periods |
|---|---|---|---|
| Following Half Year | 01-JAN-1998 to 30-JUN-1998 | 01-JUL-1998 | 2 |
| Following Half Year | 01-JUL-1998 to 31-DEC-1998 | 01-JAN-1999 | 2 |
In this example, you create another half-year prorate convention called Mid-Half-Year, in which the prorate date falls at the half-way point of the period:
| Prorate Convention | Period | Prorate Date | # of Prorate Periods |
|---|---|---|---|
| Mid-Half Year | 01-JAN-1998 to 30-JUN-1998 | 31-MAR-1998 | 2 |
| Mid-Half Year | 01-JUL-1998 to 31-DEC-1998 | 30-SEP-1999 | 2 |