System Requirement Specification

FI4010 Fixed Asset Accounting

Prepared For Prepared By Date of Document Release No:

HG Manufacturing Limited Deepak Padgaonkar 14th December 2007 V1.0

The materials presented in this document shall not be disclosed. No part of this document may be re-produced, in any form or by any means without permission from V3iT Consulting

System Requirement Specification TABLE OF CONTENT 1 CHANGE HISTORY....................................................................0 2 V3iT Consulting .......................................................................................................Confidential .4 3 ABBREVIATIONS............................................16 Updated on : 15/1/2011 V1......3 2 INTRODUCTION....................................5 4 BUSINESS REQUIREMENTS........................6 5 OTHER REMARKS..........................................................................................................................

System Requirement Specification 1 CHANGE HISTORY Date of Update Updated By Version Change Description Updated on : 15/1/2011 V1.0 3 V3iT Consulting .Confidential .

When accepted. it will form the basis for detailed design and development of the system.2 Purpose of Document The primary purpose of this document is to capture the functional requirements of the SAP Project. It represents the project deliverable to the users and also states the assumptions used in the design and development of the system by V3iT Consulting. Business User Representative Designation: Name: Date: Ledge Representative Designation: Name: Date: Process Owner FICO Consultant 2.System Requirement Specification 2 Introduction 2. It represents the project deliverable to the users. This document is also meant for V3iT Consulting Pte Ltd in the design. development and testing phases of the system. 2. Any changes to the functional requirements described in this document will be noted as change requests and this document will be amended to reflect these changes. These groups should check the validity of business assumptions.3 Intended Audience This document is intended for review by various user-groups within HG with vested interests in this Project. the accuracy of the business functions. outputs and the flow of processing logic described in the document. Updated on : 15/1/2011 V1.Confidential .1 Acceptance /Signatory of Specification This document supersedes any previous document on the subject of the requirements of application and software functionality for the project. The requirements documented here are the results of the requirements gathering phase.0 4 V3iT Consulting . Signature on this System Requirement Specification document by authorized user representative indicates satisfaction and acceptance of this document as a description of the complete functionality required of the project.

g. Applications.0 5 V3iT Consulting .Confidential .e. IV MM MP MPS MRP P&L PA PC PDO PR PO PP SAP SD SIS SO SOP Advanced Business Application Programming Bill of Material Cost Center SAP R/3 Module Controlling Chart of Accounts Controlling Area SAP R/3 Controlling Sub module Cost Center Accounting Company Code SAP R/3 Controlling Sub module Order and Project Accounting Cost of sales.System Requirement Specification 3 ABBREVIATIONS ABAP BOM CC CO CoA CoAr CO-CCA CoCo CO-OPA COS DC e. FI GI GR i. Products (company name) SAP R/3 Module Sales & Distribution Sales Information System Sales Order Sales and Operations Plan Updated on : 15/1/2011 V1. Distribution Channel example given SAP R/3 Module Finance Goods Issue Goods Receipt id est (this is) Invoice Verification SAP R/3 Module Materials Management Mass production (parts) Master Production Schedule Material Requirements Planning Profit and Loss SAP R/3 Sub-module Profitability Analysis Profit Center Production Order Purchase Requisition Purchase Order SAP R/3 Production Planning Module Systems.

System Requirement Specification 4 Business Requirements 4. Updated on : 15/1/2011 V1.0 6 V3iT Consulting .Confidential .1 Scope of Requirement This document describes system requirements specification in the Asset Accounting Module.

It serves as the subsidiary ledger to the FI General Ledger. it is possible to directly post the invoice receipt or goods receipt to assets in the Asset Accounting component. The following depreciation area will be defined for HG: Depreciation Area 01 Description Book Depreciation Currency SGD 4. As a result of the integration in the SAP.2 Assets Class Asset class is the main criteria for classifying assets. Asset classes are created at the client level.2.e.2 SAP Conceptual Design The Asset Accounting (FI-AA) component is used for managing and monitoring fixed assets in the SAP. For example. At the same time. depreciation is also passed on directly to the Financial Accounting and Controlling components. 4. providing detailed information on transactions involving fixed assets. Each asset assigned to one and only one asset class.2. When an asset is purchased.System Requirement Specification 4. The Asset class controls: The Asset class controls:    Account Determination i. G/L accounts for all asset-related postings Asset Master Numbering Default values on asset master creation for depreciation key and useful life The following asset classes will be set up as follows: Asset Class 161010 161020 161030 161040 161050 161060 161070 Leasehold Property Freehold Property Renovation Plant & Machinery Computers & Printers Furniture & Fittings Motor Vehicles Useful Life (Years) Residual Amount 0 0 0 0 0 0 variable Updated on : 15/1/2011 V1. it is possible to post from Material Management (MM) component directly to AA.Confidential . Asset Accounting (“AA”) transfers data directly to and from other components.1 Depreciation Area Depreciation areas are used for calculating depreciation of the same assets in different ways and for different purposes such as commercial and tax purposes.0 7 V3iT Consulting .

Updated on : 15/1/2011 V1. The main asset numbers can have 8 digits while the sub-numbers have 4 digits. Account determination key need to be entered in every asset class.Confidential .System Requirement Specification Asset Class 161080 161900 Office Equipments Asset under constructions 0 Useful Life (Years) Residual Amount Number Range Interval Number ranges are derived based on the asset class. All asset numbers will be assigned internally by the SAP system.0 8 V3iT Consulting . Doing so guarantees that the account assignment will be the same for all assets in the given asset class. The following number ranges will be assigned in the system: Asset Class 161010 161020 161030 161040 161050 161060 161070 161080 161900 Leasehold Property Freehold Property Renovation Plant & Machinery Computers & Printers Furniture & Fittings Motor Vehicles Office Equipments Asset under constructions Number Range From 10100000 10200000 10300000 10400000 10500000 10600000 10700000 10800000 19000000 To 10109999 10209999 10309999 10409999 10509999 10609999 10709999 10809999 19009999 Assets account determination The account determination links an asset master record to the general ledger accounts to be posted for an accounting transaction. This definition is effective for each chart of accounts and for each depreciation area that is defined as an automatic posting area in the respective chart of depreciation. This numbering always consists of the main asset number and the asset subnumber. The asset number clearly identifies a fixed asset owned by the company.

In the PR and PO. Prior to creation of PO.0 9 V3iT Consulting . The following steps are taken for asset acquisition:    Creation of Asset Master Data Creation of Purchase Requisition (PR) Creation of Purchase Order (PO). however. special account assignment “A” should be specified to identify that the transaction is for procurement of fixed assets.3 The acquisition of an asset can be posted in several ways. using different application components:   Acquisition with Purchase Order via Material Management Acquisition without reference to a Purchase Order Asset Acquisition With Purchase Order The acquisition of an asset will follow the procurement steps for standard purchasing procedure.System Requirement Specification Asset Acquisition 4. The corresponding asset number will then have to be assigned.Confidential . Posting of Goods Receipt Posting of Invoice Receipt   Assets will be capitalized during Goods Receipts with the following accounting entries: Goods Receipts Document Type WE WE Invoice Receipts Document Type WE WE WE Posting Key 86 40 31 GL Account GR/IR Clearing Account Input GST Account Vendor Account Posting Debit Debit Credit Posting Key 70 96 GL Account Asset Account (Acquisition) GR/IR Clearing Account Posting Debit Credit Updated on : 15/1/2011 V1.2. the asset master data should be created as this will be assigned at the point of creating the PO.

you can distribute any number of combinations of line items to any number of combinations of receivers. asset transfer should be used to change assignment to asset class Transfer posting from one fixed asset to another within the same company code can be carried out in one step. you need to change the organizational assignments in the asset master data (Cost Center or location) The asset class changes. such as need to change Updated on : 15/1/2011 V1.4 Asset Under Construction Asset Under Construction (AUC) is a special form of asset.0 10 V3iT Consulting . depreciation key ‘Z000’ should be assigned in the depreciation areas for the Balance Sheet. using the settlement facility. Distribution rules consist of distribution key and a receiver.2. AUC settlement is carried out by using distribution rules which are assetspecific. 4.5 Asset Transfers within the Same Company There are different types of intra-company asset transfers in Asset Accounting. Costs are initially posted to Assets Under Construction Account. The AUC monitor costs incurred for a project.Confidential . As a result. The journal entry is: Document Type KR KR KR Posting Key 70 40 31 GL Account Asset Account Input GST Account Vendor Account Posting Debit Debit Credit 4. the AUC master will be transferred to a final asset. Upon completion of the project. depending on the reason for the transfer:    You split up an asset or move part of an asset (transfer from asset to asset) The location of the asset changes. To convert a non-operating to an operating asset or an operating to an non-operating asset. and that every area of the receiving asset is supplied with values. In this way. Distribution Rule The distribution rule needs to be specified so that the settlement of the AUC to final asset is performed correctly and accordingly. for an automatic transfer posting are that no values from the asset being transferred are lost. which serves as cost collector. The distribution key can be equivalence numbers or percentage rates.2.System Requirement Specification Asset Acquisition Without Purchase Order This is entered via the Asset Accounting Module. based on a pre-defined settlement rules. These assets are usually displayed as a separate item in the Balance Sheet and therefore require a separate asset class and corresponding account determination. The pre-requisites however. If it is not possible to use automatic transfer posting because of unmet pre-requisites. AUC are not subject to depreciation and in order to ensure that depreciation is not calculated.

System Requirement Specification depreciation areas / keys. Depending on the book value of the asset sold. Percentage rate.Confidential . The pre-requisite for this is that the sales revenue account to which the revenue account should be posted. 4. In this posting transaction. credit revenue from asset sale) first. you have to manually post a retirement and then an acquisition to carry out the transfer.2. corresponding gain or loss will be calculated by the system and will automatically be posted to the gain / loss account from asset disposal per automatic account assignment.6 Retirement of Fixed Assets The disposal / retirement of fixed assets is the process of removing an asset or part of an asset (partial retirement) from the asset portfolio. Asset sale with customer The system enables user to post the entry to Accounts Receivable. and uses the same percentage of other areas. The quantity of asset to be retired can be entered if the retirement amount or percentage rate has not been specified/ The system interprets the quantity as a ratio to the total quantity of the asset and thereby determines the asset retirement percentage rate.0 11 V3iT Consulting . has a field status variant in its master data in which the asset retirement field (category Asset Accounting) is defined as a required or optional entry field. the system automatically determines. The following accounting entries are generated: Updated on : 15/1/2011 V1. The transaction will automatically create a customer open item – a debit posting to accounts receivable and a credit posting to the asset account. or Quantity When the amount of APC that is being retired is entered. Asset disposal / retirement could be through sale or write-off (Scrapping) Asset retirement can refer to an entire fixed asset (complete retirement) or part of a fixed asset (partial retirement). In both cases. It determines the percentage amount of APC being retired in that area. the revenue posting and the asset retirement in one step. you have to post the revenue (debit A/R. the system determines the percentage to be retired from the asset using the book depreciation area in which posting is to take place. and then post the asset retirement. using the asset retirement dates entered. the amount to be charged off for each depreciation area. You can initiate the partial retirement of a fixed asset by entering one of the following:    Amount of the acquisition and production cost (APC) being retired.

Depreciation of Assets in HG will be managed as such:    Full month in the month of acquisition / capitalization of asset No depreciation in the month of disposal No depreciation for Asset Under Construction Updated on : 15/1/2011 V1. Asset retirement without revenue – Scrapping A retirement without revenue is used when fixed assets are being written off such as scrapping.System Requirement Specification Document Posting Type Key DR 01 DR 70 DR 75 DR 50 Gain or Loss on Asset Sale DR 40 DR 50 Asset Clearing Account DR 50 DR 40 GL Account Customer Account Accumulated Depreciation * Asset Cost Account * Output GST Account * Loss on Asset Disposal * Gain on Asset Disposal * Asset Sale Clearing Account * Asset Sale Clearing Account * Posting Debit Debit Credit Credit Debit Credit Credit Debit Note : * These line items are automatically generated by the system. 4. If an asset write-off transaction is identified.7 Depreciation The Depreciation component of FI-AA makes it possible to manage automatically the calculation and posting of depreciation. Depreciation is computed and posted on a monthly basis.2. Document Type AA AA AA Posting Key 40 70 75 GL Account Loss on Asset Disposal * Accumulated Depreciation * Asset Cost Account * Posting Debit Debit Credit Note : * These line items are automatically generated by the system. the Finance Department will be responsible to post the retirement in SAP via transaction asset retirement without revenue. Fixed Assets are depreciated depending on its depreciation areas which set out the useful life and depreciation keys which dictate the depreciation methods such as straight-line method. The following accounting entries will be created. This transaction will automatically create a debit posting to the losses from asset disposal G/L account for the assets net book value and a credit posting to the asset account for the entire book value.0 12 V3iT Consulting .Confidential .

the asset values from the previous fiscal year are carried forward cumulatively into the new fiscal year. user can continue to post in the previous fiscal year.0 13 V3iT Consulting . Once the fiscal year change takes place. The system automatically corrects any value that is affected by postings in the past.2. The system only closes a fiscal year in a company code if:    The system found no errors during the calculation of depreciation such as incorrectly defined depreciation keys Planned depreciation from automatic posting area has been completely posted to the general ledger All assets acquired in the fiscal year have already been capitalized. user can no longer post or change values within Asset Accounting (for example. Updated on : 15/1/2011 V1. by recalculating depreciation). At the fiscal year change.System Requirement Specification 4.8 Year-End Closing Year end closing in Asset Accounting consist of 2 parts:   Fiscal Year Change Year End Closing Fiscal Year Change From the point of view of the system. a fiscal year change is the opening of new fiscal year for a company code. User can continue to post in the old fiscal year as long as year end closing has not been done.Confidential . Once the fiscal year is closed. Year-End Closing User will use the year-end closing program to close the fiscal year for the company codes from an accounting perspective. At the same time. No business transactions can be posted in anew fiscal year before the fiscal year change. The system lists any asst that do not meet the above requirements in the log of the year-end closing execution. The log also shows the cause of the errors. you can post to asst using value dates in the new fiscal year.

0 14 V3iT Consulting .System Requirement Specification 4.3 SAP Flow Nil Updated on : 15/1/2011 V1.Confidential .

Confidential .0 15 V3iT Consulting .4 SAP Configuration        Depreciation areas Asset classes G/L account assignment Screen Layout for Asset Master Data Asset Assignment Category for Asset Purchase Order Settlement Profile for Assets under construction Depreciation Key Updated on : 15/1/2011 V1.System Requirement Specification 4.

0 16 V3iT Consulting . acquisition cost.6 Data Migration  Asset Master Data and balances for each depreciation area Both asset master data and balance will be loaded in a single upload process.System Requirement Specification 4.5 ABAP & Other Technical Requirements Nil. Before uploading fixed asset balance.Confidential . asset master record and balance will be loaded into SAP and the reconciliation account will be switch on . Updated on : 15/1/2011 V1. Asset balance will be loaded at the sub-ledger level only. 5 Other Remarks Nil. accumulated depreciation as of the last fiscal year and current year depreciation cost and need to be reconciled with the G/L balance. 4. Once the balance is reconciled.

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