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FA Abandoned CIP

Discussion in 'Oracle Financials' started by MaryShmotolocha, Oct 16, 2012.

  1. MaryShmotolocha

    MaryShmotolocha Active Member

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    I just want to know how others handle a CIP asset that is abandoned prior to completion. What are the Oracle steps that you take? Do you capitalize it first or can/should you retire it without ever capitalizing it?
     
  2. Bharat

    Bharat Community Moderator Forum Guru

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    Hi Mary,

    Can you please explain what is CIP Asset?
     
  3. MaryShmotolocha

    MaryShmotolocha Active Member

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    CIP stands for Construction In Process. We use this for any asset where costs are accumulated over more than a 1 month period. Once the asset is placed in service it is transferred from CIP to Capital and begins depreciating. My question is what to Oracle customers do when a project is abandoned before it is completed. Do you retire the CIP Asset or Capitalize it first and then retire it?
     
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  4. Ramji

    Ramji Forum Guru

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    Dear MaryShmotolocha,

    It is a business decision. But from the standpoint of financial accounting what they do is they dispose of the assets of the abandoned project and the net realized adds to the cash flow and detriment reflected in the profit and loss a/c. Deferred recognition is also known in some domiciles.

    Standard practise is to mass retire them by entering the proceeds of sale and cost of removal details and calculate gains and losses.
    cheers
    ramji
     
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