Google This book is provided in digital form with the permission of the rightsholder as part of a Google project to make the world's books discoverable online. The rightsholder has graciously given you the freedom to download all pages of this book. No additional commercial or other uses have been granted Please note that all copyrights remain reserved About Google Books Google's mission is to organize the world’s information and to make it universally accessible and useful. Google Books helps readers discover the world’s books while helping authors and publishers reach new audiences. You can search through the full text of this book on the web at fiffpy/7books.google.com4espresso tutorials Dee ee + Processes and Functions in SAP ERP | - Validation and Reporting for IFRS Financials + Posting Examples and Integration to » Periodic Activities Explained General Ledger AccountingDieter Schlagenhauf, Jérg Siebert: ‘SAP® Fixed Assets Accounting (FI-AA) ISBN: 978-3-943546-22-4 (epub) 978-3-943546-21-7 (kindle) Originally published in German as ‘Anlagenbuchhaltung mit SAP" by Galileo Press, Bonn, Germany, in 2011 Translation: ‘Tracey Duty Cover design: Philip Esch, Martin Munzel Coverfoto: iStockphoto All rights reserved. 41®* Edition 2012, Gleichen © 2012 by Espresso Tutorials GmbH URL: www.espresso-tutorials.com Al rights reserved. Neither this publication nor any part of it may be ‘copied or reproduced in any form or by any means or translated into another language without the prior consent of Espresso Tutorials GmbH, Zum Gelenberg 11, 37130 Gleichen, Germany. Espresso Tutorials makes no warranties or representations with respects to the content hereof and specifically disclaims any implied warranties of ‘merchantability or fitness for any particular purpose. Espresso Tutorials assumes no responsibilty for any errors that may appear in this publication, Feedback We greatly appreciate any kind of feedback you have conceming this book. Please mail us at info@espresso-tutorials.com!We have added a few icons to our text that will help you access useful information. These include: Tips highlight information concerning more details about the 1@ subject being described and/or additional background information. Examples help illustrating a topic better by relating it to real SY, word scenarios Warnings draw attention to information that you should be ware of when recapitulating examples from this bok.Table of Contents 1 Introduction to Asset Accounting 1.1 Basic Concepts of Asset Reporting 1.2 Development of Accounting 1.3 Valuation According to US GAAP and IFRS 1.4 Group Valuation, Consolidation, and Foreign Currency 1.5 Summary 2 Inventory and Physical Inventory 2.1 Basics 2.2 Quantity Management in Fixed Assets 2.3 Fixed Value Assets 2.4 Physical Asset Inventory 2.5 Methods of Identifying Inventory 2.6 Reporting Procedure and Physical Inventory 2.7 Physical Inventory Procedure 2.8 Physical Inventory Postprocessing 2.9 Summary 3 Hierarchy of Asset Master Records 3.1 Hierarchy of the Balance Sheet, Financial Accounting, and Asset Accounting 3.2 Asset Class 3.3 Asset Number 3.4 Number Range Intervals 3.5 External versus Internal Number Assignment 3.6 Sub-Numbers 3.7 Working with the Asset Master Record 3.8 Asset as Account Assignment Object 3.9 Summary4 Business Processes and Posting Transactions 4.1 Acquisition 4.2 Transfer Posting 4.3 Retirement 4.4 Transfer 4.5 Write-Up 4.6 Summary 5 Periodic Activities in Asset Accounting 5.1 Depreciation 5.2 Periodic Balance Sheet Postings 5.3 Change of Fiscal Year and Year-End Closing 5.4 Summary 6 Evaluations in SAP Asset Accounting 6.1 Asset Balances 6.2 Day-to-Day Activities 6.3 Explanations for the Profit and Loss Statement 6.4 Explanations for the Balance Sheet 6.5 Summary ‘A About the Authors: B Disclaimer1 Introduction to Asset Accounting Drawing up a balance sheet means presenting the values of the assets and liabilities of a company. A considerable proportion of the assets are fixed assets. Here you will learn what fixed assets are, how the value of fixed assets has to be reported, and how SAP Asset Accounting can support you. ‘This book focuses on the valuation of asset objects. Fixed assets are part of the assets of a company — generally the major part. Within accounting, asset accounting is responsible for creating this asset presentation, if necessary according to multiple accounting regulations, ‘The SAP Asset Accounting solution is a tool that enables you to do this, In order for you to understand the task and tools of asset accounting, this chapter first presents the development of the accounting regulations and the differences between them with regard to the valuation of fixed assets. (SAP did not invent accounting — despite this, the development of accounting is reflected in SAP Financial Accounting and SAP Asset Accounting.) 1.1 Basic Concepts of Asset Reporting [Anyone who has tried to sella car knows this problem: how much is the car currently worth? There is hardly any question that is more difficult to ‘answer, particularly when the car in question is your own. Every owner thinks it is worth a lot; every interested party thinks it is worth less. ‘The task of accounting is to report the assets and liabilities of a company at a specific date as a monetary value, This monetary value must be determined for each object individually and documented in a book. The book is called the inventory, and the monetary value, because it is recorded in a book, the book value. This theoretical valuation for thousands of objects on a key date can only be performed in accordance with a standard set of rules — a set of rules that stipulates how the individual objects are to be valued. This set of rules is known as an "accounting regulation." As there are numerous such accounting regulations, the values of the individual objects and, in end effect, the assets of a company, are different depending on the specific regulation applied. Accounting can be performed based on the principles of US GAAP, IFRS, or other local legislation.41.2 Development of Accounting ‘Accounting has its origins far back in history. As far back as 1728 BC, the Babylonian Code of Hammurabi prescribed that traders had to perform accounting. Even the ancient Romans kept books (also known as ledgers). The current form of double entry bookkeeping evolved in the Late Middle Ages in the trading towns of northern Italy. Therefore, it is sometimes also referred to as “Italian” bookkeeping. Double entry bookkeeping was described in detail for the first time by the Italian mathematician and Franciscan monk Luca Paciol Pacioli wrote one of the first standard works on accounting. This work appeared in 1494, presenting the form of double entry bookkeeping still in use today for the first time. Many of the terms and procedures described by Luca Pacioli are stil used in legislation today. Paciolis explanations on inventory and valuation are relevant for asset accounting. Thus, the inventory was already the fundamental element of commercial accounting as early as 1494. According to Pacioli, the trader must enter, in a “special book,” what he believes to own in the form of property and moveable assets. Specification of the date, location, and name of the trader make it possible to identify and check the individual objects in the inventory. lf you compare these specifications from the 15th century with the input fields in the SAP asset master record, you will find a lot of similarities immediately (see Figure 1.1): today, just as back then, the name, umber, and date are the basic prerequisites for being able to check the individual objects.(BL) Change Asset: Master data UB Avevaves net TET Taig trata on Sucre conoycoe S5 os — bo eeeeerrat a co iit | nae a roa 5 Coa oro ——— a Kaname aa Cree © Copytght SAP AG. Al ght eee Figure 1.1: Asset master record, general data At the same time, Paciol’s note that the inventory must be prepared on ‘one and the same day gave rise to the balance sheet or accounting date. ‘The description of the order of the structure— recording items that can be easily lost first—introduces a balance sheet structure. Pacioli inventory primarily addresses the number of individual objects present. After this ‘uantity-based determination of the inventory, each individual item must be valued. A consistent sequence is important, because something that does not exist or no longer exists has no value. In Chapter 16 of his work, Luca Pacioli specifies the monetary value to be applied for the individual items in the inventory. Here, Pacioll writes that the value must be based on the monetary value usual on the market. This isa clear indication of what we call the current market value or fair market value today — that is, the monetary value at which the object can be traded on a specific day. It is a valuation that applies generally forall later forms of accounting. Despite this, the dilemma of this valuation with market values becomes very clear when we look at it more closely. Even in Pacioli's time there was not necessarily an active market for all goods. In particular, it was very difficult to determine a current market value for objects that were nottraded on a daily basis. To solve this problem, the original price paid (and thus known) for these objects was documented. A lower valuation was only to be selected if it was subsequently discovered that this price could no longer be realized, ‘The knowledge that the loss of value in the original price arises mainly through use of the object gave rise to a very important valuation variant. Paciol's successors came up with an idea: the wear-based decrease in value of the price, also called depreciation, was distributed over a probable and thus estimated useful life of an object. Thus, scheduled depreciation was established. Depreciation is the reporting of a decrease in value, that is, in principle, something negative. It was precisely this estimation of the useful life that finally led to the definition of fixed assets. Since then, all objects in the inventory that are intended to fulfil a purpose for the company over several years are assigned to fixed assets. ‘The methods of Pacioll and his successors have proven themselves and become established in many countries. 1.3 Valuation According to US GAAP and IFRS. For a long time, the intemational capital market has required standardized reporting of a company’s assets (ie., reporting that is not influenced by national regulations). Originally, ‘the US accounting regulations US GAAP (United States Generally Accepted Accounting Principles) were used for this purpose. For Europe, the IAS (International ‘Accounting Standards) were later developed: they are now known as. IFRS (International Financial Reporting Standards). Both sets of accounting regulations are only marginally different with regard to the valuation of fixed assets ‘The inventory and the principle of individual valuation are also anchored in US GAAP and IAS/IFRS. Here too, the valuation is generally according to the historical cost principle, and reduced by accumulated depreciation, However, US GAAP or IAS/IFRS place considerably more value on a “real" reporting of the asset value. The development in these two accounting approaches goes back to fair value accounting again, ‘Therefore, under strict regulations, valuations. above acquisition/production costs are possible. On the other hand, low market value (impairment) must also be reported. These decreases in value ‘must be determined by impaitment tests. 1.4 Group Valuation, Consolidation, and Foreign Currency‘A group arises when a company can exercise a controlling influence over another company. In consolidated financial statements, the asset situation of all companies involved must be reported as if the group were ‘one company. In the individual companies, the fixed asset objects are also valued ‘according to the accounting regulations of the controlling company (.9. IFRS, US GAAP, local GAAP). If there are no quantity and value movements between the group companies, the fixed assets of the individual companies, valued according to group specifications, can be summarized in a group inventory. If there are movements from oto fixed assets between individual companies in the group, these transactions must be neutralized, or rather, consolidated. Even immovable fixed assets can move around within the group. Company A acquires an older building from company B. Company A renovates the building acquired eg extensively (new roof, new windows, new heating system, etc.) For company A, the renovation costs are part of the acquisition and production costs as purchase-related ‘expenditure. The increase in assets as a result of the purchase price and the renovation costs is visible in the inventory of company A as a new building. The total expenses would be written off over 50 years at 2% (= German GAAP). From the group view: if companies A and B were one company, nothing would change in the fixed assets; everything would stay as originally presented for company A. The renovation costs would be merely necessary maintenance expenditure and would therefore reduce the group profit immediately. In its Asset Accounting module, SAP offers special functions for group- specific asset changes. For example, group companies often require balance sheets in the national currency from their subsidiaries, e.g., US Dollar. However, a translation at the respective balance sheet key date would make the historic costs incorrect due to exchange rate fluctuations, In SAP Asset Accounting, you can manage a separate valuation area in foreign currency. In this area, the translation takes place when the asset acquisition is posted, at the daily exchange rate applicable then. The other values remain fixed. 4.5 SummaryYou have now leamed some facts about how accounting developed, about the inventory, and about valuations for the inventory. You have learned above all that there are several, parallel accounting approaches to be reported: for the tax authorities, you have to create a valuation according to tax law; intemational addressees expect balance sheets according to the specifications of IFRS or US GAAP. Overall, asset accounting is a highly complex task for accountants and SAP support ‘employees. You can use the organizational structures in SAP to meet the requirements. For fixed assets in particular, you must analyze how many different accounting regulations (known in SAP as valuation areas) have to be managed and with what respective priority,2 Inventory and Physical Inventory ‘Objects that no longer exist have no value. Therefore, the existence of fixed assets must be checked by means of an annual physical inventory. The individual objects in fixed assets must therefore be recorded such that they are identifiable. In Chapter 1, we referred to the inventory — the record (directory) of the individual asset objects. This directory must report the asset objects present on a specified date. These objects must be determined by a physical check, also known as a physical inventory. The word “inventory” Is derived from the Latin “invenire," meaning to find something. In this chapter we will explain what you have to list in the fixed assets inventory and how to perform the physical check. 2.1 Basics ‘Our national tax and accounting laws regulate what information the inventory directory must contain. These laws also regulate how and at what time intervals a physical inventory must take place. ‘The verification that the individual assets listed in the inventory directory are actually present can be provided by a physical inventory, meaning that the assets should be viewed and counted individually — which can be a very time-consuming measure. ‘Accountants are often accused of being bean counters. Quite apart from the fact that this statement is not a compliment, itis also incorrect. The ‘administrative effort involved in checking and reporting the value of fixed assets can and must be kept within reasonable limits. The principle of proportionality is also applicable here. 2.2 Quantity Management in Fixed Assets Indeed, you can manage identical capital goods in the inventory as one single item, with specification of the quantity. In the sense of valuation, identical means the following: P Identical date of acquisition > Identical acquisition and production costs > Identical depreciation methodFor example, 80 personal computers could be managed under one asset number. However, this variant for the master asset (unfortunately frequently used) will certainly lead to considerably more effort later in the maintenance of asset balances: for example, these 0 personal computers will not leave the company all at the same time, meaning that time-consuming partial retirements are necessary; they will also not be used permanently in one cost center, thus requiring extensive partial repostings instead of simple cost center changes. This type of inventory management causes the greatest problems for a Physical asset inventory. How can you determine whether all 50 computers of this asset are still present? The individual PCs cannot be identified via asset accounting. However, annual evidence by means of a physical inventory is still required. This evidence would require additional individual inventory management outside or in addition to asset accounting. Thus the company still has the administrative effort and there Is therefore no benefit, We therefore strongly advise against this type of inventory management. SAP Asset Accounting offers very convenient functions for creating and posting this type of mass acquisition with the initial purchase. We will address these in Chapter 3, "Hierarchy of Asset Master Records.” Quantity details are however stil useful for certain capital goods, for example, for low-value assets that are presented as flat-rate assets, Figure 2.1 shows an asset with a quantity of 57 items; Figure 2.2 shows the movements for this asset. cae SOF La(ctec mart) ComparyCoue FIED Cezerton ee che @ secrdaemisson (EGE) Lowa atts ‘Seralnber vate mbar vary 7 FE) rece) Manage treaty © Copyrht SAP AG. Al ghis ero. Figure 2.1: Asset with quantity‘Transactions pawvaldnte frert Type Tonsscn pe name Cry Ae Doce [0.01 012e}60000. 100" Creal sxeetacuaseon USO 2oOmI00000 § 05012012” TOO 100 Evers see acquson USD SONOOONEO 6 © copyrght SAP AG. Al ghis exer Figure 2.2: Movements for this asset For real estate, we recommend specifying the number of square meters, ‘as shown in Figure 2.3. orate Desegton (ont Pain Ht @ ‘ectanumeseon (10800 | Realestate ad snares oy © copyrght SAP AG. Al ghis reser Figure 2.3: Asset with square meters ‘The evidence of ownership for real estate is not provided by means of a physical inventory but by the entry in the register of deeds of the ‘corresponding plot of land number. 2.3 Fixed Value Assets Individual verification of some objects in fixed assets can involve a great deal of effort — effort that is usually out of proportion. Typical examples are scaffolding and casing parts in the construction industry, or tableware and bed linen in the hotel industry. Beverage and transport boxes and {gas bottles also come under this category. These objects are generally subject to only few quantity-based and value-based changes. AS defective objects are regularly replaced, their stock level generally remains constant. What all of these goods have in common is that an annual physical check would be very time-consuming. This effort cannot be justified due to the low number of value fluctuations mentioned. In fixed assets, these objects can be presented as one individual asset with fixed acquisition and production costs — a fixed value asset. Thereis no depreciation for fixed value assets. Figure 2.4 shows the selection of the depreciation method No depreciation and no interest. Figure 2.5 shows that over the years, no depreciation has been applied. ven = xorg pos ces 55 edocs congaycose FIED ‘A Deyecoin wea Okey Use Prd O09 St Suave 00 onor 2012 [al Dep.” Nem for wl depen (© Copyraht SAP AG. Al ighis reserve. Figure 2.4: Asset with"No depreciation and no interest” DSi Om stnneme © Copytgt SAP AG. Al gis exer Figure 2.5: Asset History Sheet 2013 However, a regular physical inventory is also mandatory for these fixed value assets, although not on an annual basis. To check the changes in fixed value assets in the long phases between physical inventories, we recommend the following: 1. In SAP Financial Accounting, set up a separate balance sheet account for the fixed value assets and a separate asset class in SAP Asset GoogkAccounting. 2. In SAP Financial Accounting, also create a corresponding expense ‘account for posting ongoing stock additions for each fixed value item in fixed assets. 3. Check these expense accounts regularly. Extreme annual fluctuations can indicate a change in the respective fixed value asset, De not take the fixed value concept to far, particularly if individual stock monitoring takes place in the P™ company independently ofthe accounting department. For example, if individual monitoring is performed for “= ‘gas bottles’ for technical reasons, this technical procedure can be used to verify the stock. There is then no additional operating effor necessary from a physical invento 2.4 Physical Asset Inventory ‘Something that is unfortunately often neglected is the necessity of identifying movable assets uniquely. The assets must be recorded in SAP Asset Accounting such that they can be identified. For large stocks in particular, this is an essential prerequisite for a physical asset inventory ‘or for a reporting procedure that replaces the time-consuming annual inventory count. You should always try to use the SAP asset number as the unique designation. Alternatively, you can use the SAP master data field Inventory Number to manage an alternative number to the asset number. Figure 2.6 shows an asset master record with an altemative inventory number to the asset number. However, over the years, this method causes an unnecessary additional effort in data maintenance for fixed assets. The asset number constantly has to be determined via the inventory number.— Conese @ sSaeeenn ieee a a © copyrght SAP AG. Al ghis eeere Figure 2.6: Asset with inventory number Of course, not all asset objects can be identified physically. This physical identification is impossible for intangible asset objects, and not very useful for real estate, buildings, vehicles, etc. The stock of these asset ‘objects can and must be verified by other means: > For realestate, va the enty inthe registry of deeds > For vehicles registered for use on the road, via the license plate ‘number or the vehicle ownership papers ‘The physical inventory identifier, usually a label with a number, is often, and not entirely incorrectly, called the inventory number. However, this identifier must frst be created and attached to the object. 2.5 Methods of Identifying Inventory Unique, unmistakable identification of an object is a prerequisite for the legally prescribed physical inventory and for a reporting procedure that replaces this physical inventory. Physical inventory identifiers are used for the purposes of this unique identification. Almost any method of affixing the identifier is possible: painting, riveting, welding, branding, sticking. For animals (they can also be assets), ear clips with RFID (Radio Frequency Identification) tags are also used. ‘The physical inventory identifiers represent a main feature of the asset, and they are designed for permanent use — for ten years or more, even under extreme conditions in production. Therefore, the manufacture and attachment of a physical inventory identifier can involve a lot of effort‘The simplest and cheapest type of identifier is an adhesive label. It can be printed quite cheaply and simply, can be sent easily, and attached to the object by technical lay persons with litle effort. High-quality adhesive labels stick to almost every surface permanently, have a long life, and if they have bar codes or RFID tags, can be read by machines. In principle, it is advisable to connect the inventory identification procedure with the goods receipt check. Easily movable objects in Particular, for example, notebooks, should already be identified before delivery to the users. C } C 4 HAP toy n. Figure 2.7: Metal label for HIPP PAULANER Neg ia Figure 2.8: PAULANER adhesive labelQUEITER eer ont etl Figure 2.9: Adhesive label with bar code However, there are also technical and organizational limits for adhesive labels. For example, it is not advisable to attach a small inventory identifier to very large objects. For a physical inventory or change report, the search for this "postage stamp" can be extremely time-consuming, Figure 2.10 shows a dredger bucket with a welded inventory number. Figure 2.10: Identification on a dredger bucket When identifying objects, make sure that you follow a standard procedure — for example, the inventory identifier should be positioned as close to the object name plate as possible. 2.6 Reporting Procedure and Physical Inventory GoogleChanges to individual assets are interesting not only for asset accounting and financial accounting: timely information about changes to individual objects is also important for other areas of the company (technology, insurance), Itis very unsatisfactory if these changes are only discovered at the end of the fiscal year during an annual physical inventory. Changes to individual assets should be reported continuously via an operational reporting procedure anchored in asset accounting. In this context, changes refer not only to asset retirements (scrapping, theft, and sales): they also include changes to the cost center or location of the object. In principle, these reports can be informal. However, most companies use forms. Depending on the size of the company, there are very different solutions — from complicated forms with strictly regulated signature procedures and multiple cycles to informal information via e-mail Regardless of what the report looks like, the decisive factor is that the information arrives in asset accounting and is processed promptly there. If this type of reporting procedure is in place, you do not have to perform an annual physical inventory of the entire fixed assets. Despite this, the quality of the reporting procedure should be checked by means of inventory sampling procedures — samples that can be restricted to individual departments respectively. Regardless of whether it is the annual physical inventory or an inventory sampling procedure, at some point a physical asset inventory is necessary. 2.7 Physical Inventory Procedure (One of the simplest physical asset inventory procedures is checking the stock using printouts from SAP Asset Accounting. Figure 2.11 shows how to call up a physical inventory list; Figure 2.12 shows the objects to be checked.‘comoany cade ro » @ Repot dae sR Depreciton ea oF usowe © copytght SAP AG. Al ghee. Figure 2.11: Calling up the physical inventory list ventory st seQ0emy Baz nsotery mater [eet sorption [ba ane es seonsoroz ono Set sce ees - wmances 29.09 0 ena © Copytght SAP AG. Al gh eee Figure 2.12: Physical inventory lists — sorted by cost center This check is usually performed sorted by cost center. The cost center ‘manager is responsible for physically checking the items on the printout and confirming them with a checkmark against the Inventory number, as well as with a date and signature. Special notes from the asset accounting department can also be provided in the Comments column). Any assets managed in the cost center but not listed on the printout must Googlealso be reported In our experience, this procedure with distributing and checking off physical inventory lists is very prone to errors. Missing assets are often not reported; the uniformness of the checkmarks on a physical inventory list generally indicates that the physical check has not been performed properly. A more precise method is a physical asset inventory with a “blank” form on which no assets are printed. The person performing the physical inventory has to record all objects present—naturally, together With the inventory number of the object—and must also note objects that have no identification. These days, this blank form does not have to be a sheet of paper — the difficult and time-consuming reading and noting of inventory numbers can be supported by IT. For inventory identifiers that can be read by machines, the inventory numbers can be transferred to the blank form easily or the form itself replaced by MDE (mobile data entry) devices, small computers with bar code scanners, or RFID receivers. Inventory identifiers that can be read by machines in connection with correspondingly programmed MDE devices ensure long-term inventory recording with low time effort and cost expense. The time-consuming subsequent processing of the physical asset inventory can also be supported technically, enabling further time and cost advantages. However, the fact remains that a physical check is not possible forall fixed asset objects. Some objects cannot be verified by a physical inventory — they are checked by means of book inventories. The term comes from the ‘ownership evidence for real estate: in this case, the verification is provided by entries in the registry of deeds, that is, by comparison with another book: > Intangible assets can only be verified by book inventory. > Software usage rights or patents should be verifiable via license agreements or patent rights. > Financial assets, investments, or loans in fixed assets can be verified with bank statements and contracts. > Ownership of vehicles is usually verified by the vehicle registration papers. > ownership of realestate and buildings, as already mentioned, s documented by entries in the registry of deeds. Despite this, buildings must also be checked physically.> Down payments for assets can be verified by payment transactions. and balance confirmations. Regardless of the respective inventory count procedure, additional information can be given to the asset accounting department for each asset (eg., "no longer required"). All inventory count procedures can have loopholes and should therefore be checked by third parties, internal audit, or external auditors via samples. The decisive part of the physical inventory, the subsequent processing, begins after the recording of the inventory. 2.8 Physical Inventory Postprocessing A physical asset inventory is performed to detect deviations to the inventory in asset accounting and, where necessary, to add to andlor correct this inventory. Proceed as follows: 1. You can generally save the date of the last physical inventory in the SAP asset master record (field: Last Inventory On) without any checks and, where applicable, the physical inventory note. Figure 2.13 shows these entries in the SAP asset master record. The last physical verification took place on December 31, 2012 and during this physical inventory, the information was received that the desk is no longer needed. ‘TST ice desk mance (uso nner) ‘00 LwaGeaws mart) Coreanycese FICO) eres ezegton once eck erence agus wher @ scctenminton ED) Lona ass at rate uy oa Moraga (RFRA TESS rare areas For example, why was an asset not found? > Was this asset being repaired at the time of the physical inventory? > Perhaps this asset was scrapped without notification to the asset accounting department. The asset may appear on the physical inventory of another cost center. ‘These questions must be asked and clarified. 3. After checking and clarifying the deviations, you can make cost center changes in SAP Asset Accounting. Figure 3.32 shows the cost center change for an asset. (B} Change Asset: Overview of time Intervals: Cas 08 Dama mgr) Conpycose_(F1C (© Copyrht SAP AG. Al ghis reser Figure 2.14: Cost center change ‘You may have to post asset retirements (scrapping, theft) or calculate current value depreciation. It may even be the case thal, for deviations detected, you have to pay back any subsidies received and/or add back special depreciation affecting net income that has been deducted. ‘As you can see, almost all posting transactions for asset accounting that we describe more closely in Chapter 4 can arise in physical inventory postprocessing, 2.9 Summary In this chapter, we have made you aware of the interactions between the asset inventory and the physical asset inventoryireporting procedure. You have to set up fixed assets such that the assets are identifiable and canbe verified. The assets that you set up and maintain in SAP Asset ‘Accounting (FIA) now will stil being used in decades to come. You have to take this into account precisely in FI-AA when you enter and maintain asset master records, To enable you to enter assets economically while still making them verifiable, SAP Asset Accounting offers numerous options for setting up the entries according to asset classes. We will look at these in Chapter 3.3 Hierarchy of Asset Master Records Asset accounting is about balancing an account. Before we look at the actual SAP asset master record, let us address the hierarchy of the balance sheet, financial accounting, and asset accounting. Then we will explain the control functions of the asset class. You will learn about the options for setting up the asset master sheet. We will also show you how to work with the asset master record. At the end of the chapter, you will learn why and how the asset number is used for account assignment. 3.1 Hierarchy of the Balance Sheet, Financial Accounting, and Asset ‘Accounting In the balance sheet, the fixed asset values are reported via balance sheet items. Initially, the fixed assets are classified into the items Intangible Assets, Tangible Assets, and Financial Investments. Within these classification levels, the assets must be classified further. Figure 3.1 shows a corresponding balance sheet structure in SAP Financial ‘Accounting up to account level, 7 Serena 3X ant 0d teen ootanong aft Acquistion "'atepes) foe‘©Copyright SAP AG. Al gis exer. Figure 3.1: Balance sheet structure in SAP Financial Accounting In SAP Financial Accounting, there must be at least one balance sheet account for each balance sheet iter in fixed assets. The balances of all accounts assigned to a balance sheet item make up the value of this item. In SAP Asset Accounting integrated with SAP Financial Accounting, these balance sheet accounts must be designated as reconciliation accounts of account class A, In accounting, we generally differentiate between balance sheet accounts and profit and loss statement BD eccounts > Balance sheet accounts subdivide the afore- “=== mentioned balance sheet items > Profit and loss statement accounts subdivide the items in the profit and loss statement Viewed strictly, even the profit and loss statement accounts are balance sheet accounts, merely representing in more detail the change in a major balance sheet item — equity capital. Typical profit and loss statement accounts in asset accounting are the depreciation accounts and the accounts for profits or losses from relirements of assets. In every accounting system (not just those using SAP), the fixed asset balance sheet accounts are broken down further into assets. The account balance of an asset account must be verified by the values of the assets assigned to this account. This brings us back to the SAP asset master record. Somewhere in SAP Asset Accounting, an asset must be assigned to its balance sheet account. In the SAP system, this takes place via the asset class and the account determination defined in this asset class. ‘The asset class introduces a further, purely organizational hierarchy level between the balance sheet account and the asset in the SAP system, Figure 3.2 shows the SAP Asset Accounting asset classes assigned to balance sheet account 22000.‘Asset Balances - 01 US-GAAP. (Repo: 3112202 Credo 2182082 © Copytght SAP AG. A ghie eeerved. Figure 3.2: Balance sheet account with asset classes ‘The assignment of an asset to an asset class is the deciding factor for the account assignment of an asset. For the asset accountant, in SAP ‘Accounting, the problem of G/L account assignment has moved to the selection of the asset class. To create a new asset master record, the accountant therefore has to select an asset class. Figure 3.3 shows the initial screen for creating an asset, with the asset class selection list. Create Asset: intial screen Nase es Ooeeaton eas © Copyigt SAP AG. Al gh exert. Figure 3.3: Asset class selection for creation of the asset master record 3.2 Asset Class Google‘The SAP asset class does more than just regulate the assignment to the respective balance sheet account. It also contains important control functions for creating an asset master record. We will look at some of these functions here. > The asset class is used for account assignment. Remember that by selecting the asset class, you assign the asset to a balance sheet account in SAP Financial Accounting, and this balance ‘sheet account is used for account assignment and drawing up the balance sheet > You cannot change the asset class. Correct assignment of the asset class is therefore vitally important. ‘Once you have created the asset, you can no longer change the assignment of the asset to its asset class and thus the assignment to the balance sheet account in SAP Financial Accounting. The individual asset remains connected to its asset class and thus its balance sheet ‘account permanently. > Do not change the balance sheet assignment of a balance sheet account. In SAP Financial Accounting, you can change the assignment of a balance sheet account to a balance sheet item at any time. However, you must not change fixed asset balance sheet accounts. > Account transfers only via SAP Asset Accounting If an asset moves to a different G/L account, for example, undeveloped real estate becomes developed real estat, in SAP Asset Accounting, this means that you have to create a new asset with a new asset class. for the receiving balance sheet account. An asset must only be transferred to a diferent balance sheet account and thus potentially to a different balance sheet item via the SAP Asset Accounting functions (for more information, see Chapter 4, Business Processes and Posting Transactions"). 3.3 Asset Number Every asset requires unique and therefore unmistakable identification. This identification usually takes the form of a numerical value, the inventory number that we have already mentioned (see Chapter 2, “Inventory and Physical Inventory”). Ideally, this number is identical to an identifier attached to the object. Since this does not always have to be the case (for various reasons), this unique designation within SAP Asset Accounting is known not as the inventory number but as the asset number.‘The asset number is composed of two elements: the main number and the sub-number, Figure 3.4 shows this unique asset number in the highlighted area. Beneath that you can see the specification of the asset class. > Here, the main number should not be interpreted as a pure numerical value. For the main number, in SAP Asset Accounting you can use alphanumeric values. In SAP Asset Accounting, an asset number can be "ABC 12345" or "INTERN-00001," for example. > In SAP, the sub-numberis a purely numerical valu: when a master record is created, the sub-number receives the value 0 (zero) automatically. Create Asset: Master data “emesapetert_| Mocs sme ad oun ene @ ecient SG] Fees nats une essenotneay ‘© Copy SAP AG. Al gts eee Figure 3.4: Asset with main number and sub-number How do you assign this asset number? This is also regulated indirectly via the asset class. The asset class contains the specification of the number range, or more precisely, the number range interval responsible for the assignment of the asset number. 3.4 Number Range Intervals Within SAP Asset Accounting, the assignment of asset main numbers is controlled by number ranges. Figure 3.5 shows number ranges with their intervals for the assignment of the main numbers. In intervals, number ranges are defined in the Columns From Number and To Number. Withintemal assignment (no checkmark in the Ext. checkbox), the number level shows the last asset number assigned For interval 01, for example, number range 1 to 1999999999 is reserved. ‘SAP Asset Accounting performs the number assignment — that is, the system assigns an asset number. In this example, number 2 is the last ‘main number assigned, ‘Maintain Number Range Intervals Brew BS Neopet Serra 1 [mena ] [pena ener Career eo 3. sena0cce60 ssoo00009999 ——~socceeeoonot : & sooooococos0 | «aooooooooa00-—«—«—‘oconeo0ecd 40. 2o0000co00 zeoooomnone =o ©Copyright SAP AG. Al ghis reson Figure 3.5: Number range intervals Interval 10 is reserved for the range from 900000000000 to {999999999999, and interval XX for the alphanumeric range from A to 222222227722. Both intervals require the user to enter the main number — the checkmark is set in the Ext. checkbox. For extemal assignment for SAP Asset Accounting, the number level is irrelevant and therefore not shown. You should use as few intervals as possible for internal assignments and thus set up thei rom ranges very MEP™ onorously. in our opinion, for asset accounting, one internal interval is sufficient. Any attempt to derive balance sheet accounts or even asset classes via the asset numbers will eventually fail, To avoid overlaps, define the number ranges for external intervals as far removed from those of the internal intervals as possible.3.5 External versus Internal Number Assignment In the same way as for many assignments of unique key terms in the ‘SAP system, two variants are generally possible for the asset number. Either the user enters this unique identification externally, or the system assigns it internally For external assignment of the main number, the user enters the number or the alphanumeric value. The user must therefore know which number has to be assigned next or which numbers have not yet been assigned, For example, if predefined, sequentially numbered inventory identifiers are used and these identifiers are stored with the user, extemal assignment can make very good sense. However, if there are several users, potentially also in different locations, this requires a distribution of the predefined inventory numbers to the different users. Every user thus has his own external number interval. User A has number range 1 to 9999, user B 10000 to 19999 etc. If multiple company codes are also operated at different locations, the potential problem multiplies very quickly. The same situation applies if a User processes multiple company codes. In these cases, external assignment of the main number You can see the effect of the External Sub-Number indicator in the ‘number range interval on creation of a master record in Figure 3.6. Create Asset: Master data UD ress om Tce mee) CameayCote FIC Tiedt (cans simi Tas Oop es Cmseyon fesse ener sec stereson ‘| Lwai ets © copytht SAP AG. Al gh eee. Figure 3.6: Exteral assignment of the asset number Here, the manual (extemal) entry of the asset number by the user is‘expected in the first field. The system checks whether this number has already been assigned. If it has, the system would issue an error message. Figure 3,7 shows an asset number assigned externally by the user. In this case, the user deliberately assigned a meaningful main ‘number, composed of the cost center with number 9000, an underscore *_*, and the fiscal year 2012, Change Asset: Master data BB sons set SER ce Cnccea art)—— cameanca FCS cos een ge concen a1) yom Pacers a a) ‘©Copyright SAP AG. Al gh eee. Figure 3.7: Extemally assigned asset number A meaningful asset number as shown in Figure 3.7 mao th account asinment fer mass, rancetong WG, Cvicratiy caer. Under come cieuratance, tore are thousands of assignments and postings to such “sau assets. In larger companies, several users in different locations can be responsible for creating assets for numerous company codes. In these cases, intemal assignment of main numbers by the system is unavoidable. Here, SAP Asset Accounting assigns the next free main number, controlled by the number interval. Figure 3.8 shows an asset master record for asset class 3200,Descreton Conse a ec ernie (SR) Fate rte canes, Moraceae © copyrght SAP AG. Al ghis eeere. Figure 3.8: Internally assigned asset number Asset class 3200 is assigned to number range 03, an interval with intemal number assignment by the system. Here the system assigned asset number 4000000000, 3.6 Sub-Numbers Every time you create a new asset master record, the sub-number 0 is assigned automatically. In addition, you can create further sub-numbers for one main number. From a technical perspective, every sub-number is an independent asset master record, the main characteristics (asset class, account determination, screen layout rule, etc.) of which, however, are identical with those of sub-number 0. You can use an additional sub-number to classify the asset further where necessary. The assignment method for the sub-number is regulated in the asset class. Here too, a checkmark in the External Sub-Number checkbox can define whether assignment is external and manual or performed by the system, ‘The sub-number is intended for special valuation cases. Often, certain volumes of the acquisition and production costs of an asset have to be depreciated differently to the method used for sub-number 0 as a result of tax regulations. This could be the case for a general ovethaul of a machine that has been fully depreciated where the overhaul has to be capitalized; the same applies to an extension of a building that has already been fully depreciated. In such cases, the subsequent acquisition and production costs could be subject to valuation rules separate to sub- ‘umber 0.3.7 Working with the Asset Master Record Even acquisitions in the current year can require an additional sub- ‘number from a valuation perspective in very rare cases. Here, “working with the asset master record” means the classic database functions: create, change, and delete. Creating an asset is by far the most time- consuming activity. 3.7.1 Creating a New Asset Master Record We will show you how to create an asset master record using a posting ‘example. You will encounter this example again in Chapter 4, "Business Processes and Posting Transactions." The invoice document in Figure 3.9 represents the purchase of a pickup truck. carina 8) Hah ee onda, 02386 fngard roescow woe anyon ore Bsr SesarrTON aay — [Rane — [vou Pickup truck '50,000 USD TAK10% 5,000 USD TOTAL 55,000 USD ‘THANK YOU FOR YOUR BUSINESS! Figure 3.9: Pickup truck invoice‘As already mentioned, you create a new asset and perform the account assignment by assigning the asset to an asset class (see Figure 3.10). Here, company code FICO was selected as the business owner of the asset, Create Asset: Inia screen =. 5s © Copyraht SAP AG. Al ghis reser. Figure 3.10: Creation of the new truck asset — initial screen If there are multiple identical assets, you can enter the quantity via the field Number of Similar Assets. If number assignment is intemal, once you have created the first asset, further assets are created corresponding to the number entered. They receive the same content as the first asset. Note that you may have to rework entries such as the serial number, cost center, of location, In the template field group, you can select existing assets to copy, even assets from other company codes. ‘The Post-Capitalization checkbox is reserved for items that were not created as assets in previous fiscal years — facts that were usually detected during tax audits and that require special posting transactions, known as write-ups. The capitalization date of such assets must be before the fiscal year of the write-up posting. With the Post-Capitalization Indicator, these types of assets are permitted for write-up postings of the acquisition and production costs. We will address write-ups in Chapter 4, “Business Processes and Posting Transactions.”(@) Change Asset: Master date 1 Actas cm (0 wees Conprycoce (IED sectors (Gl )_—Fonresantens erty umber ‘uy Mage hres ety Pong tomaten season t+ Deseten © Copyrght SAP AG. Al ghis reser Figure 3.11: "General" tab ‘Once you have completed the initial screen, the entry screen for the first asset master record tab appears: the General tab (see Figure 3.11) Here, the asset number is already displayed, due to internal assignment, and you cannot change it. You have to enter a name/description for the asset. You can also make entries in other input fields but you do not have to (yet) In addition to the asset number, the frst name you enter is displayed or printed with virtually all MPR evauations. Therefore, make sure that you enter a ‘meaningful text. The second line should also contribute to identifying the asset, describing the object in more detail. Therefore, avoid using changeable information One of the important fields here is the Capitalized On date field. Youhave to make an entry in this field either before or at the same time as the first posting. The date of availabilty to the business is relevant here, ‘This date is decisive for the display in the asset directory and the beginning of the depreciation. You can transfer the Capitalization On date field when you make the first posting to the asset, without calling up the asset. In the posting dialogs, you then enter the capitalization date in the Reference Date field. We will look at this in Chapter 6. The next step is usually the tab for the time-based data (Time-Dependent tab, see Figure 3.12) eset ODODE) [F Pen ck oo acer eee epee restr 0101 00 1125808 Cox Coser me iow peony pe reorder a ere © Copyrht SAP AG. Al ghis eter Figure 3.12: “Time-Dependent” tab Depending on the Customizing, you have to make entries in or select numerous fields. A typical and table-supported field certainly used in ‘most companies is that of the cost center. r In addition to the asset number, the frst name you enter is displayed or printed with virtually all evaluations. MP Therefore, make sure that you enter a meaningful text. The second line should also contribute to identifying the asset, describing the object in more detail. Therefore, avoid using changeable information.All time-based information can change. Do not underestimate the ‘organizational and maintenance effort required for this information. You must always question whether this data is up-to-date. A further tab is managed here under the term Allocations (see Figure 3.13). : 3 Soa (© Copyraht SAP AG. Al ghis reserve. Figure 3.13: “Allocations” tab Here you can define table-supported evaluation groups according to freely definable operating requirements. In this context, we recommend grouping the fixed assets technically independently of the balance sheet account and asset class, for example, a unique identification of trucks and cars. Permanent maintenance effort here is unlikely. indaneke ‘Avoid redundancies with existing information such as the balance sheet account, cost center, or location. This information is already available in other places in the asset master record. An interesting assignment is the Asset Super Number field. Using a correspondingassignment table, you can group various assets under fone group number. For example, you could group oa multiple PCs, monitors, and monitoring cameras under the group number "Monitoring system" However, also SSE tink about the maintenance effort: the assignment {0 the group number can change constant ‘The Origin tab is available for further asset identification data (see Figure 3.14) sss NCOEODDET Pup mack oy wr a orumesiss) @ Coumyat erg ogee 1 © Copytht SAP AG. Al ght eee Figure 3.14: "Origin” tab You can enter the vendor in the form of the vendor number andlor as text; you can only enter the manufacturer as text. Both input fields require further comment. > Vendor ‘A fixed asset has a long life — the relationship to the vendor ‘sometimes does not. You can enter a vendor number here — whether this vendor will stil be in accounts payable accounting in ten years remains to be seen. This is why the name of the vendor is also saved as text. Unfortunately, the vendor name is usually not recognizable on the object, and is therefore unsuitable for identifying the object. An asset could also have many vendors — for example, a building. > Manufacturer ‘You can only enter the manufacturer as text. However, the ‘manufacturer name is more suitable for identifying the object than the vendor name. The manufacturer is generally recognizable even afterdecades from the name plates and other signs on the asset. “yore hauteur nae sn ypo when you create a master record. This makes it easier to identify Me) cst tcn to tagng. Erg vendore ane useful, but this is usually only important for a short Sa You can select the checkboxes Asset Purchased or Manufactured New and Purchased Used. If the asset was purchased second-hand (used), it is useful to also enter an original acquisition year and the original acquisition value in that year. ‘The Depreciation Areas tab is the most important one for SAP Asset ‘Accounting. Here you define the depreciation methods and useful lives for each depreciation area (see Figure 3.15). You also enter the data for scheduled distribution of the acquisition and production costs over a probable useful life (see Chapter 1). The accountant decides the book value used to report an object at the respective balance sheet key dates. ree (SOREN Tap com woes compote FIT Geers aoceers eee | Les wet Ae Groncanams ora uu Ps Ooms otmee ee B8oerges) LNB — smcrs no : pon Figure 3.15: “Depreciation” tab You can specify depreciation methods (Dkey column) and useful lives (UseLife column) via the asset class. Making sure that the useful life corresponds to official depreciation tables saves having to provide ‘evidence in a tax audit. Whenever you create a new asset master record, ‘numerous entries can be required depending on the screen layout rule,‘Therefore, the creation of a master record can be correspondingly time- consuming. Master data information that can change over the life of an asset is particularly dificult. We will look at this in the next section. 3.7.2 Changes to the Asset Master Record ‘There is some master data information that should never change. Why should the name, manufacturer, type, serial number, or vendor of an ‘asset change? Other data can change numerous times over the life of an asset. The effort required for maintaining such changeable data is less in the data maintenance or on the screen; the skill is in getting the corresponding information in front of the screen. The higher the volume of changeable data that is queried in the asset master record, the more time-consuming and costly the associated internal reporting procedures. ‘These are factors that are often neglected when designing screen layout rules. Note that changeable information that is not maintained has no value. Less but up-to-date information is much more useful. But let us move on from the sense of the changes to the practical treatment. To change data in the asset master record, there are two different options depending on the master data field For certain fields, such as the name, manufacturer, vendor, type, and serial number, you only have to overwrite the original data, For example, if you change the name, the up-to-date name always appears in evaluations or queries (even for those for past fiscal years). Despite this, you can still trace who changed one of these master data fields and When. In Figure 3.16, our truck receives the new license plate Washington AG9225E due to a change of location in January 2012. teu "HOROSRET Tap ck Wns Eo) con Tio ‘ences congoncuse FET Tegra | core trance sos 9 Pecpravenrenaszaeved ecistemracn UGH aes ater oo se ety © Copytigt SAP AG. Al gh eeeFigure 3.16: Change to the name In the inventory evaluation at December 31, 2012, the name is therefore correct (see Figure 3.17). Asset Balances SEF ENO BSI BEEN Toe OW Asset Balances - 01 US-GAAP 1p Reporte: 31.12.2012 rested on: 10102012 fest ‘ie. Captalzed on Asset desgsan 01017012 Pep Rk Wastgon AKZIE (new) ‘© Copy SAP AG. Al gh esa Figure 3.17: Evaluation — reporting date 12/31/2012 In the inventory evaluation at December 31, 2011, the name is somewhat confusing (see Figure 3.18). At this point in time, the license plate of our truck was stil DN-ESPRESSO35. This looks different in the time-based data, Here, the problem of the confusing time-based display is avoided. ‘Asset Batances AGSUF BNO BRI BEER Eso OW Asset Balances - 01 US-GAAP [a Repor dat: 31.12.2011 - Crests on: 10102012 foot ‘He |Capttzed on cet ancrgean Feodommoons GOLGI 2012 Psp tuck Washgun ABSZEE (nen) (Coat Center 344 Vehicles © copyrght SAP AG. Al ghis eee Figure 3.18: Evaluation — reporting date 12/31/2011 Certain data fields in the asset master record are referred to as time- based data and are generally managed on a separate tab. Typical examples of time-based data are cost centers and location information, This data Is stored in the form of time intervals. When you create a new asset, a first interval with a from date 01/01/1900 and a to date 12/31/9999 js created. You can change this data by adding a new time interval.When it was created, our truck was assigned to cost center number 3444, From 01/01/2012, it was assigned to cost center number 9898 with a second interval. Internally, the to date of the first interval is changed from 12/31/9999 to 12/31/2011. The second and currently last interval is saved with a from date of 01/01/2012 and to date of 12/31/9999. You can see these changes in Figure 3.19. (| Change Asset: Overview of time intervals seoet __[RanponE0008) [o Plu muck Washington A892285 (ren) Ges 3100 vonices Company Code Te eas Fe Cost Cert Locston —Resp.cost. AcTip toner FL. oom | oo a © Copyigt SAP AG. Al gh eared Figure 3.19: Evaluation — reporting date 12/31/2011 Here it is sufficient to specify only the from date: cost center 3444 from (01/01/1900 and cost center 9898 from 01/01/2012. The to date of the last time interval is stil unknown and is therefore recorded internally as 12/31/9999. Look at Figure 3.17 and Figure 3.18 again: both evaluations were created after the new interval was entered. In Figure 3.17, the truck is reported at 12/31/2012 as an object of cost center 9898; in Figure 3.18, at 12/31/2011 as an object of the original cost center, 3444. This is different to the procedure for changing (overwriting) the name. The name is always the up-to-date name, regardless of the time period for the evaluations. 3.7.3 Blocks and De ions In addition to changes to asset master records, blocks and deletions are also possible. Figure 3.20 shows the initial screen for blocking/deleting an asset,ese ty Crete Sarre corr een i) esters 3S | Pes dtr berynarter uaa rages ‘©Copyright SAP AG. A ght eee Figure 3.20: Initial screen for block or deletion You biock an asset master record to prevent further acquisition postings to this asset. This is a procedure used primarily for assets in the area of down payments or assets under construction. You set the block itself by selecting the corresponding asset (under Asset > Block/Delote > Block, see Figure 3.20) and then saving (see Figure 3.21). The blocked asset is still available for display and evaluation. Other postings, for example, depreciation and retirements are also still possible. You can cancel the acquisition biock by selecting the None radio button in the Acquisition Lock field group at any time.(| Block Asset: Processing screen naset —_(neoesoeas) © Pelap mick wasn AEIISE (re) ase (S100 vere canoany cate FTC ‘uray 8,008 Poste terran Frstacquston on (01-01-2012 seman (© Copytght SAP AG. A ghis eeere. Figure 3.21: Selecting the block ‘You can only delete an asset physically under certain conditions: > There must have been no postings tothe asset > The asset number must nt be linked o any other SAP application, for example, in Materials Management for the purchase order or the goods receipt. If you use external number assignment, you could assign the asset number that has now become free when you create a new asset master record, 3.8 Asset as Account Assignment Object, In SAP Financial Accounting, account assignments and postings usually take place at the G/L account hierarchy level. The values of balance sheet or profit and loss items result from the respective account assignments. If a new vehicle intended for own use is purchased, when it is invoiced (see Figure 3.22), the following posting record would arise: Vehicles account (debit) to Payables for goods and services (credit).caruneatua) mvorce aria 12 With treet London, 12986 fngand Invoice: nearer oer /aron Delvere: oye to "oes cop 209 cas.soh se, Sute1157 "New Yr, 720022 use DeCRPTION ‘quay — [are [amouNr Pickup truck s 100,000 USD cance pte: ABC TAX 10 % 10,000 USD TOTAL: 110,000 USD Payebiewntan20daysto ‘THANK YOU FOR YOUR BUSINESS! Figure 3.22: Invoice for a truck This posting record, completely correct for regular financial accounting purposes, causes an etror message for account 21000 (Vehicles) (see Figure 3.23) in SAP Financial Accounting.(Post Documene: Header Dace seeecemet Jatt Pata Dra nierer_ fearon ‘Accent 2100 ncampany code 9 camatbe dec pote 2 ogres ‘Sytem Rapes (© Copyrht SAP AG. Al ghis reser Figure 3.23: Error message — Account 21000 (Vehicles) cannot be directly posted to In SAP Financial Accounting, the balance sheet account *Vehicles* (21000) is designated as reconciliation account for account type A (Asset ‘Accounting). You can only post to these accounts via an asset number in SAP Asset Accounting. SAP also uses the method of direct posting via the subledgers for asset accounting. In the same way as for SAP ‘Accounts Receivable and Accounts Payable Accounting, the application ‘must first be told which of the ledgers the entry in the Account field refers to. This is done via the posting key, in this case posting key 70 (see Figure 3.24)28 23 a a2 34 35 36 7 38 33 40 50 Hee) P._~ AccTy DiC Posting key name Qo<<<<< Payment clearing Special G/L debit Invoice Reverse credit memo Other payables Incoming payment Payment difference Other clearing Payment clearing Special G/L credit Debit entry Credit entry Debit asset Credit asset Inventory taking Costs Inventory difference Price difference ©Copyright SAP AG. Al gh eee Figure 3.24: Selection of posting key ‘The posting key controls the entry of the line item A specific account type is assigned to each posting key: > G stands for GIL account and is assigned to the general ledger > C stands for customers and is assigned tothe accounts receivable accounting subledger > stands for vendors and is assigned to the accounts payableaccounting subledger > A stands for assets and is assigned to the asset accounting subledger Via the entry of a posting key, the application “recognizes” whether the ety in the Account field is @ G/L account number, a customer number, a vendor number, or an asset number. The posting key also defines. Whether the posting is @ debit posting or a credit posting. The amount entry in the line item is therefore assigned to the debit side (at SAP a positive value) or the credit side (at SAP a negative value) of an account, when you enter the posting key. As standard, for SAP Asset Accounting, key 70 is reserved for debits and 75 for credits. Depending on the posting dialog, you navigate to the entry of the posting key via the Complex Posting menu item or using the function key (F6). Within SAP Accounting, the asset, or more precisely, the main number and sub-number of the asset are further account assignment objects. ‘Thus, the SAP application consistently follows the prescribed hierarchy of ‘main and subledger. The posting record for this asset acquisition in an integrated SAP Financial Accounting is therefore: ‘Truck asset 400000000004 -0 (debit) to Payables for goods and services (credit) Thus, you can only post to andior change the balance of a balance sheet account assigned to SAP Asset Accounting (account type A) via an asset. In Figure 3.25, the asset number is used in the Account field and, separated by a dash, sub-number 0. Due to the predefined posting key 70, the SAP application “recognizes” thatthe entry in the Account fied is an asset number.Enter Vendor invoice: Add Vendor item SGBD Sree — rccrmose: GranOaacrey tees vrs x orton as) thee [167008 en eT coc Tecoe Popes oyeercee 1 1 Pree ce Peeters Poymer Pree art Tet @ testes ) Paaly 70 Aecare “eo0000000004-0 Sok!‘ The "100" Neneozate Jj) Figure 3.25: Posting key 70 with asset number and sub-number as account As the asset is assigned to a balance sheet account via the asset class and its account determination, the SAP system determines the account assignment for Financial Accounting. From the entry of asset number 400000000004 -0, the SAP system only creates a debit posting to account 11000. Figure 3.26 shows account number 21000 as the G/L ‘account in posting line 002, and to the right of that, asset number 400000000004 with the sub-number 0 (in this display, with leading zeros), Enter Vendor invoice: Display Overview GE B80 cureey Bam ec PosmpOxe (O02 2012 Pes 2 0. Reinga cor 31 onom0nz1 car Lanited (Lea) 196.000,00- 49.000,00- 11Figure 3.26: Overview of the posting ‘The account assignment and postings take place via the asset number. This results in the posting record that we had at the beginning, Vehicles to Payables. For every traditional accountant, this is a reassuring fact. ‘The posting key also controls which fields the input screens contain. In Chapter 4, "Business Processes and Posting Transactions,” you will get to know this type of posting— with the asset number instead of the ‘account number—and the other input fields more closely in numerous examples, 3.9 Summary In this chapter we have presented the asset in the balance sheet hierarchy. You have become familar with the control function of the asset classes and the options for setting up the asset master sheet. We have discussed creating, changing, and deleting the asset master record. And you now know that in SAP, the asset number is used for account ‘assignment. In the next chapter we will also look at the task of account assignment — and above all, the question of when you can create the asset master record in the intemal process.4 Business Processes and Posting Transactions “There are many ways to achieve a goal.” Staying true to this motto, in this chapter we will present various SAP transactions for ‘everyday business transactions or postings. Within a company, the asset accountant talks to and corresponds with people from many different departments, gathering the information that he needs. This cross-organizational fact is reflected as a division of work in many SAP transactions that you will become familiar with later in examples, particularly for acquisition postings. With no claim to completeness, the following are important departments with points of contact with asset accounting: > Accounts payable accounting Accounts receivable accounting P Vehicle fleet Insurance management In this chapter, we will present the resulting SAP Asset Accounting postings using practice-related business transactions. You will become familiar with the various SAP transactions and will then be able to use them in your daily work. Our objective is also to show an overview of different alternative transactions for one business transaction, with the corresponding advantages and disadvantages. We will address five main topics: P Acquisition > Transter posting P Retirement > Transfer > Write-up We will present different variants of the individual SAP transactions and business transactions. For example, you can post acquisitions via a clearing account, integrated with Accounts Payable Accounting, or even integrated with Materials Management. In addition to the incominginvoice, complete or partial credit memos are important. We will also consider individual aspects such as amount rounding or subsequent acquisitions in the same fiscal year. Highlighted tips and error messages created deliberately should help you to master every individual business transaction. 4.1 Acquisition You create the balance sheet at the end of the fiscal year, and at this point in time at the latest, you have to define and value the new objects added to fixed assets. Traditionally therefore, asset accounting wasiis oriented on financial statements. Usually, for assets acquired during the year, the assumed acquisition and production costs were posted to the ‘asset accounts in financial accounting or to clearing accounts. Therefore, there was no movement in asset accounting itself. The only benefit of this isa time-saving. ‘As a result, around the end of the fiscal year there was always a flurry of ‘activity in accounting departments. The information mentioned above has to be obtained; at some point in the fiscal year, the clearing accounts (e.g., for acquisition postings) have to be credited. This means that every transaction has to be processed again, every document looked at again and posted. This procedure not only causes unnecessary personnel costs: the willingness of the accounting department to provide information is limited for clearing postings during the year. As a result of the postings to clearing accounts during the fiscal year, the balance sheet and profit and loss statement are not very informative. This procedure also makes the verification or proof of acquisition and production costs more difficult. All of the information mentioned above has to be queried, All documents have to be looked at again. Considering the disadvantages of traditional asset accounting, which relied heavily on clearing accounts, it is clear why there are multiple transactions for the same content (acquisition or retirement) in the SAP system. In SAP Asset Accounting, you can post and document acquisition postings with three different methods. Figure 4.1 shows an overview of the methods with the respective degree of integration.vendor lewing account net oT ® vendor set — Figure 4.1: Overview 4.1.1 Posting using clearing accounts In the first method, posting using a clearing account, the SAP Accounts Payable Accounting and Asset Accounting modules are managed separately. There are usually different people involved who are concered exclusively with their own area of work. The accounts payable accountant activates the posting record— Clearing account to Vendor— passing the invoice on to the asset accounting department. There, the transaction is completed in the system with the posting Asset fo Clearing account. The clearing account used by both departments has to be reconciled at the end of the month, This is an additional work step, a potential source of error, and a considerable disadvantage of this method. 4.1.2 Integration with FILAP If the SAP Asset Accounting and Accounts Payable Accounting modules are not strictly separated, one posting record—Asset fo Vendor—can be used. In this second method, the division of work consists of the asset accountant creating the asset master record in the SAP system based on the invoice and noting the master data number on the invoice. Theaccounts payable accountant then documents the business transaction completely in the system. If the asset accountant and accounts payable ‘accountant are one person, this method is preferred anyway. 4.1.3 Integration with MM In the third method, available technically from SAP Release 4.6, there is an initial account assignment based on the purchase order data. At this very early stage, the asset master record is generated in the ERP module MM and defined in the purchase order as information. In practice, this integrated variant has the most advantages for documentation of the business process. To find out which of the three methods are used most in practice, the Internet platform www-fico-forum.com launched a survey in June 2010. More than 100 users participated in the survey. The result showed a trend towards the highest possible integration with Materials Management (41%). Integration with FI-AP recorded 30% of the votes, and posting using clearing accounts 29% of the votes. The survey results can also be interpreted to mean that each of the three acquisition posting methods is used with similar frequency, and that each method is justifiable in a company. In addition to this overview, in the next sections we will present all three acquisition posting methods in more detail using an example. This will make the advantages and disadvantages of each method transparent and tangible. 4.1.4 Posting via a Clearing Account This procedure is still available in integrated SAP Asset Accounting. Here too, you can park assumed asset acquisitions in clearing accounts in ‘SAP Financial Accounting to post them to the assets at a later point in time. For this "traditional" procedure, SAP Asset Accounting offers special functions, Ifthe SAP Accounts Payable Accounting and Asset Accounting modules are separate, a posting method via clearing account can/must be used. In a first step, the vendor invoice is available; it is processed with transaction FB6O (Enter Incoming Invoices) and posting record Clearing ‘account to Vendor (see Figure 4.2).ss = Se ads : a Greene q © Copyrht SAP AG. Al ghis ero. Figure 4.2: Posting record — Clearing account to Vendor ‘The accounts payable accountant does not need any specific knowledge about SAP Asset Accounting and can define the payable in the system and schedule it for payment. The SAP posting is usually noted on the paper document and this is passed on to the asset accountant. In a second, independent step, the asset accountant can create the asset master record in the correct asset class and complete the business transaction. Figure 4.3 shows transaction ABZON (Acquisition with ‘Automatic Offsetting Entry) with an example in which an asset, "Computer," is created in asset class 3200 and at the same time, there is ‘a posting in the amount of USD 10,000.00 to the clearing account.Enter Asset Transaction: Acquis. wiAutom. Offsetting Entry FE cptvetams enue conpamcece eaves 6 @ comveyene FT — sao gi) onc “corr arse a0 Te _—_— (© Copytght SAP AG. Al gh eee. Figure 4.3: Posting record — Asset to Clearing account Two main points are dependent on the knowledge of the asset accountant: P Selection of the correct asset class ensures the correct useful lfe for the computer. > irrespective ofthe posting date and document date, itis important to know the point in time from which the asset was available to the company. This produces the reference date and thus the depreciation star. Using transaction AWOTN (Asset Explorer), you can display all relevant ‘and linked data in an overview (see Figure 4.4). Here, a disadvantage of this acquisition posting method becomes clear: only a few items of integrated information are available in the bottom left area, Objects related to asset. Due to the posting method, data from the purchase order ‘or SAP Accounts Payable Accounting is missing.a amuses eres See oa © copyrght SAP AG. Al ghis reserve Figure 4.4: Asset Explorer including linked objects ‘A further disadvantage of this acquisition posting method is that you have to clear the open items in the clearing account in an additional work step. Figure 4.5 shows a simple case with USD 10,000.00, document type KR, ‘and an identical amount with document type AA. If open items cannot be cleared automatically, you have to process them manually. Depending on the volume of documents, the clearing account becomes unclear and incorrect postings are common in practice. This major disadvantage is reason enough to think about integrated acquisition postings. GoogleClear GA. Account Process open Items 2 Onnmar Oxmeotan Gecmmones (Aces nm se cin cr ‘eon Cocoa. Coumare. Coca et PanngKey FotrgD.UeDGrn. t} Figure 4.5: Clearing open items © copyrht SAP AG. Al ghiseeere 4.1.5 Posting Integrated with SAP Accounts Payable Accounting You can post vendor invoices easily and clearly with the single-screen transaction FB60; however, an integrated posting with SAP Asset ‘Accounting is not yet possible. Instead you have to use transaction FBO1 (Post Document) — available since the days of R/2. To post a complete document, you must have already created an asset master record. The accounts payable accountant also determines when depreciation should begin. In the first step, you enter the data for the document header. Figure 4.6 shows that, in addition to the invoice date (document date), you define a document type for vendor postings (KR), the date for the period in financial accounting (posting date), and a reference to the external invoice number (reference). Post Document: Header Data Flscccimare secimee! EFsiCx tery (Postmenreerence Estas Omens ee coromycme 6100 Pee Coney usb Figure 4.6: Enter document headerIf you select the vendor using posting key 31 (Credit Vendor Posting), when you press ENTER, the first line item appears as shown in Figure 4.7. The gross amount of USD 11,000.00 contains an example tax portion of 10%. The payment target is defined as four days for a net Payment. For integration with SAP Asset Accounting, you need a suitable posting key, in this case, 70. The input help (F4) offers a corresponding selection of existing asset numbers. If you work with the F4 input help and search for your asset master record using the name, note a special feature in SAP Asset Accounting. In the asset master record there are two lines for defining the name — ‘enabling you to describe the asset in detail. However, in the context of the posting transaction, the search function is limited to the first line. ss Enter Vendor invoice: Add Vendor item SO DD Preven sccmecs Gfor0s cay Bee Vente Beatie) 3 Cop em 1/inaee/ 31 Cate Tucose Pap Tes Doptpecet ’ 1 Decne ee, rot Pomecte Pee soe ee @ tna) Posy TO'Aceurt 400000000006°0 “SOLind “Thpe 100" Newcocase Jp © copytght SAP AG. Al ghis eee. Figure 4.7: First line item with preparation for FI-AA ‘Asset master record 400000000006 was selected. Transaction type 100 for acquisition postings assigns the posting within the asset history sheet. Press ENTER to go to the second line item (Figure 4.8). Information about the business area and the profit center is taken from the asset‘master record and you cannot change it here. The reference date 04/26 indicates the depreciation start Enter Vendor Invoice: Add Asset item BOBO Piers Accmosd Grsaoxseey Hoes caicont TT Fear tangs Campevene Festa Tansee TH ae “TaROOREGR T— Corot? tay 2st at TE e100 oe : 0 see BiROSRRRI] commas? Fewer OE Accounting > Valuation > Amount Specifications (Company Code/Depreciation Area) > Specify Rounding of Net Book Value and/or Depreciation (transaction OAYO). Figure 4.21 shows a transaction that focuses on cent amounts and the second asset, an office chair.corumned tad) vorce ahh saat Landon, 12386 ngand mwolce arse s6/oa2012 Purchase Order Oste: 31/07/2012 DelweryOwe: 34/8/2012 1065 cow 203s sth st, Sue 1157 ‘ew Yr, WF 10022 ua ‘DESCRIPTION ‘uae [Rare [awouer Desk 2 ‘899.99 USD Office chair 100.01 USD TAX 10% 100 USD TOTAL: — 1,100USD Pape win 20 daysto own ec ‘THANK YOU FOR YOUR BUSINESS! Figure 4.21: Business transaction ‘A gross amount of USD 1,100.00 is payable net within 30 days. The delivery encompasses a desk and an office chair. At USD 899.99, the desk belongs to the asset class Fixtures and fittings, see Figure 4.22. In contrast, the office chair is a low-value asset and is to be written off ‘completely in the year of acquisitionEnter Vendor invoice: Correct Asset Item BERD Sroess Aeamose LGrssioao ey Htoes tccnet FRE Fotaes nttange _ Cconganycuse FIED ‘oescop Tanete T pre e008 v0 c: ae : bene = es © unatee ‘© Copytgt SAP AG. Al gh esa Figure 4.22: Asset item — desk ‘Once the invoice has been posted, it is worth taking a look at the Asset Explorer. Figure 4.23 shows the desk with acquisition costs of USD £899.99 in the first year. The depreciation in the first year is USD 75.99, ‘meaning that in the subsequent years, round depreciation amounts and net book values can be calculated,Fo Company Case 1065 cop ase connonacea02) [0 —‘ploese reaee = Q2RD) » Oanl Paneedvoues | Posed vaves Parte FeO MMM mei) Ex) Oe) )8 bs) B) US-GAAP:2012 -2017 Ficalyeor £APC ransacions Acquston vale #Ordnary deprec. Netbook value roy “aor 30 nama 90 ex USD. im 8 wom ba4go USD L fea0 impo Seton Uso as ego mo zet00 Uso ms ea imo toto Uso a eae toi. sD Figure 4.23: Asset Explorer — desk ‘An asset is not always acquired with one invoice alone. In practice, there are offen multiple invoices for one asset. The next business transaction looks at an example of this. 4.1.9 Additional Acquisition in the Same Fiscal Year In this example, the truck asset was acquired a few months ago at a total value of USD 80,000.00. In the same fiscal year, all trucks are to be fitted with modern navigation devices at USD 2,000.00 each. An additional installation kit is also required, at a cost of USD 500.00. For an additional ‘acquisition in the same fiscal year, you can use transaction type 100. Our company, Car Limited (Ltd.), upgrades two trucks and issues the following invoice (see Figure 4.24).corumted ad) snvotee i2hersvee london a2 98¢ fogs wwocesn® ——e2nonoi2 chase Ore Date 940772012 DeweyOute 0407012 oes cow 203 ot ht, Sate 1157 fw or wr 022 BeeRRTON aR — eae — ToT 2 navigation systems including assembly Navigation system 2 4,000 USD Installation kit 2 1,000 USD TAX10% 500_USD, TOTAL: 5,500USD ape win 20 date THANK YOU FOR YOUR BUSINESS! Figure 4.24: Business transaction ‘The vendor item in Figure 4.25 shows the total gross amount of USD 5,500.00 and the tax item of USD 500.00. The descriptive document text for the asset transactions is helpful for subsequent traceability of the business transaction,(nib, Mord frvooe: Correct Mant HO EGBG Pvcess —secrmate GffostOaatny wow FR] carumea as) curee [61000] Conga Cage ICD] oes cep enn Pa Teme Ooppercet Ts 1 Beda 62-10-2077) eas T Dec bare ee armut Poymer Pee sree a assgmert Tet 2 ampiton stems eatrg tbe © conyight SAP AG. A ghee. Figure 4.25: Vendor item Both the navigation system in Figure 4.26 and the installation kit in Figure 4.27 are posted to separate assets. At this point, we would advise against the use of the asset sub-number again. With a sub-number, there is a risk that it will be forgotten in cost center changes or retirements of the main number. |Batea Mentos females: Act Asset 0 pee ROBO Precedas scrote: LHF ast ata Enry Ctecon RT] Peres Cees FE) cescon ete a NTO ow rk ven A od (tn 2 Een 1 ee aowerDae WH cm) sso = om © Copyrht SAP AG. Alighieri. Figure 4.26: Navigation system GoogleEnter Vendor Involce: Add Asset item BARD Proves —secinest Fas 0waEny Bees Guten FT Paes ate Coneanycade ‘FICO ‘OES coo Tans te TH poset "oDDHOEOOES Pen eu Wasnon A725 (ne wm Dee eet TOE ct eg 100 aceose 7 est “iGGOGGOGGOSTO | Pep eek Wasgen ABZIE ( Relrne Oxe 070-2 Se) sscinmert Tea satan @imrs) (© Copyrght SAP AG. Al ghis reser Figure 4.27: Installation kit Figure 4.28 shows the truck purchase in January and the upgrade in October. Figure 4.28: Asset transactions ‘There is no change to the existing linear depreciation of the truck over five years, However, the additional acquisition results in a new depreciation base in SAP Asset Accounting. Previously, USD 80,000.00 split over five years resulted in an annual depreciation of USD 16,000.00 — broken down by month, USD 1,334.00 per month, You can see this value for months 1 to 9 in Figure 4.29. Our additional acquisition results in a new depreciation base of USD 82,500.00. Split over five years, this is an annual depreciation of USD16,500.00 — broken down by month, USD 1,375.00 per month. You can see this new depreciation value for months 11 and 12 in Figure 4.29. company Cote FICO woes cup pase "400000000008" 0” Papen Washing B22 (ew) roa EAD) Poreedvates Porarters Wea ea a oe Depreciation posted/planned ons Ste Par Ok den. Ui ep Recenes eet Rea icy lo Paes Paes. 1130000000 Om 000 USO lo Pawes Pes 2130000 ao) MD USD lowes Pd] 313000008] aOD MD USD lo Pawes Pes 4130000000000 Om USD la wes Pes] § 1300) OOD Om” USD 0 Pawes—Pames “613350000 000m 000 USO la Pwes Ps) T1300 Op) —aoD Om” USD la ames Pas 8130002 ORDO ODOM UD lo Famed Ped] 8, 1300006000000 090 Uso lo Pawes Pewee IY 1375007 Ono Of) 000 om USD lo Powes Pies 2137502000 000 000000 USD © Copyigt SAP AG. Al gh exer Figure 4.29: Monthly values in the Asset Explorer ‘The month of the additional acquisition is a special situation. In period 10, the depreciation forthe navigation system and the installation kit up to the prior acquisition of the truck in period 1 is made up. If we take the difference between the old depreciation (USD 1,334.00) and the new depreciation (USD 1,375.00) and multiply this by 9 (periods 1 to 9), the amount is USD 369.00. Add this depreciation to be made up to the new depreciation amount (plus some rounding differences), and this explains the monthly value of USD 1,750.00 for period 10 shown in Figure 4.29. 4.1.10 Credit Memo If an invoice is subsequently corrected by means of a credit memo (for ‘example, due to notification of defects), you must also take this business transaction into account in SAP Asset Accounting. To take it step-by- step, in the following example, the invoice is available first and in a second step, has to be corrected by means of a credit memo. Both complete and partial credit memo variants are shown. Figure 4.30 shows an acquisition with the original invoice for five height-adjustable desks, for which transport costs are also due.