Project Partners Blog


Posts Tagged ‘Oracle E-Business Suite Applications Release 12’

_________________________________________________________________________________________________________

 Project Partners Blog Author: Donna Dignam | Principal Functional Consultant 
____________________________________________________________________________________________________________________

In April 2015, FASB (Financial Accounting Standards Board) issued ASU (Accounting Standards Update) 2015-05 to assist entities to determine when a customer in a cloud computing arrangement “CCA” (i.e. hosting arrangement) included a software license.

If a CCA includes a license to internal use software, the software license is accounted for by the customer as an intangible asset.  Basically, the intangible asset is recognized for the software license, and the payments or said license made over time are recognized as a liability.  If no software license is included in the contract, the company should account for the arrangement as a service contract, and the fees associated with the hosting service of the arrangement are expensed as incurred.

The Update did not give any guidance regarding the implementation costs for activities performed in a cloud computing arrangement as a service contract.  Since the FASB guidance in this area was not explicit, the Board decided to issue an Update to specifically address the resulting diversity in practice.

Who Is Affected by ASU 2018-154?

These Amendments on the accounting for implementation, setup and other upfront costs (commonly referred to as implementation costs) apply to entities that are a customer in a hosting arrangement that is a service contract.  Oracle Cloud computing arrangements where a license is sold to the customer along with a hosting arrangement with Oracle Cloud would be one such customer.

Main Provisions of ASU 20184

The Update’s intent is to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software and hosting arrangements that include an internal-use software license.  The current accounting for the service element of a hosting arrangement is not affected.

It is up to the company to determine which implementation costs to capitalize as an asset related to the service contract and which to expense.  Costs to develop or obtain internal use software that could not be capitalized under Subtopic 350-40, such as training costs and certain data conversion cost, also cannot be capitalized for a hosting arrangement that is a service contract.  The company in a hosting arrangement that is a service contract determines which project stage an implementation activity relates to.  Project stages include preliminary project stage, application development stage or post implementation stage.  Costs incurred for the application development stage are capitalized, while those costs related to the preliminary project stage or the post implementation stage are expensed as the activities are performed.

In addition, the company is required to amortize the capitalized implementation costs over the terms of the hosting arrangement.  The term of the hosting arrangement includes the noncancellable period of the arrangement plus periods covered by:

  1. Option to Extend – customer must be reasonable expected to exercise this option
  2. Option to Terminate the Arrangement – where the customer is reasonably expected NOT to exercise this option
  3. Option to Extend or Not to Terminate – where the vendor has control of exercising the option.

Impairment guidance, as if the costs were long-lived assets, and abandonment are to be applied based upon the existing guidance in SubTopics 350-40 and 360-10, respectively.

Income Statement presentation by the entity should be the same line item as the fees associated with the hosting service of the arrangement.  Similarly, classification of payments for capitalized implementation costs in the Statement of Cash Flows are done in the same manner as payments made for fees associated with the hosting arrangement.  In the Statement of Financial Position, capitalized implementation costs are presented in the same line item that a prepayment for fees associated to the hosting arrangement would be presented.

How is This Different and Why is it an Improvement?

Currently, GAAP does not specifically address accounting for implementation costs associated with a HASC.  Therefore, the Update improves current GAAP as it clarifies accounting and aligns the accounting for implementation costs for hosting arrangements, regardless of whether a license is conveyed.

For consulting firms, the new standards present an improved selling point as costs that were previously required to be expensed can now be capitalized.  For capital intensive industries, where cloud applications are being considered and dismissed due to financial considerations around increased expenses (and resulting decreased profitability metrics) due to cloud implementation, the new standard allows a way to capitalize the costs associated to both the license and the implementation and development costs around getting that application stood up.

When Does This New Update Take Affect?

For public entities, the amendments are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. For all other entities, annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021 are required.  Early adoption is permitted at any time.

The amendments in this Update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

Have Questions?
Simply reach out to us and our experts will immediately assist, provide additional information,
and answer any of your questions.

P: #1.650.712.6203  |   Email: cfryc@projectp.com

 

Author: Wendy Lamar | Managing Principal Consultant | Project Partners
Oracle E-Business Suite R12 Project Certified Implementation Specialist


Through this three (3) part educational web-series, Project Partners will arm you with critical steps and insight into a Project Financials cost-effective solution. This unique solution offering will assist administratively burdened organizations like yours to effectively manage Project Financials around Capital spend through all phases of the Capital Lifecycle (Concept Definition, Funding Approvals, Execution, Reporting, and Managing Project Costs).

WHY CAPITAL PROJECTS? – WEBINAR REGISTRATION

CLICK TO REGISTER HERE for PART 2 of the three (3) part series as we explore the WHY and HOW to leverage EBS Project Financials for Capital Projects. We’ll walk you through the solution focused around project costing to your specific business requirements, robust functionality, and use of authorizations for expenditures to further efficiency gains and extensive return on investments.

MISSED PART 1?  Don’t Worry…CLICK HERE to get a downloadable recording so you will be up-to-speed!   

Have Questions?
Simply reach out to us and our experts will immediately assist, provide additional information, and ensure you have associated playbacks. We look forward to your attendance, and will set up a call to fully understand your needs, and offer next steps around a Project Financials cost-effective solution that best fits your organization.

P: #1.650.712.6203 Email: cfryc@projectp.com

By Wendy Lamar

Personalizations can be used to change attributes on a page, such as displayed columns or column headings. A public view is a personalization which can be configured at the user, responsibility, organization, or site level. A view displays relevant columns for a page, and can include all data or be limited by a specific search. A page that is view enabled can have one or many views, so they are useful quick reporting tools, and save the user time searching data sets for common or frequently queried subsets of data. Most views can be easily exported to Microsoft Excel.

To enable personalizations, the following profile options should be set at your user level: Read the rest of this entry »

By Wendy Lamar

Pay when paid functionality has been added to Oracle E-Business Suite as part of integration with procurement. The pay when paid functionality improves cash flow management by preventing payment to subcontractors until the customer invoice has been collected. Further, the supplier workbench provides the Project Manager improved visibility to the vendor invoice information, as well as enabling the management of invoice holds directly from the workbench. Read the rest of this entry »

Don’t miss the latest issue of our Primavera Newsletter!

You’ll find links to new on-demand webinars, invitations to new live webinars, an excellent new report by Oracle about the Changing Face of Enterprise Project Portfolio Management, and more.

Read the newsletter now.

 

 

You’re invited to view a new on-demand webinar and learn how Atkins North America uses Oracle and Project Partners Applications to support business growth.

Why a World-Class Engineering and Design Firm Uses Oracle E-Business Suite and Project Partners Applications

Atkins is one of the world’s leading engineering and design consultancies, employing some 17,420 people across the UK, North America, Middle East, Asia Pacific and Europe. It has the breadth and depth of expertise to plan, design and enable some of the world’s most technically challenging and time critical projects. View this webinar and learn how Atkins provided the infrastructure needed to free up employees’ time to focus on their customers and grow their business.

View the webinar here

By John Sasali and Kimberly McDonald Baker

As a follow up to our blog post of February 12, we want to let you know that Oracle has issued a patch to address the bug that affects Billing Extensions in Oracle E-Business Suite Projects applications.

Patch 16313327 has been released by Oracle support in a controlled status for bugs 16313327 and 10208280. Prequisites for applying this patch are as follows:

        Pre-requisite or Co-requisite, which is not included with this patch:
        Ensure to have patches 14477974:R12.PJC.B and 14667319:R12.PJF.B applied.

The following bugs are fixed by this patch:

10208280 – ERROR IN PRC: GENERATE INTERCOMPANY INVOICES FOR A SINGLE PROJECT

16313327 – PAI_ORACLE_ERROR CURSOR=31 CODE=-1458: INVALID LENGTH INSIDE VARIABLE CHARAC

By John Sasali and Kimberly McDonald Baker

We know that many, many users of Oracle Project Billing use Billing Extensions to tailor their invoicing capabilities.  You can learn more about the expanded functionality provided by Extensions in Oracle E-Business Suite Projects by visiting our resource library, where you will find two whitepapers and a presentation.

Therefore, we want to make sure everyone who uses Extensions knows that Oracle patch 13345785:R12.PJ_PF.B causes issues with Billing Extensions.  Oracle describes this patch as PERIODIC RELEASE 6 FOR 12.1.3 ON RELEASE DATE 01-FEB-2013.

This patch for Oracle E-Business Suite Release 12.1.3 causes numerous issues if you use a billing extension that creates automatic class events and you are billing expenditures on the same invoice. If your invoice is only expenditures or only events, however, you should not have any problems. 

Error messages vary but you will find the following in the log.

ORACLE error during DRAFT INVOICE GENERATION (cursor=31 code=-1458: ORA-01458: invalid length inside variable character string
          )
PAI_ORACLE_ERROR

or

ORACLE error during DRAFT INVOICE GENERATION (cursor=32 code=-1722: ORA-01722: invalid number)

Oracle has this listed as as bug 16313327.

 

By Kimberly McDonald Baker

We want to be sure you don’t miss a new case study article featured in the November 2012 issue of Profit Magazine, titled “Unifying Financial and Project Management” In this article you will learn about Colonial Pipeline Company’s integrated Oracle E-Business Suite and Primavera systems, and a few of the benefits that Colonial is receiving.

With the new, integrated Oracle system, Colonial will have all project related financial records and information in one centralized repository. Project managers and the leadership team will be able to view individual projects or overall capital spend easily. With the new system, Colonial expects time spent on monthly status reporting to decrease by 75 percent, from 8,000 to 2,000 project management hours annually.

“This is a paradigm shift of work for our project managers from doing data manipulation to actually being a project manager,” says Phillip Chandler, Financial Controls Administrator at Colonial Pipeline Company. “This allows them to support our customers both internally and externally in a more effective manner.”

Chandler says Project Partners has helped Colonial implement best practices into its processes, making the company more efficient. “The Project Partners team is sensitive to the specific needs of Colonial. At the same time, they are able to present solutions from an outside perspective that we also need to grow as a business,” says Chandler. “Project Partners has provided the expertise and professionalism that we needed for developing and implementing our project.”

You can read the full article here.