Lease Assets

SAP FI-AA
 Leased Asset Leased
Asset

Leased Assets:
Leased assets create special accounting requirements for the lessee. During
the term of the lease, leased assets remain the property of the lessor or
manufacturer. They represent, therefore, a special form of rented asset.
Such assets are legally and from a tax perspective the responsibility of the
lessor, and are not relevant for assessing the value of the asset portfolio of
the lessee. However, in certain countries, you are nonetheless required to
capitalize leased assets, depending on the type of financing.
Leased assets create special accounting requirements for the lessee. During
the term of the lease, leased assets remain the property of the lessor or
manufacturer. They represent, therefore, a special form of rented asset.
Such assets are legally and from a tax perspective the responsibility of the
lessor, and are not relevant for assessing the value of the asset portfolio of
the lessee. However, in certain countries, you are nonetheless required to
capitalize leased assets, depending on the type of financing.
The Leased Assets component enables you to capitalize leased assets in the
Asset Accounting (FI-AA) component using the capital lease method. The
system calculates the acquisition value from the present value of the future
lease payments in the leasing agreement.
Features :
There are different ways of handling the values of leased assets in the
system. Depending on legal requirements and the conditions of the lease,
there are two different options:
• You have to capitalize and depreciate certain leased assets (capital
lease).
• You treat others as periodic rent expense, which flows into the profit
and loss statement (operating lease).

This second type is not relevant to the fixed assets of the lessee. It is
therefore sufficient to do one of the following:
 Manage operating leases as statistical assets in the Asset
Accounting component (with no active depreciation areas)
 Manage them only as cost-accounting values (or for group
accounting) in the corresponding depreciation areas

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 Leased Asset Leased
Asset
There is a special report on rent liability that can be used for all types
of leased assets (see below).
You can also manage insurance values for purely statistical leased assets
(without depreciation areas). You enter a manual insurance value and an
index series for the leased assets in the asset master record. You obtain
reports on these values using the standard report for insurance values.
Valuation Methods for Leased Assets:
The result is that there are two different methods for handling the
bookkeeping for leased assets, depending on legal requirements and the
conditions of the lease. You must capitalize and depreciate certain leased
assets (capital lease). Others are handled as periodic rent expense, and flow
into the Profit and Loss statement (operating lease).
Capital Lease Method :
Leased assets can be capitalized in the Asset Accounting component using
the capital lease method. The system calculates the acquisition value from
the present value of the future lease payments in the leasing agreement. To
be able to determine the future burden of payment, you need to maintain
the following leasing conditions in the asset master records:
• Amount of lease payment
• Number of payments
• Payment cycle

In order to calculate present value, also enter an interest rate. The system
requires that you post a leasing partner as a vendor in the asset master
record at the time of the acquisition posting (opening posting).
At the present time, the capital lease method can only be used for assets
that are capitalized in the book depreciation area. An opening posting with
simultaneous creation of leasing liability is not possible for assets that have
only cost-accounting depreciation areas.
Implementation Considerations:
General Tips
If you want to manage capitalized leased assets in the system, follow these
steps:
• Define leasing types in Customizing for Asset Accounting with the
specifications for posting asset acquisitions.
• Create special asset classes and account allocations for your leased assets.

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 Leased Asset Leased
Asset
• Define depreciation areas, in which you plan to capitalize leased assets
using the capital lease procedure, so that they manage interest that can
be posted with the depreciation posting program.
• Activate the depreciation areas, in which the leased assets will be
capitalized and depreciated, in these asset classes.
• Assign a leasing type to the asset master records for leased assets.
• Maintain the information and conditions of the leasing agreement in the
master records of the leased assets. Specify an interest rate for
calculating the present value and determine

Configuration Document for Leased Assets:

Specify Account Determination for Lased Assets:

SPRO → Financial Accounting (New) →Asset Accounting → Organisation Structure → Asset

Classes → Specify Account Determination.
Select

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 Leased Asset Leased
Asset

Save. .

Create Screen Layout for rules for Assets Class

SPRO → Financial Accounting(New) → Asset Accounting → Organisation Structure → Asset

Classes → Create Screen Layout rules.

Select the Screen Layout for Leased Assets

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 Leased Asset Leased
Asset

Select F6 to copy as

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 Leased Asset Leased
Asset

Change the Screen layout rule & Name it. Save .

Define number interval for assigning asset main numbers in the asset class. T.Code – AS08.

SPRO → Financial Accounting( New) → Asset Accounting → Organisation Structure → Asset

Classes → Define number range interval.

Enter Company Code and Click on Change Interval Button

Click on Shift + F1 to Insert Interval . Insert the Serial no & number ranges for the same

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 Leased Asset Leased
Asset

.
Save .

Creation of Asset Classes for Leased Asset. T.Code: OAOA

SPRO → Financial Accounting(New) → Asset Accounting → Organisation Structure → Asset

Classes → Define Asset Classes .
Select

Enter the Asset Class, Description for the Asset, Account determination key, Screen Layout,
Number range and select the include asset check box to use the asset for material management
purposes.

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 Leased Asset Leased
Asset

Save. .

Creation of General Ledger Accounts.

Create general Ledger Account for Lease Asset, Accumulated depreciation account for leased
assets, Interest Paid Account & Interest Clearing Account using FS00.

Integration with general Ledger Accounts TCODE:AO90

SPRO → Financial Accounting (New) → Asset Accounting → Integration with the General
ledger → Assign G/L Accounts.
Select Chart of Depreciation and select Chart of Accounts. Double click on Account Allocation.
Select Chart of Accounts and double click on Account determination key.

Select Account determination for Leased Assets and double click on Balance Sheet Accounts
folder and double click on Book Depreciation Area

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 Leased Asset Leased
Asset

Save. .

Fields
Enter the Leased Assets Account number in the Acquisition & Production Costs field.
Fields
Enter the Scrapping of Asset number in the Loss made on retirement without Revenue field
Enter the Revenue on Sale of Assets Account in the Clearing Account revenue from Asset Sale
field.
Enter the Profit on sale of assets account in the Gain from the Asset sale field.
Enter the Loss on sale of Assets account in the Loss from the asset sale field.
Select Depreciation Folder and select Book Depreciation.

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 Leased Asset Leased
Asset

Save. .

Fields
Enter Accumulated Depreciation on Leased Assets Account in Accumulated Depreciation
account for Ordinary Depreciation field.
Enter Depreciation expense account in the Expenses account for Ordinary Depreciation field.
Enter Interest paid Account in the Expense Account for Interest field.
Enter Interest clearing Account in the Clearing Interest posting field.

Determining Depreciation Areas in Asset classes by activating the asset class.

T.Code: OAYZ

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 Leased Asset Leased
Asset

Deselect the deactivate check box to activate the depreciation area for the asset class.
Save. .
Set indicator for the interest of depreciation area for calculating Interest. T.Code:OABZ
SPRO → Financial Accounting(New) → Asset Accounting →Special
Valuation→Interest→Determine Depreciation Areas.

Save.
By activating the interest indicator you can calculate interest in the depreciation areas.
Specify Depreciation Area for Group Assets. T.Code: OAYM
SPRO → Financial Accounting(New) → Asset Accounting →Valuation→ Group
Assets→Specify Depreciation areas for Group Assets

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 Leased Asset Leased
Asset

Select the Group assets check box of Depreciation area as per Income tax Act 1961 to allow the
group Assets for calculating depreciation.

Specify Asset Classes for Depreciation on group assets: T.Code: OAAX

Select the check box of group of assets of your company code to calculate depreciation for the
group of assets.

Define depreciation calculation methods (Base method, Declining balance method & Multi
Level method for all the assets)

Define period controls & Calendar assignments for all the assets for asset acquisitions &
Retirements. T.Codes:OA84 & T.Code: OAVH

Define depreciation keys for leased assets T.Code: AFAMA

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 Leased Asset Leased
Asset
Enter Depreciation Key & description for the depreciation key.

Save. .

Select assignment calculation method.

Select
Enter Dep Type: Ord. Depreciation
Phase: From the start of Depreciation
Fields
Base Method:0014
Decl.bal.method:001
Prd.control:001
Multi level method: C01
Class: Straight Line Depreciation

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 Leased Asset Leased
Asset

Select next entry button and enter the following values

Base Method:0028
Decl.bal.method:001
Prd.control:001
Multi level method: C01
Class: Straight Line Depreciation

Save. .

Create of Group Assets using the T.Code:AS21

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 Leased Asset Leased
Asset

Creation of Leased asset T.Code:AS01

Enter the values in the following fields:
Asset Class:
Company Code:
No.of .Similar Assets:

Press Enter Key after entering the above values.

Enter Description for Leased Assets in the General Tab.

Select the Depreciation Tab & Enter the following fields

Depreciation Key for Book Depreciation:

Depreciation Key for Tax Balance Sheet:
And enter the useful life of the Leased asset.

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 Leased Asset Leased
Asset

Select the Leasing Tab and enter the values in the following fields.

Leasing Company:
Agreement Number:
Agreement Date:
Notice Date:
Lease Start Date:
Lease Length:
Type of Lease:
Base Value as new:
No. of Lease Payments:
Payment Cycle:
Lease Payment:
Annual Interest rate:

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 Leased Asset Leased
Asset

Save. .

Display Assets data using AS03

After entering the values in the fields press Enter Key.
Select the Leasing Tab. It will display the button.

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 Leased Asset Leased
Asset

Click the button, It will take you to the following screen.

In the above screen press enter to post the entry.

The Journal Entry for the Transaction will be as follows.

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 Leased Asset Leased
Asset

Asset A/c Dr 113,745.08

Interest Clearing Account Dr 6,254.92
To Asset vendor A/c 10,000
To Asset vendor A/c 10,000
To Asset vendor A/c 10,000
To Asset vendor A/c 10,000
To Asset vendor A/c 10,000
To Asset vendor A/c 10,000
To Asset vendor A/c 10,000
To Asset vendor A/c 10,000
To Asset vendor A/c 10,000
To Asset vendor A/c 10,000
To Asset vendor A/c 10,000
To Asset vendor A/c 10,000

The entry will be shown as like this.

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 Leased Asset Leased
Asset
After executing the depreciation run (Tcode: AFAB), Depreciation for the Asset &
the Interest will be transferred to the respective accounts.

The Journal Entries after the execution of Depreciation run will be as follows.

Interest Paid A/c Dr xxxx

To Interest Clearing A/c xxxx

Depreciation A/c Dr xxxx

To Accu. Dep on Assets A/c xxxx

→ Interest amount will be transferred from Interest clearing account to Interest

Expense Account after the execution of depreciation run.

→ By the end of the lease period all the balance in the interest clearing account will
be transferred to Interest expense account.

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 Leased Asset Leased
Asset

Thank You
for Your Time !

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