TFIN52 1 Summary

Financial Accounting TFIN 52 Summary

Prepared by: Zeeshan R Haryani

Financial Accounting TFIN 52 Summary

Prepared By Zeeshan Raza Haryani ACA, ACCA Finalist Certified FICOBW [email protected]

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Financial Accounting TFIN 52 Summary

Prepared by: Zeeshan R Haryani

Contents Unit 1 – Organizational Structure ..................................................................................................................... 4 Lesson 1 – Assignment Company Code - Chart of Accounts - Chart of Depreciation ................................ 4 Lesson 2 – Cost Accounting Assignment ..................................................................................................... 5 Lesson 3 – Introduction to Assets Class ....................................................................................................... 5 Unit 2 – Master Data ......................................................................................................................................... 7 Lesson 1 – Function of Assets class ............................................................................................................. 7 Lesson 2 –Assets Master Record .................................................................................................................. 9 Lesson 3 – Mass Change............................................................................................................................... 9 Unit 3 – Assets Transactions........................................................................................................................... 11 Lesson 1 – Assets Acquisition .................................................................................................................... 11 Lesson 2 – Assets Retirement ..................................................................................................................... 12 Lesson 3 – Intercompany & Intracompany Assets Transfer ....................................................................... 13 Lesson 4 –Assets Under Construction ........................................................................................................ 13 Lesson 5 – Unplanned Depreciation ........................................................................................................... 14 Unit 4 – Periodic Processing and Valuation ................................................................................................... 15 Lesson 1 – Function of Assets class ........................................................................................................... 15 Lesson 2 – Fiscal Year Change and Year End Closing in Assets ............................................................... 18 Unit 5 – Information System........................................................................................................................... 19 Lesson 1 – Report Selection ....................................................................................................................... 19 Lesson 2 – Value Simulation ...................................................................................................................... 19 Lesson 3 – Assets History Sheet ................................................................................................................. 19 Unit 6 – Standard Reports in General Ledger Accounting, Accounts Receivable Accounting and Accounts Payable Accounting ........................................................................................................................................ 21 Lesson 1 – Information System .................................................................................................................. 21 Lesson 2 – Report Variant and Variables ................................................................................................... 21 Unit 7 – List Viewer ....................................................................................................................................... 22 Lesson 1 – SAP List Viewer Design........................................................................................................... 22 Lesson 2 – Selections .................................................................................................................................. 22 Lesson 3 – Changing the Screen Layout..................................................................................................... 23 Unit 8 – Drilldown Reporting in Financial Accounting ................................................................................. 24 Lesson 1 – Architecture of Drilldown Reporting ....................................................................................... 24 Lesson 2 – Characteristics and Key Figures ............................................................................................... 24 Lesson 3 – Form Types ............................................................................................................................... 25 Lesson 4 – Navigation in Reports ............................................................................................................... 26 Lesson 5 – Form & Report Definition ........................................................................................................ 26 Lesson 6 – Report/Report Interface and Report Assignment ..................................................................... 27 Unit 9 – Special GL Transactions ................................................................................................................... 29 Lesson 1 – Application view for Special GL Transactions ........................................................................ 29 Lesson 2 – Configuration of Special GL Transactions ............................................................................... 31 Unit 10 – Parking Documents ......................................................................................................................... 32 Lesson 1 – Basics of Parking Documents ................................................................................................... 32 Lesson 2 –Parking Documents & Processing Parked Documents .............................................................. 32 Lesson 3 –Document Parking and Workflow ............................................................................................. 33

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Financial Accounting TFIN 52 Summary

Prepared by: Zeeshan R Haryani

Unit 11 – Validation & Substitution ............................................................................................................... 36 Lesson 1 – Basics of Validation / Substitution ........................................................................................... 36 Lesson 2 – Definition and Execution of Validation in Financial Accounting ............................................ 37 Lesson 3 – Definition and Execution of Substitution in Financial Accounting ......................................... 38 Lesson 4 – Additional Technique for Substitution/Validation ................................................................... 39 Lesson 5 – Validation Rule for Account Assignment combination ........................................................... 39 Unit 12 – FI Archiving.................................................................................................................................... 41 Lesson 1 – Basics of Parking Documents ................................................................................................... 41 Lesson 2 – Preparatory Activities – System Settings ................................................................................. 42 Lesson 3 – Executing Archiving in Financial Accounting Using example ................................................ 43

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Financial Accounting TFIN 52 Summary

Prepared by: Zeeshan R Haryani

Unit 1 – Organizational Structure Lesson 1 – Assignment Company Code - Chart of Accounts - Chart of Depreciation · · · · · · · · ·

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The client is the highest level in the SAP system hierarchy. It also denotes the specific logical system you are working on. Specifications that you make on this level apply to all company codes. Each company code is an independent accounting unit. The legally required balance sheet and profit and loss statement are created at this level. Each business area is to be regarded as a financially separate unit for which an internal balance sheet and profit and loss statement can be created. Asset Accounting (FI-AA) works with the chart of accounts assigned to the company code in Financial Accounting (FI). The chart of depreciation must be country-specific. Each depreciation area represents a specific type of valuation (for example, book depreciation or tax depreciation, and so on). Each company code uses one (operative) chart of accounts and one chart of depreciation. All or several company codes can work with the same chart of accounts and the same chart of depreciation. The depreciation areas in a chart of depreciation are defined with a two-digit numeric key. Depreciation area 01 is always what is known as the leading depreciation area. The leading area 01 (currently) reflects the local accounting principles in each sample chart of depreciation. Other depreciation areas can contain the following valuations, for example: o Tax balance sheet valuation o Costing-based valuation o Valuation approaches in other currencies and/or valuation approaches (=> such as group valuation) o Capital tax valuation o Differences between book and country-specific tax-based depreciation Asset portfolios and transactions are often valued differently for different purposes; for example, different valuation approaches should/have to be used for: o ... Book depreciation (according to local requirements) o ... Balance sheets for tax purposes (insofar as another valuation is permitted) o ... Internal accounting (=> cost accounting) o ... Parallel accounting, such as for creating a consolidated balance sheet according to IFRS and/or US GAAP. These various valuation approaches are mapped in the SAP system by means of depreciation areas. Steps in Assets Accounting o First, completely set up the company code(s) in Financial Accounting. o Then allocate a chart of depreciation to the company code (in a separate project, if possible). o * The company code is then expanded by means of various Customizing activities to include the necessary data and information. o The company code is then ready for use by Asset Accounting

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Financial Accounting TFIN 52 Summary

Prepared by: Zeeshan R Haryani

Lesson 2 – Cost Accounting Assignment ·

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In the master record, you can assign the following basic Cost Accounting objects to an asset: o Cost center o (Internal) order: the order can be “real” or “statistical” o Activity type: as purely statistical information These CO objects are assigned to a controlling area which can, in turn, include one or more company codes. It is also possible to assign objects from other applications (with controlling functions) in addition to original the CO objects. examples: o WBS element o Real estate object o Maintenance order: as purely statistical information o Objects from Public Sector Management (=> PSM) As such we can post the following (CO) objects: o A cost center o A (real) order o A cost center and a statistical order o A WBS element o A cost center and a statistical WBS element o A real estate object o Objects from Public Sector Management However, it is not possible to assign an asset to two cost centers.

Lesson 3 – Introduction to Assets Class

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Assets are assigned to asset classes. Examples of asset classes are the Vehicles, Fixtures and Fittings and Machines classes. Asset classes consist of a master data section and a depreciation area section. Asset classes are created at client level. They are also assigned to at least one chart of depreciation *, so you can complete the asset class with default values for the depreciation terms for each depreciation area. For each depreciation area, you can propose the depreciation attributes for the assets; you can choose that they be specified by the system. If the depreciation attributes are specified by the system, they are not changeable. There is also at least one special asset class each for assets under construction and low value assets. This will be addressed in further detail in the next chapter. The technical management of assets is d one using (logistical) Plant Maintenance or Enterprise Asset Management (=> EAM). Page 5 of 45

Financial Accounting TFIN 52 Summary

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Prepared by: Zeeshan R Haryani

The Treasury system is used to manage financial assets. It is a part of Financial Supply Chain Management (=> FSCM). With FI-AA, you can manage different valuation approaches for each asset in depreciation areas. However, financial statements are not created / required for the values of all depreciation areas. When using the Account Approach (see Periodic Processing and Depreciation unit) , you have the following options: o (0) Area does not post (no values posted to FI) o (1) Area posts in real-time (asset values are posted to FI online – periodic depreciation) o (2) Area posts asset values and depreciation periodically o (3) Area only posts depreciation (of course, periodically) o (4) Area posts asset values and depreciation (depreciation is, of course, posted periodically) o The settings (5) and (6) are only required when using the Ledger Approach in the New General Ledger. With periodic asset value posting (program RAPERB2000), you can post asset values from depreciation areas other than area 01 to the general ledger. Depreciation is always posted on a periodic basis. Program RAPOST2000 is used for this. You can also define depreciation areas for reporting purposes only, which do not post any values to the general ledger. You can post both the asset values and the depreciation values from the individual depreciation areas to separate financial statement accounts or profit and loss accounts. You specify in the financial statement version the financial statement item or the profit and loss statement item in which the account values should appear. In Customizing for Asset Accounting, you enter the financial statement versions to be used for each depreciation area, if the asset report is also to create financial statements items for these areas in FIAA Reporting.

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Financial Accounting TFIN 52 Summary

Prepared by: Zeeshan R Haryani

Unit 2 – Master Data Lesson 1 – Function of Assets class ·

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The asset class definitions apply to all company codes in a client. An asset class consists of two main sections: o A master data section with control data and default values for the administrative data in the asset master record o A depreciation section with control parameters and default values for depreciation terms for each depreciation area When you create asset master records, this data is automatically adopted from the asset class you specify. By entering useful default values, you can reduce the time and effort needed to create new asset master records The asset class is the main selection criterion in all standard reports in FI-AA. If you use different company codes with different operational charts of accounts, however, you need only one account determination key to post asset values of the asset of one class to different accounts in different charts of accounts For those depreciation areas that post depreciation to the general ledger, you must assign the following additional G/L accounts: o For ordinary depreciation: o Accumulated depreciation accounts o Expense accounts o Revenue accounts for a write-up o For unplanned depreciation: depreciati o Accumulated depreciation accounts o Expense accounts o Revenue accounts for a write-up o And for revaluations of depreciation and for interest (cost accounting area), if necessary/desired. The number range controls the assignment of the number of the asset master record. You define number assignment as either internal or external. You can assign each company code its own number ranges, or specify cross-company code number assignment. The screen layout determines which input fields in the asset master records can be processed or whether these fields are to be defined as required fields or if the fields are not displayed at all. In addition to the information on the field selection (required entry, optional entry, display, suppress), the screen layout specifies the maintenance level of master data fields. It also determines whether the master data fields are allowed to be used as a reference. The maintenance level specifies at which level maintenance of each data field is permitted possible maintenance levels are: o Asset class o Main asset number o Sub number On the one hand, you can post (cost-accounting) depreciation to account assignment objects, on the other hand, account assignment objects can also be used for making APC postings, such as direct Page 7 of 45

Financial Accounting TFIN 52 Summary

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Prepared by: Zeeshan R Haryani

capitalization as part of an investment measure (when the IM component is also in use) or for (statistical) budget monitoring for asset purchases. You can specify a layout for the master data of each asset class. The layout defines: o The number of tab pages o The names of the tab pages o The logical field groups (groups / field group boxes, such as the visible logical field groups General data and Posting information in the figure above), that are to appear on the tab pages. In each asset class, you enter a screen layout rule for each depreciation area. These rules apply to the (input) fields of the in the depreciation data section / depreciation area. SAP supplies screen layout rules 1000 and 2000 in the standard system. These screen layout rules also contain a maintenance level. The maintenance level guarantees that depreciation is controlled uniformly. There are three options: o 1. Asset class: This maintenance level ensures uniform control of valuation at asset class level. o 2. Main asset number: The control of valuation is unifor uniform at the level of the asset master record. The entries made in the asset class are adopted in the asset master record, and can be changed there. All asset sub numbers that belong to this asset master record adopt these values from the main number. o 3. Asset sub number: Valuation can be controlled more flexibly. Asset sub numbers can receive their own individual depreciation terms. Defining allowed entries for user fields and other information fields: In the asset master record the following fields are available as standard for general and user-specific structure of fixed assets: o Evaluation groups (evaluation group 1 to 5): These are asset master record fields that are used to map customer-defined / customer-specific information. o Environmental protection indicator: In this field you can save the reason for an environmental protection investment (for example, new climate-protection regulations). o Reason for investment: In this field you can enter an explanation for a capital investment (for example, replacement acquisition). o Asset super number: This can be assigned to an asset. This is useful, for example, if several assets are to be assigned to an asset super number (for example, business unit or production line). Assets under construction (AuC) require a separate asset class and corresponding G/L account, because they have to be shown separately in the financial statement. By choosing ing the standard depreciation key 0000 you can ensure that depreciation is not calculated for assets under construction in depreciation areas (at least for the depreciation areas in the financial statement). However, special tax depreciation and investment support are also possible for assets under construction. You can also enter down payments on assets under construction in accounts payable pa accounting processes. Even after an asset under construction truction has been fully capitalized, you can still post credit memos. For this to be possible you must permit negative (APC) values in the detail screen of the depreciation data section. Investment Management (IM) is available to help you manage more extensive asset investments. It integrates internal orders and projects with assets under construction. You can choose whether to manage low value assets (LVAs) using individual management or collective management. For each type of management, you have to set up a separate asset class. If you select collective management for low-value assets, a base unit of quantity must be specified for this asset class. Page 8 of 45

Financial Accounting TFIN 52 Summary

Prepared by: Zeeshan R Haryani

Lesson 2 –Assets Master Record ·

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When you create an asset master record, you have two options: o Enter the company code and asset class for the new asset master record o Use an existing asset master record as a reference When creating asset master records, you can create multiple similar assets. Some information in the asset master record can be managed as time-dependent data. This is of particular significance for the assignment of assets to CO organizational units, for example, cost center or project). di Shift operation and asset shutdown can have a direct effect on depreciation. Therefore you should enter them in the time-dependent data, where they can be changed on a monthly basis. Each time you change an asset master record, the system creates a change document. The change document contains a list of fields that were changed and the number of changes to a field. In addition, the name of the user and the old and new contents of fields are stored. The method for assigning equipment to an asset was to enter the asset number in the relevant master record still exists. Several pieces of equipment can be assigned to an asset, but a piece of equipment can only belong to one asset. You can set up the system so that when you create an asset master record, the system automatically creates an equipment master record while copying the values of certain master data fields (for example, the Company Code and the Inventory Number). If you change master data in the asset at a later point in time, the system then automatically updates the fields in the equipment master record and the other way around. If a fixed asset is made up of many component assets, you may want to manage these component assets as separate sub numbers. This might be useful for both technical and accounting reasons. You can divide up assets by sub numbers, if: o You want to manage the values for subsequent acquisitions in following years separately for example, buildings. o You want to manage the values for individual parts of assets separately. o You want to split the asset according to various technical aspects

Lesson 3 – Mass Change ·

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The individual steps for a mass change to asset master data can be summarized as follows: o 1. Create a substitution rule to specify which fields you want to change and how you want to change them o 2. The saved substitution rule ule must then be assigned to a company code o 3. Create a list of assets to be changed (=> a work list). o 4. Using the program called, select the master data to be changed and press the Create Work list pushbutton in the results screen. o 5. Enter a description and select a purpose for your work list. The purpose is a pre-defined standard task in the system (for example, change master data). o 6. In the dialog window that appears, select the defined substitution rule for the mass change and save your data. o 7. Now (only) the work list still has to be processed. o 8. Check whether your mass change was successful by displaying the assets or running an appropriate report. A substitution rule consists of two parts: Page 9 of 45

Financial Accounting TFIN 52 Summary

Prepared by: Zeeshan R Haryani

o 1. Conditions that identify the records to be selected: You can create conditions using the Form Editor or in expert mode. To use expert mode, you have to know the (technical) field and table descriptions of the input fields involved. o 2. Substitutions (if the conditions are met) that identify the replacement values. These can be constant values, field-field assignments, or user exits

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Financial Accounting TFIN 52 Summary

Prepared by: Zeeshan R Haryani

Unit 3 – Assets Transactions Lesson 1 – Assets Acquisition ·

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Acquisition of an asset from a business partner: External acquisition: o In FI-AA with integration with accounts payable, usually if an incoming invoice is available, but without reference to a purchase order. o In FI-AA with automatic offsetting entry, but without a link to a purchase order and without integration with Accounts Payable. The offsetting account also has to be cleared. o In FI-AA with offset clearing: The first posting is usually made in FI-AP. The asset posting then also clears the clearing account. It is also possible, however, for both departments to make postings in the opposite order: An asset is entered with automatic offsetting entry, and the clearing account is cleared with the credit creation of the incoming invoice. o In Materials Management (MM): The posting/activation of the assets takes place in Logistics. Acquisition from in-house production is the capitalization of goods or services that are partially or completely produced in your own enterprise. Generally, you capitalize production costs by creating an investment measure (=> order/project) in Investment Management (IM) and settling to an asset under construction and then to the final asset. Transaction type When posting to assets, you must enter a transaction type. The transaction type identifies the different transactions in the asset history sheet. Document splitting is a functionality that is enabled by the new G/L. It is used to create (complete) balance sheets on characteristics under the company code. Standard (document splitting) characteristics are the profit center, the business area, or the segment, for example. You can display planned values, book values and transactions directly in the Asset Explorer in a print preview format, and you can print and export this information. The following information is automatically set in the asset master record at the time of the first acquisition posting: o Date of asset capitalization (derived from the asset value date). o Date of initial acquisition on the relevant master record (also derived from the asset value date). o Acquisition year and acquisition period (derived from the posting date) In Customizing for Asset Accounting, you can enter default values for the asset value date for each type of accounting transaction. The system determines the start date for ordinary depreciation using the asset value date of the acquisition posting and the period control method (see Deprecation Key for more information), and writes this date to the depreciation areas in the asset master record. When you post the acquisition integrated with FI-AP, the system automatically enters the vendor in the origin data field of the asset master record. The asset value date is the actual date the asset is updated and determines the depreciation start date along with the deprecation key (for each depreciation area). The posting date and the asset value date must always be in the same fiscal year! Page 11 of 45

Financial Accounting TFIN 52 Summary

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The number range interval for the assignment of FI document numbers is defined in the document type. Although the document type is defined across all clients, the FI document number range interval should be created specifically for the company-code. Transaction types must be used with every posting. Transaction types identify acquisitions, retirements, and transfers, amongst other things. If asset acquisition postings are not integrated, you would normally use a clearing account. This should be a general ledger account with open item management to guarantee that you can clear the account (later). Reasons for not making integrated postings: o The invoice arrived before the asset o The asset has already been delivered and should be used, but the invoice has not been delivered. The first process steps in case of FI-AA and MM could proceed as follows: o Create Purchase Requisition (optional) o Create Asset Master Record if required o Create Purchase Order (from PReq) with assignment category A (=> A = asset). In the purchase order, you can specify an asset master record number in the Item Detail screen area. o Goods receipt When you enter the purchase order, you determine whether the asset is posted directly to Asset Accounting when the goods receipt is posted (=> valuated goods receipt), and thereby capitalized, or whether capitalization does not take place until the invoice (=> invoice receipt) is posted (non-valuated goods receipt).

Lesson 2 – Assets Retirement ·

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There are different ways of posting retirements: o Retirement with revenue and customer (=> integrated asset retirement) o Retirement with revenue, but without customer (=> not integrated) o Retirement without revenue (=> Asset retirement by scrapping) o The first three points can each be entered either as complete or as partial retirement o Mass asset retirement (with work list) o Retirement of several assets (within the manually posted retirement transaction). The system determines the period for the asset retirement based on the asset value date of the asset retirement (= asset retirement date). Using the period control method (=> period control key of the depreciation key), the system automatically calculates how long depreciation is (allowed to be) posted for the asset. The system automatically determines the proportional value adjustments (depreciation) up to this period that apply to the part of the asset being retired, and cancels this depreciation. At the same time, the system posts the asset retirement. To carry out a mass retirement, follow these steps: o Use an asset report to create a list of the assets to be retired. o Create a work list. o Select a purpose for the work list: § Retirement without revenue § Retirement sale (with revenue) o Enter the revenue distribution. o Process the work list, or edit the work list before releasing it. Page 12 of 45

Financial Accounting TFIN 52 Summary

Prepared by: Zeeshan R Haryani

Lesson 3 – Intercompany & Intra-company Assets Transfer ·

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Asset Accounting distinguishes between different types of transfers, depending on circumstances: o transactions within one company code (=> Intra-company Transfer) or o Transactions between different company codes (=> Intercompany Transfer). Possible reasons for intercompany code transfers: o A master record was created and posted to in the wrong class (in the previous year). o You would like to split up an asset or move part of an asset. Part of the asset must thus be transferred to a new asset. o You would like settle an asset under construction and transfer it to a finished asset. The system uses transfer variant 4 by default for intra-company asset transfers. One of the functions of the transfer variant is to determine the transaction types with which the transfer is recorded in the source and the target asset. The Transfer function can be used when: o an asset has been sold to another company code, The following distinction is made for transfers: o ... Whether it is a transfer within a legal unit (within a company). In the case where both company codes belong to the same company, SAP refers to a transfer of relationship type 02. o • ... or whether the transfer is taking place between legally independent organizational units (=> company codes) which are each assigned to a different company. This arrangement can also be redefined using a relationship type it is a relationship type 01 transfer. The transfer method is used to control how the values are transferred from the source to the target company code. o If you select the Gross transfer method, this method transfers the historical values of the asset to the target company code. o When you use the Net method or the New Value Method, you have to enter sales revenue. o If there is no gain or loss on the asset retirement, the sales revenue equals the net book value of the asset. o Using the Net Method, the net book value (of the source company code) is capitalized on the target asset. o When you use the New Value Method, the system capitalizes the amount of the sales revenue on the target asset. The standard SAP assumption is that transfers of relationship type 02 (=> two company codes but one company (number)) are always transfers within one legal unit (=> the company within a corporate group), and are therefore always represented as intra-company transfers (=> with intracompany transfer transaction types and the gross method). The individual company code is not an independent legal entity, and does not create balance sheets for external purposes. If company codes are assigned to different charts of depreciation, the charts may contain different depreciation areas (=> different keys/different area IDs) but have the same functions. When this is the case, you must define cross-company depreciation areas before asset transfer. If a corresponding cross-company depreciation area is not defined, the system enters an asterisk (*) as a generic entry for the cross-company areas.

Lesson 4 –Assets under Construction ·

Assets under construction have two phases that are relevant to Asset Accounting: Page 13 of 45

Financial Accounting TFIN 52 Summary

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o The under construction phase o The useful life phase The assets have to be shown in two different balance sheet items during these two phases. Therefore, they have to be managed using different objects or asset master records for the under-construction phase and for the completed asset(s). The transfer from the under-construction phase to completed asset is referred to here as capitalization of the asset under construction. Assets in the under construction phase in FI-AA can be managed in the following ways o As a normal asset master record (=> for summary settlement) o As an asset master record with line item management When capitalizing the asset under construction, the system automatically separates the transactions from the previous years from the transactions from the current year. This is done by using different transaction types. Proceed as follows to settle the asset under construction on a line-item basis to one or more completed assets: o First, assign a settlement profile to your company code o Select all line items that you want to settle in the same proportion to the same receiver. o Define distribution rules for these line items. o Post the settlement of line items to the specified receivers using the distribution rule. Note that this posting procedure settles all line items to which a distribution rule is assigned. When you settle, you do not have to settle all line items at once, and you do not have to distribute 100% of each line item.

Lesson 5 – Unplanned Depreciation · ·

When you enter the relevant transaction type, the system recognizes that you want to perform manual depreciation. As you have only manually scheduled the depreciation, the system does not create an FI document. This FI document is not generated until the depreciation posting program is run.

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Financial Accounting TFIN 52 Summary

Prepared by: Zeeshan R Haryani

Unit 4 – Periodic Processing and Valuation Lesson 1 – Function of Assets class · ·

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If you want to plan primary costs on a cost center basis, you can periodically determine planned depreciation and interest and pass these on to primary cost planning in the CO system via a report. Investment support is a subsidy that a company receives for certain asset investments. Assets that are eligible for such a subsidy are marked in the asset master records with an investment support key. All specifications for claiming the investment support are stored in the definition of this key. You can post the claim manually or in a mass procedure. Inflation management is required in countries with high rates of inflation or deflation. You can now also use the Schedule Manager in FI-AA to define, schedule, process, and control periodically recurring activities. Depreciation areas are identified in the system by a two-character numeric key. We can define Depreciation area for following reasons: o Define how to post the asset balance sheet values and depreciation to the general ledger accounts. o For reporting reasons only. They will show values and calculate depreciation, but will not post any values to G/L accounts. o To calculate different values in a depreciation area for a specific purpose (for example, for the balance sheet, for cost accounting, or for taxes). o To define which values have to be managed (for example, APC or positive/negative net book values)? o To define how posting values and depreciation terms should or can be transferred to other areas. The system supports the following depreciation types: o Ordinary depreciation: This is the planned reduction in asset value due to normal wear and tear. o Special depreciation: This represents a purely tax-based type of depreciation for wear and tear. This form of depreciation usually allows for depreciating a percentage of the asset value, and this percentage may be staggered within a tax concession period, without taking the actual wear and tear on the asset into consideration. o Unplanned depreciation: This is concerned with unusual circumstances, such as damage to the asset, that lead to a permanent reduction in its value. o Unit-of-production depreciation: This allows you to take fluctuations in activity into account for the depreciation calculation. It makes the amount of depreciation dependent upon seasonal usage of the asset (example: Driven kilometers of a truck or produced units of a machine) Specifications and parameters that the system requires to calculate depreciation amounts are entered in calculation methods which are assigned to the depreciation key Individual calculation methods are: o The base method o The declining-balance method o The maximum amount method o The multilevel method Page 15 of 45

Financial Accounting TFIN 52 Summary

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o The period control method The depreciation terms are stored in the asset master record. The system determines the depreciation start date using the asset value date and the period control method. The Asset Explorer displays the values and the depreciation for every transaction and each area. Changes to the settings of the depreciation keys (=> customizing changes) do not automatically lead to a correction of depreciation amounts for already posted/active assets. For that to happen, you have to execute a recalculation of depreciation: With SAP Solution ERP 6.0, (and active Enterprise Extension EA-FIN, the calculation logic for depreciation changed from “transaction based calculation” to “calculation on the basis of period interval” Nonetheless, the new way of calculating depreciation (=> nwc also mentions the use of the Depreciation Engine) does enable in principle a more exact and precise calculation of depreciation amounts.

The logic and method for working with time-dependent depreciation terms is comparable with the procedure for time-dependent data in the master data area. Time-dependent changes can therefore also be defined by creating new intervals. Summary: Whats new in FI-AA deprecation calculation with ECC 6.0 and active Enterprise Extension EA-FIN (=> Financial Extension) : o Depreciation calculation on the basis of period intervals/use of the Depreciation Engine o Time-dependent depreciation terms o Support for an (automatic) changeover method to period/months. However, this is not a standard method, it must be implemented using the BAdI (Business Add-In) FAA_DC_CUSTOMER If time-dependent depreciation terms are not used, a change would have the effect that all open (and future) fiscal years are/were recalculated. The new logic of the depreciation calculation creates a new period interval for a mid-year changes to the term. You can define whether interest should be calculated for the cost-accounting depreciation area, and whether depreciation should continue below zero. You make these specifications when you define the depreciation areas. You can use index series for indexing the acquisition value and thus calculate a replacement value. Automatic calculation of Depreciation Indicator means: o Depreciation after planned life end: This indicates that you want the system to continue depreciation after the end of the planned useful life. Page 16 of 45

Financial Accounting TFIN 52 Summary

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Prepared by: Zeeshan R Haryani

o Depreciation below book value: Set this indicator if you want the system to continue depreciation after the book value is zero. The depreciation area must allow negative net book value (=> a changeover key may be used). o Effective life after planned end (=> with curb): The actual, not the planned life determines the rate of depreciation. For cost accounting, you might have to calculate imputed interest on the capital tied up in assets. Specify the following settings: o Allow the calculation of imputed interest for the depreciation area. o Determine that interest should be posted for the company code and the corresponding depreciation area. o Use a depreciation key to which calculation methods for the depreciation type Interest are assigned, or define such a key user-specifically. o If the calculation of the interest is based on a replacement value, the system calculates indexed interest. The system posts interest (periodically) during the periodic depreciation posting run. It posts to the accounts that are entered in the account determination for each depreciation area. Furthermore, an additional account assignment can be made to the cost center or the internal order entered in each asset master record (as is the case with depreciation). If revaluation (indexing) is used in a depreciation area, you can specify a default index series for calculating the replacement value in the asset or asset class. For each fiscal year, you should specify index figures for the index series. If they are missing, the system switches to a simulated annual rate. An indexed revaluation can also be calculated for accumulated depreciation and imputed interest (if the interest calculation key is based on replacement value). Specify in the depreciation area if you want to post to the general ledger, indicating whether you want to post revaluation of APC only, or also include depreciation/interest. The depreciation position program RAPOST2000 can be used to post (if required) o Ordinary depreciation (book depreciation and cost-accounting) o Tax depreciation, or allocation and write-off of reserves due to special tax depreciation o Unplanned depreciation (or other manually planned depreciation) o Imputed interest o Revaluation of APC or of accumulated depreciation Program RAPOST2000 posts without session directly to the G/L accounts and (if you want, also) to additional account assignment objects. Only real CO account assignment objects can be posted. However, you can make additional, statistical postings to other objects

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Financial Accounting TFIN 52 Summary

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Prepared by: Zeeshan R Haryani

Carry out all essential checks during the test run, and records any errors: o Incorrect account assignment objects (for example, a cost center that is locked in CO) o Account assignment types missing in Customizing for Asset Accounting. You receive the error message Account xxxx requires an assignment to a CO object o Accounts for depreciation posting missing o Posting period was entered incorrectly (related to the posting interval entered in Customizing) on the initial screen of RAPOST2000 o Settings missing for the depreciation posting cycle in the depreciation area

Lesson 2 – Fiscal Year Change and Year End Closing in Assets ·

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The fiscal year change program opens new annual value fields for each asset. o The earliest you can start this program (in the production system) is in the last posting period of the current year. o You have to run the fiscal year change program for your whole company code. o You can only process a fiscal year change to a subsequent year if the previous year has already been closed for business Year-End Closing (in Asset Accounting) - Preparations: o After the depreciation lists and asset history sheet have been checked, depreciation is posted. o If an area posts asset balances periodically to the general ledger, you must start the report for periodic asset balance postings (=> RAPERB2000) (at least once in the update run). o If the final result is not satisfactory, you can carry out depreciation simulation or (bulk) changes, or make adjustment postings. o If you change any depreciation values, you must run depreciation posting again. The year-end closing program (=> RAJABS00) checks whether: o Depreciation and asset balances are posted in full o Assets contain errors or are incomplete If the program does not find any errors, it updates the last closed fiscal year (for each depreciation area). The report also locks all closed fiscal years against postings from the asset area. If a closed fiscal year is subsequently released for posting, it can only be closed again once the year-end closing program RAJABS00 has been run again. Settings for using program RAPERB2000: o Define(new)document type: o Create number range interval: o Now create the new document type for your company code(s):

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