SAP's New SAP S New Depreciation Calculation in ERP 6.0

SAP s New
SAP’s
Depreciation
Calculation in ERP 6.0
Nathan Genez & Eric Barlow

Managing Partners
Serio Consulting LLC
Contents
New Depreciation Calculation in ERP 6.0
Upgrade Considerations
Wrap-Up
Contents
Wrap-Up
Who is Serio Consulting?
Founded by a group off fformer S

SAP America Platinum
Consultants with over 40 years combined SAP experience
Focused on the Capital Management area of SAP across both
SAP ERP and SAP BW
Project Systems (PS)
Investment Management (IM)
Asset Accounting (FI-AA)
Professional Service Offering:
SAP Implementations and Upgrades
Quality Assurance and Configuration Reviews
Advanced Capital Management reporting solutions including BW
Advanced Tax solutions
Remote On-Demand consulting
• http://www SerioConsulting com/

http://www.SerioConsulting.com/
Source: Nathan Genez & Eric Barlow, New DCP Overview, slide #4
Scope of New Depreciation Calculation (New DCP)
• What does the New Depreciation Calculation refer to?

How depreciation amounts are calculated / planned
• It does not refer to…

How depreciation is posted
The process to gather depreciation figures and post them to the G/L
is covered by the depreciation posting program RAPOST2000
What Values Are Affected?
• All planned values including:

Planned ordinary depreciation
Planned special depreciation
Interest
Inflation
Revaluation
Why Was the Calculation Changed?
A period interval-based calculation is more intuitive and easier

to understand
Support of time-dependent depreciation parameters
Support of method changeover and base value determination on
a period level
More flexibility to support customer and country specific
requirements via Business Add-Ins (BAdIs)
Potentially greater performance
Better handling of rounding accuracy issues related to large
amounts with no decimals (e.g., currency JPY)
… and many
y other reasons ((mostly
y country
y specific)
p )
Technical Requirements
• Delivered in SAP ERP 6.0 as part of the Enterprise

AddOn for Financials (EA-FIN)
Not possible to release for earlier SAP ERP or SAP R/3 versions
EA-FIN must be active
The new calculation cannot be disabled using
standard methods other than deactivating EA-FIN
Old: Transaction-Based Calculation
• Prior to SAP ERP 6.0, depreciation was always

calculated in detail on every transaction line item
Whenever a transaction is posted
posted, a depreciation amount was
calculated
The asset line item table contained fields for:
Ordinary
O di depreciation
d i ti on transaction
t ti
Special depreciation on transaction
Old: Transaction-Based Calculation (cont.)
• All transactions were interpreted sequentially

First posting served as the “baseline” calculation
All subsequent postings were adjustments to the
original posting
• Annual depreciation
p = sum of the depreciation
p of the
individual transactions
This approach could make the verification of depreciation
figures difficult
Example of Transaction-Based Calculation
• Scenario
Straight line depreciation
Total Acquisition Cost (APC) / Total Useful Life (UL)
Useful life = 10 years
12 period calendar fiscal year: January – December (e.g., K4)
Period control = pro rata determination
• The following
g two transactions are posted:
p
Transaction Amount / Percentage Time

I iti l A
Initial Acquisition
i iti $12 000
$12,000 J
January 1
Partial Retirement (current year) $3,000 October 1
Example of Transaction-Based Calculation (cont.)
Date Transaction Type Transaction Period Rate Base Value Calculated

Amount Factor Depreciation
Jan 1 Initial Acquisition $12,000 12 / 12 10% $12,000 - $1,200
Total - $1,200
Date Transaction Type Transaction Period Rate Base Value Calculated

Amount Factor Depreciation
Jan 1 Initial Acquisition $12,000 12 / 12 10% $12,000 - $1,200
Oct 1 Partial Retirement - $3,000 3 / 12 10% - $3,000 $75
Total - $1,125
•R/3 4.7
•R/3 4.7
R/3 4.7
•
Asset Explorer
displayed the
depreciation
amounts
calculated for
each line item
• Asset Line Item table displayed the amounts in

additional detail
•R/3 4.7
New: Period Interval-Based Calculation
• Depreciation calculation is based on period intervals

(time segments)
All transactions in the same period interval are aggregated and
used to calculate depreciation as a single number
All line items are aggregated by their appropriate period
All periods are aggregated to get an annual value
• Annual depreciation = sum of the depreciation of the

period intervals
inter als
New: Period Interval-Based Calculation (cont.)
• SAP ERP 6.0 no longer calculates depreciation or

interest on asset line items
•ERP 6.0
What Is a Period Interval?
• Initially, there is just one time interval per year,

depreciation area, and amount type
• New segments
N t are created
t d whenever
h an eventt changes
h
the asset’s value, such as:
Transactions within fiscal year
Time-dependent master data changes
Shutdown or multiple shift intervals
Depreciation
D i ti parameter
t changes
h
Changes to depreciation method
Multilevel method changes within a fiscal year
Method changeover occurs at the end or within the UL
More Information on Period Intervals
• The number of period intervals depends on the number

of fiscal periods with changes that affect the asset’s
depreciation
p calculation
The more transactions posted …
Or the more depreciation parameter changes …
Made across more periods will yield more depreciation
period intervals
• The maximum
ma im m n number
mber of depreciation period inter
intervals
als is
the same as the number of normal fiscal periods
Example of Period Interval-Based Calculation
1 2 3 4 5 6 7 8 9 10 11 12
Period Interval 1
Date Transaction Transaction Prd Prd Interval Rate Base Value Depreciation
Type Amount Int Duration Per Interval
Jan 1 Initial $12,000 1 12 months 10% $12,000 - $1,200
Acquisition
Total - $1,200
Example of Period Interval-Based Calculation (cont.)
1 2 3 4 5 6 7 8 9 10 11 12
Period Interval 1 Period Interval 2
Date Transaction Transaction Prd Prd Interval Rate Base Value Depreciation
Type Amount Int Duration Per Interval
Jan 1 Initial $12,000 1 9 months 10% $12,000 - $900
Acquisition
Oct 1 Partial - $3,000 2 3 months 10% $9,000 - $225
Retirement
Total - $1,125
•ERP 6.0
Period Interval = 1 - 12
Percentage
Base Value
Period Factor Final Annual
Source: Nathan Genez & Eric Barlow, New DCP Overview, slide #24 Depreciation
ERP 6.0
•
Final Annual
Depreciation
Base Value
Period Interval 1 = 1 - 9
Period Interval 2 = 10 - 12 Percentage
Source: Nathan Genez & Eric Barlow, New DCP Overview, slide #25 Period Factor
Comparison of Old vs. New Calculations
• Is there a difference in the final calculated amount

between these two approaches?
NO
• The annual depreciation amount is identical between
both approaches for most all scenarios.
Contents
Wrap-Up
Configuration Requirements
• No configuration is required as part of the

new calculation
No changes are necessary to the depreciation areas or
depreciation keys
• No migration
g of data is required
q
• The final depreciation amounts calculated by SAP
should be the same before and after the upgrade *
Small amount differences might occur in some situations
Process
• SAP recommends that all customers recalculate values

(RAAFAR00) immediately after the technical upgrade
Also consider recalculating prior to the upgrade as part of a
formal system close process
Enhancements
• Existing user exits are no longer processed by the new

depreciation calculation
• SAP-delivered
SAP d li d new BAdI is
i compliant
li t with
ith the
th
new calculation
BAdI FAA_EE_CUSTOMER
FAA EE CUSTOMER
Method SET_BASE_VALUE replaces AFAR0001
Method SET_PERCENT_AMOUNT replaces AFAR0002
Method DEFINE_CHANGEOVER_YR
DEFINE CHANGEOVER YR replaces AFAR0003
• A migration of the business logic must be made to these

new BAdIs if the new calculation is used
Reporting
• Since depreciation is no longer calculated on a line item

basis, all asset transaction reports will show $0.00 as
the depreciation
p amount
SAP Note 949701 will hide the depreciation figures so that the
report is not misleading
C
Consider
id creating
ti an assett history
hi t sheet
h t version
i that
th t breaks
b k outt
depreciation by type for each period
Asset Explorer
• In addition to the normal Asset Explorer, there is an

alternative version that always uses the old
depreciation
p calculation
Allows you to compare the calculations between the old and
new depreciation calculations without deactivating the
Enterprise AddOn
Transaction Description
AW01N Current Depreciation Calculation (New)
AW01 AFAR
AW01_AFAR Old Depreciation Calculation
Asset Explorer — AW01N “New Depreciation Calc”
•ERP 6
6.0
0
Asset Explorer — AW01_AFAR “Old Deprec Calc”
•ERP 6
6.0
0
Contents
Wrap-Up
Resources
• Relevant SAP Notes

949701 — Fix for asset line item reports
965032 — Explanation of small differences post upgrade
988238 — Information related to new calculation’s impacts on
year end closing
Resources (cont.)
• SAP ERP 6.0 Documentation on New DCP

http://help.sap.com/saphelp_erp2005vp/helpdata/en/44/07e6a80f
2e5920e10000000a155369/frameset.htm
• SAP ERP 6.0 release notes

http://help.sap.com/erp2005
http://help.sap.com/erp2005_ehp_02/helpdata/en/43/68805bb88f2
ehp 02/helpdata/en/43/68805bb88f2
97ee10000000a422035/frameset.htm
• Information for Enterprise AddOn EA-FIN

http://help.sap.com/erp2005_ehp_02/helpdata/en/44/558b1099c9
3672e10000000a114a6b/frameset.htm
Resources (cont.)
• SAP Developer Network (SDN) – Wiki

www.sdn.sap.com/irj/sdn/wiki > ERP Financials > Financial
Accounting > Asset Accounting
Resources (cont.)
• SAP Developer Network (SDN) – Blog Series

www.sdn.sap.com/irj/sdn/wiki > ERP Financials > Financial
Accounting > Asset Accounting
Resources (cont.)
• SAP Financials Expert

“Discover the Logic and Parameter Changes in the New
Depreciation
p Calculation” (January
( y 2007))
Thank you for your attention
Nathan Genez
Managing Partner
Serio Consulting
g LLC
227 Sandy Springs Place
Suite D238
Atlanta, GA 30328
T 1-713-240-0421
E nathan.genez@SerioConsulting.com
http://www SerioConsulting com
http://www.SerioConsulting.com
Eric Barlow
Managing Partner
Serio Consulting LLC

227 S
Sandyd S
Springs
i Pl
Place
Suite D238
Atlanta, GA 30328
T 1-404-667-0447
E eric.barlow@SerioConsulting.com
http://www.SerioConsulting.com

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SAP s New

Nathan Genez & Eric Barlow

New Depreciation Calculation in ERP 6.0

New Depreciation Calculation in ERP 6.0

 Founded by a group off fformer S

• http://www SerioConsulting com/

• What does the New Depreciation Calculation refer to?

• It does not refer to…

• All planned values including:

 A period interval-based calculation is more intuitive and easier

• Delivered in SAP ERP 6.0 as part of the Enterprise

• Prior to SAP ERP 6.0, depreciation was always

• All transactions were interpreted sequentially

Transaction Amount / Percentage Time

Date Transaction Type Transaction Period Rate Base Value Calculated

Date Transaction Type Transaction Period Rate Base Value Calculated

• Asset Line Item table displayed the amounts in

• Depreciation calculation is based on period intervals

• Annual depreciation = sum of the depreciation of the

• SAP ERP 6.0 no longer calculates depreciation or

• Initially, there is just one time interval per year,

• The number of period intervals depends on the number

Period Interval 1 Period Interval 2

• Is there a difference in the final calculated amount

New Depreciation Calculation in ERP 6.0

• No configuration is required as part of the

• SAP recommends that all customers recalculate values

• Existing user exits are no longer processed by the new

• A migration of the business logic must be made to these

• Since depreciation is no longer calculated on a line item

• In addition to the normal Asset Explorer, there is an

New Depreciation Calculation in ERP 6.0

• Relevant SAP Notes

• SAP ERP 6.0 Documentation on New DCP

• SAP ERP 6.0 release notes

• Information for Enterprise AddOn EA-FIN

• SAP Developer Network (SDN) – Wiki

• SAP Developer Network (SDN) – Blog Series

• SAP Financials Expert

Serio Consulting LLC

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Founded by a group off fformer S

A period interval-based calculation is more intuitive and easier