SAP Assets Accounting Depreciation

November 8, 2016 by Neel Rao

Filed under SAP

Last modified November 8, 2016

SAP Assets Accounting Depreciation

SAP Assets Accounting Depreciation

The depreciation is collectively executed at the company code level. Each asset master contains the necessary information to calculate the depreciation like:

Capitalization date
Depreciation areas
Useful life
Scrap Value
Asset Value Date

The depreciation run is an important periodic processing activity which takes care of calculating depreciation for the assets. This run posts the corresponding transactions in both AA and FI. The depreciation calculation is done through AFAB session and the AFAB posting session posts the different depreciation areas ‘01’ and ‘15’. Test run can be executed for individual asset or entire fixed asset depending upon the requirement.

System posts following entry.

Depreciation A/c Dr
To Accumulated Depreciation  A/c Cr

The depreciation posting can be done as per following.

  1. Planned posting run
    2. Repeat
    3. Restart
    4. Unplanned posting run

Planned posting run: It is used to post depreciation of the asset at the end of planned period. The planned period is going to be every month end.

Repeat: If we want to post additional depreciation for any additional posting after planned posting run, it can be achieved through repeat posting run. If any asset is booked after planned posting run, depreciation of the same can be posted using repeat run in the same period provided period is open.

Restart:
It is used to complete depreciation run which is aborted or not completed due to technical reasons like server is not working during depreciation run.

Unplanned:
It is used to calculate depreciation other than normally defined planned posting cycle. In case of any gap between the planned posting period, the accumulated depreciation for the gap period can be posted together by the unplanned depreciation run.

Manual Value Correction- Unplanned Depreciation: (ABAA)

If we want to post additional depreciation which is not considered while depreciation posting run, it can be done through unplanned depreciation. In this case we have to mention amount of depreciation which is not considered against individual asset. This is called as Unplanned depreciation. Asset value date should be on or after capitalization date. Unplanned amount of depreciation posted is initially recorded in Asset module only. It is posted to FI when depreciation run is executed.

SAP T code to be used

Depreciation Run    :  AFAB
Depreciation Simulation    : S_ALR_87012936
Manual value correction-unplanned depreciation    :  ABAA

SAP Assets Accounting End User Documents

This set of documents explain in step by step manner with screenshots, how to do transaction in SAP FI Assets Accounting (FI-AA).

These documents can be used for power user training or end user training in the final preparation phase during implementation.

These documents help you to understand how to run transactions in SAP and complete your business process. These documents are very helpful for the entire sap user even if they are new to SAP screens.

In this document set we cover following transactions

Master data

AR31 Edit Worklist

AS01 Create Asset

AS02 Change Asset

AS03 Display Asset

AS05 Lock

AS06 Delete

AS11 Create Sub Number

AS21 Create Group Asset

AS24 Create Group Asset Sub Number

AW01N Asset Explorer

Acquisition

ABGF Credit Memo in Next Year

ABGL Credit Memo in Current Year

ABZON Acquisition with Automatic Offsetting Entry

F.14 Post Recurring Entries

F-47 Down Payment Request

F-48 Create Down Payment

F-90 Acquisition with Vendor

F-91 Clearing Offsetting Entry

FBD1 Enter Recurring Entry

Transactions

AB02 Change Asset Document

AB08 Reverse Asset Document

ABAON Sale without Customer

ABSO Miscellaneous

ABUMN Transfer within Company Code

ABZU Create Write Up

AIAB AUC Settlement with Line Items

AIBU AUC Settlement

AIST Reverse Settlement of of AUC

Retirement

ABAVN Retirement by Scrapping

AR31 Mass Retirement

F-92 Retirement with Customer

Period End Closing

ABAA Unplanned Depreciation

AFAB Depreciation Run Execution

AFAR Recalculation of Depreciation

Reporting

S_ALR_87011964 Asset Balances

S_ALR_87011979 Physical Inventory List

S_ALR_87011990 Asset History Sheet

S_ALR_87012004 Total Depreciation

S_ALR_87012039 Asset Transactions

S_ALR_87012050 Asset Acquisition List

S_ALR_87012052 Asset Retirements

S_ALR_87012936 Depreciation Simulation Forecast

S_ALR_87099918 Primary Cost Planning

Year End Closing

ABST2 Preparation

AJAB Asset Year End Closing

AJRW Asset Fiscal Year Change

 

SAP Assets Accounting Configuration Document

This document explain SAP FI Assets Accounting (FI-AA) and in step by step manner with the help of system screenshots.

This document is very useful for all SAP FI consultant and or who are having aspiration to be FI consultant. This document helps you to understand sap FI Assets Accounting (FI-AA) configuration in systematic manner and you need not to waste your time in SPRO for Assets Accounting (FI-AA) configuration.

You can use this document for learning and implementing projects. If you are going to attend SAP certification examination, this document may help you to understand the concept of SAP Assets Accounting (FI-AA) and configuration option available for the same.

This document covers following aspects of configuration,

  1. Chart of Depreciation
  2. Assets Class
  3. Assets Master Data Screen layout
  4. Number range for assets master
  5. Integration with general ledger
  6. Valuation
  7. Depreciation Area
  8. Depreciation key configuration
  9. Assets Data transfer or migration
  10. Reporting

 

SAP Assets Accounting Concept Document

The Asset Accounting (FI-AA) component is used for managing and supervising fixed assets with the SAP System. In Financial Accounting, it serves as a subsidiary ledger to the General Ledger, providing detailed information on transactions involving fixed assets.

The system also offers special functions for leased assets, and assets under construction. The system enables you to manage values in parallel currencies using different types of valuation. These features simplify the process of preparing for the consolidation of multi-national group concerns.

The Plant Maintenance (PM) component offers functions for the technical management of assets in the form of functional locations and as equipment. The Treasury (TR) component offers special functions for managing financial assets

SAP Assets Accounting Concept Document

This document explains about what all concepts are involved in SAP Assets Accounting (FI-AA). This presentation helps you to understand

  1. Assets Accounting as Sub Ledger
  2. Assets Class
  3. Chart of Depreciation
  4. Assets Master Data (Create / Change)
  5. Acquisition
  6. Retirements
  7. Depreciation
  8. Transfer
  9. Period / Year end Closing
  10. Reporting

This document is in the form of PPT. You may use this document for your self study and client demo. This readymade presentation helps you to make your client understand the potential of SAP Assets Accounting (FI-AA) functionality.

This is a base level of document. If you are new to SAP Assets Accounting (FI-AA) or you are working in other sap module (like SD, HR, MM, PP … etc). You will find this document very useful. This will make you understand SAP Assets Accounting (FI-AA) very clearly and very quickly.

Hi Rajen ,

The accounting entries are as follows:

1. Sale of an Asset

Sales A/c Dr
Accumulated depreciation A/c Dr
To Asset A/c
In addition to the this an expense a/c will be either dr or cr depending upon loss on sale or profit on sale.

2. Purchase of an Asset

Asset A/c Dr
Trade A/P GR/IR A/c
This entry takes place at the time of GR of the Asset.

3. Retiring an Asset/Scrapping an Asset

Accumulated Depreciation A/c Dr
To Asset A/c

4. Depreciation Posting

Depreciation expense A/c Dr
To Asset A/c

As regards to the Depreciation Areas that depends from a client to client basis. As per my experience you would mainly need 3 depreciation areas- US GAAP, Indian GAAP and Tax reporting. apart from these 3 you will also need 1 for group currency.

Let me know if this answers your query : What is planned and unplanned depreciation?

The depreciation can either be planned or unplanned.

 

Planned depreciation is one which brings down the value of the asset after every planned period; say every month, until the asset value is fully depreciated over its life period. With this method, you will know what the value of the asset at any point of time in its active life.

 

On the contrary, unplanned depreciation is a sudden happening of an event or occurrence not foreseen (there could be a sudden break out of a fire damaging an asset, which forces you to depreciate fully as it is no longer useful economically) resulting in a permanent reduction of the value of the asset.

 

Posting Depreciation

Purpose

Every asset transaction in the Asset Accounting (FI-AA) component immediately causes a change of the forecasted depreciation. However, an asset transaction does not immediately cause an update of the depreciation and value adjustment accounts for the financial statements. The planned depreciation is posted directly to Financial Accounting (FI) when you run the periodic depreciation posting run. This posting run posts the planned depreciation for each posting level for each asset as a lump sum amount.

Process Flow

The calculation and scheduling of depreciation, interest and revaluation are automatically controlled by keys in the system, or you can control them manually using a special posting transaction. In both cases, planned depreciation from Asset Accounting has to be periodically posted to the corresponding asset and expense accounts of the general ledger. In addition to the various depreciation types, interest and revaluation, this posting run also posts the allocation and write-off of special reserves.

Sap

Sap

Starting the Posting Run

To call the depreciation posting report, on the SAP Easy Access screen, choose Periodic Processing ® Depreciation Run ® Execute.

Run the report periodically (annually, semi-annually, quarterly or monthly). This report posts depreciation amounts directly to Financial Accounting (FI). You can only start an update run of this report in the form of background processing. You can also schedule the report using the Schedule Manager (for example, as part of periodic closing operations). Regardless of whether or not you use the Schedule Manager to schedule the depreciation posting run, the Schedule Manager is used to store the error log, the output lists and the job log, and you can use the monitor to access these later.

For more information on:

  • The output list: see the documentation for the Log for Posting Run report.
  • Correcting errors

Purpose of the Posting Run

On the selection screen of the report, specify the specific activity you want to perform in the posting run:

  • Planned posting run: You post to the next period that is specified according to the posting cycle. During a regular posting run of this kind, the system does not allow for limiting the run to particular assets. As long as the last normal period was already posted, it is possible to post to special periods in Financial Accounting. This is generally required, when certain measures for the year-end closing (regarding accounting policy) should be kept from distorting the results for the last normal period. Start a planned posting run by entering any special period (for example, 13). When you have a non-calendar fiscal year, you still have to enter the FI period to be posted, rather than the calendar period. For more informationsa.
  • Repeat posting run: You can request a repeat posting run for the last period posted. A repeat run might be necessary, for example, if the depreciation terms were changed for individual assets in connection with the year-end closing. During a repeat posting run, the system only posts the differences that resulted between the first posting run and the repeat posting run (no double posting). You can limit the run to particular assets.
  • ¡ Catch-up method

When you use the catch-up method, the system calculates depreciation over again from the start of the year (or depreciation start) up to and including the depreciation period you are now posting. The difference between this amount and the total depreciation already posted is the new depreciation amount that is posted in the case of a repeat run. As a result of this recalculation of depreciation, new postings and changed depreciation parameters are included in the repeat run.

  • ¡ Smoothing

When you use the smoothing method, the annual depreciation that is still to be posted is distributed evenly over the periods that have not yet been posted. There is no recalculation of depreciation, as there is when the catch-up method is used. Once a period is posted, there can be no new posting to the same period. Any changes to depreciation terms, and/or any new acquisition postings, become effective only in the following period. The only exception is when a new asset is created. Depreciation is then posted for this asset in the repeat run, since no depreciation was posted for it up to that point.

  • Restart: If the posting run terminates for technical reasons or because user errors are found, you have to start the report over again in restart mode. Using the restart mode ensures that all system activities are repeated that were not completed in the run containing the errors. In a restart run, only those assets are processed and displayed in the log that were not processed successfully in the prior run.
  • Unplanned posting run: If you want to skip over one or more posting periods, specify an unplanned posting run. The system then posts for all periods that were skipped, as well as for the period entered. The posting period that you specify, however, has to fit into the posting cycle. If you specify period 7, for example, for a quarterly posting cycle, no posting will occur.

Further Options

You also have the following options:

  • You can specify if you want the report to list all assets separately, or if you want them to be shown in summarized form. Keep in mind that the output list can become very large if you have a high number of assets. It is also possible to create a list by individual asset later using the log report.
  • You can specify if you want entries to be shown only for assets for which there are values to be posted in the current period. If you select Display all values, then the report generates entries for assets even if they only have planned or posted values in the current year.
  • You can specify that you want a separate list showing manual depreciation.
  • You can enter an ALV layout that specifies how you want the output list to be formatted. You can create this kind of layout interactively in the output list itself, and save it for later use.
  • You can execute the depreciation posting run in parallel on different servers by entering a server group. This distributes the calculation burden to several application servers. We recommend this procedure when you have large datasets and long runtimes. For more information, see the online help documentation for the Server Group field.

Test Run

You can start the posting run first as a test run. We recommend this, particularly if you are starting the posting run for the first time, or if significant changes have been made to your data or to your system configuration. The functions of the test run are explained below:

  • During a test run, the system performs all of the same checks as for an update run. The system checks in particular the validity of all existing account assignments (for example, to cost centers or internal orders).
  • The system simulates all accounting documents that would be created. You can go to the simulated document by double clicking on the document number. If you start the test run in the background, a spool list is created for each simulated document.
  • You can limit the test run to particular assets.
  • You can execute a test run at any time, even after a terminated posting run. This is especially useful for analyzing errors that occurred in an update run.

Graphic: Catch-Up/Smoothing

The following graphic shows the depreciation posted for an acquisition made during the fiscal year, depending on which posting procedure is used. The depreciation posted using the two methods is compared to depreciation for an acquisition at the start of the fiscal year.

The depreciation data are as follows:

Depreciation posting cycle: Monthly
Period control: Half year convention
Acquis. on May 5, 1996 (asset value date) 12,000
Depreciation start date: Jan 1,1996
Planned useful life: 10 years

Sap2

Sap2

The Period Control Method is one of the 5 methods used to determine the depreciation key, which in turn depreciates your particular asset.

Other 4 methods are –
Multi-level Method
Base Method
Declining Balance Method
Maximum Amount Method

Now, PCM basically determines from what period should your depreciation be calculated.
It takes care of the depreciation to be charged on the Acquisitions or subsequent acquisitions in the next period/ year or Retirement of assets or transfer.

For example, PCM determeines whether the depreciation on the machinery you recently acquired should be from the period start date or from mid-period and so on.

Similarly, here are more than 20 per-defined period controls, which you can go through to better understand it.

Ask more, if still confused.. since PCM plays an important role while calculating depreciation.

Let me try to explain a little bit to the procedure:
1. first, you maintain the Period Control Method in the depreciation key in AFAMA.
2. Before the first step, you should have already maintained Period Control Method in AFAMP. In this IMG activity, you will find Period Control for different transaction, like Acquisition, Retirement.
3. Now, you go to OAVH to Define Calender Assignments for various Fiscal Year Variant, which will determine the starting period to calculate the depreciation, You can take a look at the help of this activity, and pay attention to the value date period as followings:

Value date period for depreciation/interest calculation
For acquisitions, this is the period after which (and excluding) the system calculates depreciation. For retirements, this is the period up to which (and including) the system calculates depreciation.

Depreciation is calculated from or to the end of the period. For this calculation the first period is always the period 000. In other words, if you want to calculate depreciation from the beginning of the fiscal year you must specify the period 000 (or leave the field blank).

Take an example:
Fiscal Year Variant K4, Period Control 04, Month 6, Day 30, Value Date 000
Fiscal Year Variant K4, Period Control 04, Month 12, Day 31, Value Date 007

In this case, if you post acquisition before June 30th, you need to calculate the depreciation from period 001 to end, otherwise, the starting period for depreciation is 008.

Hope it will help you.

Maximum Amount Method

You use the maximum amount method to specify the maximum amount up to which the system should calculate depreciation until a certain calendar date. In this way, you can meet those legal requirements, for example, that allow depreciation for certain assets only up to a set amount. During the specified time period, the system calculates depreciation only until this amount is reached.

 

Base Method 

Use

 

The base method contains general control parameters the system needs for calculating depreciation. You enter the base method in a depreciation key. The base method is independent of the chart of depreciation, meaning that it does not contain any country-specific settings.

Features

You specify the following in the base method:

  • Depreciation type
  • Depreciation calculation method
  • Treatment of the end of depreciation

Declining-Balance Method of Depreciation 

Use

For the declining-balance method of depreciation, the fixed asset is depreciated by a progressively falling rate. A constant percentage rate is calculated from the expected useful life and a given multiplication factor. This is multiplied with the falling net book value of the fixed asset. For mathematical reasons, the net book value will never reach zero using this method. You change over to straight-line or complete depreciation under these conditions:

  • Declining-balance depreciation < straight-line depreciation
  • Net book value < x percent of acquisition value
  • Net book value < fixed amount
  • Net book value < straight-line depreciation

The changeover method is specified in the internal calculation key.

Calculation :

Depreciation = net book value * percentage rate from expected useful life and factor

APC: 1000

Exp. useful life: 10

Net book value: 700

Multiplication factor: 3

Depreciation = 700 * (100% / 10 * 3) = 210

Multi-Level Method 

Use

Base methods for certain depreciation calculation methods (Stated percentage and Total percentage in concessionary period) use either a total percentage rate or a periodic percentage rate to calculate depreciation. You can divide these calculation keys into as many levels as you like. A level, in this sense, represents the period of validity of a certain percentage rate. This percentage rate is then replaced by the next percentage rate when its period of validity has expired.

Features

Period of Validity for the Individual Levels

You determine the validity period for the individual levels of a key by specifying the length of time in years and months. You can choose whether the defined validity period begins with

  • The capitalization date
  • The start date for ordinary or tax depreciation
  • The original acquisition date of the asset under construction
  • The changeover year

The defined time periods of a key always have a common start date. This means that the period from the start of one key to its end will overlap with the next period, which has the same start date but a longer validity period. Therefore, you have to enter the validity periods for the levels in cumulative form.

There is a special indicator you can use when you work with non-calendar fiscal years. The indicator allows you to specify that the definition of the levels applies to the fiscal year and not to the calendar year. However, be aware of the considerations involved when using shortened fiscal years.

Depreciation Percentage Rates

How you enter the depreciation percentage rate is dependent on the depreciation calculation method being used:

  • When using the Total percentage in concessionary period depreciation calculation method, you also have to enter the depreciation percentage rate in cumulative form (see example).
  • When using the Stated percentage depreciation calculation method, you do not enter the percentage rate in cumulative form.

 

 

 

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