STRUMS. SAP Financial Accounting (FI) Boot camp. Day 1

Agenda Day 4 Asset Accounting Key Concepts & Organisation Structure Asset Accounting Master Data Asset Accounting Business Transactions Asset Accounting Period End Closing & Reporting New GL Online Document Splitting 2

Agenda Day 1 Asset Accounting Key Concepts & Organisation Structure Asset Accounting Master Data Asset Accounting Business Transactions Asset Accounting Period End Closing & Reporting New GL Online Document Splitting 3

FI Asset Accounting : FI-AA provides for the accounting of fixed assets : As a sub module of the FI Financials module, FI-AA provides a subsidiary ledger containing detailed asset transactions to the general ledger : FI-AA is integrated with other SAP modules: : From MM Purchasing, goods receipts and invoice verification transactions post to assets : From CO Overhead, orders collect costs and settle them to assets : From PS Project System, WBS elements collect costs and settle them to assets : FI-AA in turn posts back to FI general ledger and CO Controlling via depreciation postings, acquisitions, transfers, and retirements 4

FI Asset Accounting (cont.) : Key Concepts : Asset Accounting facilitates Parallel accounting : This feature enables organisations to account and report based on various accounting standards : It also supports Segment Reporting, which is a key requirement for various organisations. 5

Key Definition: Fixed Asset : Fixed assets Tangible property used in the operation of a business : Land, buildings, leased real property and improvements : Equipment, including computers, plant, labs, office, and hardware : Software purchases or development : Construction in process (assets under construction) : Contrast to other types of assets: : Cash and equivalents (including receivables) : Investments (handled in Treasury/Investment Management) : Prepaid expenses, allowances : Leases : Raw materials, supplies, or inventory 6

Key Definition: Transactions : Financial transactions posted to assets (other than depreciation) fall into three general categories: : An asset acquisition (or capitalization) occurs when a company buys or produces a fixed asset : Goods receipt through purchasing : Invoice receipt through purchasing : Invoice receipt through accounts payable : Settlement of an order or project : Transfer from another asset : Results in an acquisition posting to the balance sheet : Transfers move costs between assets. An example is completing an asset under construction and transferring the capitalized costs to a new, depreciating asset. : Retirements remove costs from and deactivate assets, such as disposing or selling an asset 7

Key Definition: Depreciation : Depreciation is a specific accounting treatment : Assets are depreciated to expense to recognize their reducing value from year to year : Depreciation is calculated by FI-AA and is controlled by a number of organisational and configuration elements : Depreciation is posted as an expense and posted to a contraaccount offsetting the acquisition value of assets : Accounting rules allow different methods of depreciation: Straight-line, accelerated, tax, double-declining, etc., allowing companies different books for tax and financial reporting purposes 8

Asset Accounting Organization Structure : Organization Structure : Client : Chart of Accounts : Chart of Depreciation : Company Code(s) : Asset Class(es) : Depreciation Area(s) : Asset Masters FI Asset Accounting Organizational Structures Company Code AERO Assets Client 300 Chart of Accounts ACOA Chart of Depreciation AERO Asset Classes (multiple) Depreciation Areas 01 Book 9

Organization Structure Chart of Depreciation : Chart of Depreciation (COD) is the highest level of organisation in Asset Accounting. : Chart of Depreciation is usually country specific; it satisfies the various business and legal requirements for valuation and depreciation of assets. : Chart of Depreciation is a directory of depreciation areas, with each depreciation area meant to calculate values for assets for a specific need like book depreciation, tax depreciation, etc. : One Chart of Deprecation can be assigned to more than one company code. One company code can, however, be assigned to only one chart of depreciation. 10

Organisation Structure Chart of Depreciation Example : SAP provides a standard Chart of Depreciation per country. It can be copied and customized, as necessary : Standard Charts of Depreciation for various countries that are provided by SAP include Germany (0DE), USA (0US), Australia (0AU) and New Zealand (0NZ) among others 11

: Depreciation areas are set up to accommodate calculation of parallel values of depreciation for different purposes: : Separate depreciation areas can be set up for the purpose of book depreciation, tax depreciation, cost accounting depreciation, etc. : For every asset, depreciation terms and values can be managed at depreciation area level : At least one depreciation area is required to record book values : We can manage asset valuation in parallel in up to 99 12 depreciation areas Organisation Structure Depreciation Areas (1 of 7)

Organisation Structure Depreciation Areas (2 of 7) : Depreciation areas are set up to accommodate calculation of parallel values of depreciation for different purposes (cont.): : Rules for posting to General Ledger is configured per depreciation area. Some of the rules are: 0 no values are posted to GL; e.g., internal costing 1 post assets in GL real time; e.g., book depreciation 2 post assets periodically in GL; e.g., revaluation 3 only depreciation posted in GL; e.g., tax 13 depreciation

Organisation Structure Depreciation Areas (3 of 7) : Depreciation areas are set up to accommodate calculation of parallel values of depreciation for different purposes (cont.): : Rules for posting to General Ledger are configured per depreciation area. List of rules are: 14

Organisation Structure Depreciation Areas (4 of 7) : Depreciation areas are set up to accommodate calculation of parallel values of depreciation for different purposes (cont.): : Depreciation areas can facilitate parallel valuation in asset accounting, and they can be assigned to the ledger groups to integrate parallel valuation in asset accounting with parallel valuation in general ledger (Ledger approach) : Leading depreciation area is assigned to ledger group containing the leading ledger 15

Organisation Structure Depreciation Areas (5 of 7) : Depreciation areas are set up to accommodate calculation of parallel values of depreciation for different purposes (cont.): Assignment of depreciation areas to Parallel Ledgers Assignment of depreciation area to the ledger group facilitates parallel accounting 16

Organisation Structure Depreciation Areas (6 of 7) : Each Depreciation area is set up as either a Real depreciation area or as Derived depreciation areas: Derived Depreciation Area Depreciation is calculated, using a formula on values from 2 or more Real depreciation areas; values are calculated dynamically and made available for reporting. Real Depreciation Area Values are updated in this depreciation area when postings are made and are 17

Organisation Structure Depreciation Areas (7 of 7) : Transfer rules for posting of APC values and depreciation terms for each depreciation areas are specified. : Transfer rules can ensure that certain depreciation areas have identical values/basis. Most depreciation areas will copy the asset value (APC) from Book Depreciation 18

Organisation Structure Depreciation Areas Example : Standard Chart of Depreciation for Australia (0AU) has five depreciation areas: 01 Book deprec. Book depreciation (uses Straight Line method) 15 Tax B/S Tax balance sheet (uses declining then straight line) 30 Group AUD Consolidated bal sheet in local currency 31 Group USD Consolidated bal sheet in group currency 32 BkDep(g.cur) Book depreciation in group currency 19

Organisation Structure Depreciation Key : Determines how the depreciation is calculated through calculation method configuration; e.g., straight line method, 25% double declining method, etc. : Assigned per depreciation area at asset master data : Defaulted per asset class; i.e., classification of similar asset : There are four calculation methods: : Base method : Declining balance method : Period control method : Multi-level method 20 Chart of Depreciation Depreciation Key Calculation Method

Organisation Structure Calculation Method: Base Method : Base method configuration includes determination of depreciation calculation method : E.g., 1 % from useful life - Depreciation % rate is derived from the useful life of the asset, maintained in the asset master. : E.g., 2 explicit % - Depreciation % rate has to be explicitly specified in the depreciation configuration. (Multi-Level Method) : System does not allow addition of depreciation 21

Organisation Structure Calculation Method: Declining Balance Method (1 of 3) : Declining Balance Methods are an annual calculation of depreciation amounts that are reduced by a constant percentage : The percentage is calculated from the useful life and a multiplication factor and is subject to maximum and minimum percentage limits. This percentage is then multiplied with the base value (i.e., net book value of the fixed asset at the beginning of the year) to compute 22 the depreciation amount

Organisation Structure Calculation Method: Declining Balance Method (2 of 3) : For each declining-balance method, specify: : A multiplication factor for determining the depreciation percentage rate : An upper limit for the depreciation percentage rate : A lower limit for the depreciation percentage rate : Depreciation = net book value * percentage rate from expected useful life and factor : SAP will calculate the yearly amount first and 23 then divide the figure with number of periods to

Organisation Structure Calculation Method: Declining Balance Method (3 of 3) Example: Useful life: 10 years Net book value: 700 USD Multiplication factor: 1.5 Depreciation = 700 * (1/ 10 * 1.5) = 105 USD for the year If there are 12 periods, depreciation = 105 / 12 = 8.75 USD/period 24

Calculation Method Multi-Level Method : Should be configured according to the Base Method selected : E.g., if a depreciation key uses a Base Method with explicit %, then multi-level method for that depreciation key should contain explicit % rates : Define depreciation Base Value : E.g., if Base Value = 01 (Acquisition Value) is selected, then every time depreciation is calculated the acquisition value of the asset will be the base on which the depreciation percentage will be applied : Example below is for explicit % with base value = acquisition value 25 Year Percentage Depreciation 1 2% year 1 9 2% x acquisition value 10 6% year 10 6% x acquisition value 11 5% year 11 5% x acquisition value 18 4% year 18 onwards 4% x acquisition value

Calculation Method Period Control : Determine when depreciation is calculated in the system relative to the transaction posting date : Examples of period control: 01 Pro rata at period start date Depreciation is calculated at monthly basis 02 Pro rata up to mid period at period start date if posting date < mid period, depreciation is calculated for the period, else depreciation is calculated for the next period 06 At the start of the year Depreciation is calculated at yearly basis 08 At the end of the year Any changes for the year will take effect in the next year : Can be set up differently per transaction: : Period control for acquisition in the capitalization year : Period control for acquisition in the following year : Period control for retirement : Period 26 control for transfer

Depreciation Key Period Control (cont.) : Depreciation to the day : Specifies that the system calculates depreciation to the day : Period control parameters are ignored with this switched ON : This applies to all transactions (acquisitions, retirements, and transfers) : With this setting the system always uses the asset value date as the depreciation start date : Warning : Once the asset has been capitalised, you cannot switch to or from a depreciation key with this setting 27

Depreciation Key Change Over Method : Used to setup depreciation key by phases; i.e., system will automatically change the combination of calculation methods (depreciation terms) once the event specified in the changeover method has occurred 28 In this example, depreciation is determined by the calculation methods in phase 1. This is compared with the straight line rate which is computed based on the useful life. Whenever the straight line depreciation is higher, change over to Phase 2 happens.

: Asset class facilitates classification of similar asset; e.g., Land & Building, Plant & Machinery, Office Equipments, etc. : The catalogue of asset classes can be used by all the company codes that use asset accounting component. : The following configurations are set up at asset class level: : Assignment of Asset number can be set up as internally assigned or externally assigned. Number range is also defined at the asset class level for each company code. : Screen layout controls the asset master data screen and specifies if a field is optional, required, suppressed for data entry. : Default depreciation key and useful life : GL 29 accounts through account determination assignment Organisation Structure Asset Class (1 of 4)

Organisation Structure Asset Class (2 of 4) Asset Factory 1 Factory 2 Office 1 Machine 1 Machine 2 Asset Class Building Machinery Reconciliation Account Acquisition & Prod cost Accumulated Depreciation Acquisition & Prod cost Accumulated Depreciation 30

Organisation Structure Asset Class (3 of 4) : Asset Class is linked to any (or) all the depreciation areas in a chart of depreciation. This is achieved by activating the appropriate depreciation areas : Asset Class needs to be activated for the required depreciation areas in a chart of depreciation. This activation has to be performed for each asset class for all the charts of depreciation, which are actively used : Default depreciation key and useful life is specified for an asset class for each depreciation area in a chart of depreciation 31

Organisation Structure Asset Class (4 of 4) : Determination of depreciation areas for asset class 32 Depreciation area is activated for an asset class

Organisation Structure Account Determination (1 of 3) : Compilation of GL accounts used for asset posting : Posting to asset, i.e., via asset number, will update these GL accounts that are determined using account determination. : One account determination can be used for more than one asset class : For example, Building and Structure can be defined as separate asset classes; however, depending on the 33 chart of account structure, they could be assigned to one account determination Question: Can we directly post to asset acq. accounts? If we post to an asset, when can we see the values in GL?

Organisation Structure Account Determination (2 of 3) : GL accounts are set up per depreciation area, i.e., not all accounts need to be configured as posting to GL varies per depreciation area : Key GL accounts: : Acquisition & Production Cost (reconciliation account, B/S account) : Clearing account revenue from asset sale : Gain & Loss from asset sale : Loss made on asset retirement without revenue; i.e., scrap/write off : Accumulated depreciation (reconciliation account, B/S account) 34 : Depreciation expense Question: Can we directly post to asset acq. accounts? If we post to an asset, when can we see the values in GL?

Organisation Structure Account Determination (3 of 3) : Determination of GL accounts Simple illustration Account Determination Asset Class Asset Master Company code Chart of depreciation (COD) 01 Book depren. ----- Chart of Account Transaction posting to an asset sub-ledger will update the General Ledger: COD + COA + Account Determination + depreciation Area + Transaction => GL account 35 GL 11000 - Acquisition ----- -----

Asset Organisational Hierarchy Example Chart of Depreciation (copied from country ABC) Depreciation Area 01 Book Depreciation 02 Tax Depreciation 03 Cost Accounting Depreciation Company Code 1 Company Code 2 Company Code 3 Asset Class 100 Building Asset Class 200 Machinery Asset Class 300 Office Equip. Acct Determination 1000 (GL accounts) 100001 Acquisition - Building 130001 Accum. Depr. - Building 400001 Depr. Expense - Building etc Acct Determination 2000 (GL accounts) 100002 Acquisition - Machinery 130002 Accum. Depr. - Machinery 400002 Depr. Expense - Machinery etc Acct Determination 3000 (GL accounts) 100003 Acquisition Office Equip. 130003 Accum. Depr. Office Equip. 400003 Depr. Expense Office Equip. etc 1000001 Building A 1000002 Building B 36 2000001 Machine 123 2000002 Machine 234 3000001 Printer 222 3000002 Computer XYZ

Low Value Asset (LVA) : Fully depreciated in the year of purchase or in the period of acquisition : Even though LVA value is not significant, it is considered necessary to keep track of the asset : Since individual value is little, can be managed collectively in single asset master : Separate asset class is created for LVA 37

Low Value Asset (cont.) : Maximum allowable is specified in the configuration : Individual check (individual management) : When the acquisition is posted, the entire acquisition and production costs of the asset are compared with the LVA maximum amount : Quantity check (collective management) : When the acquisition is posted, the entire acquisition and production costs of the asset, divided by the total quantity, are checked against the LVA maximum amount 38

System Walkthrough 4.1 Chart of Depreciation Refer to System Walkthrough 4.1 Chart of Depreciation in your Faculty Guide. Chart of Depreciation Tax Indicator Assign Chart of Depreciation to Company code (Ensure the prerequisites are met before the assignment is made). 39

System Walkthrough 4.2 Depreciation Area Refer to System Walkthrough 4.2 Depreciation Area in your Faculty Guide. Depreciation Area Asset Class 41

System Walkthrough 4.3 Depreciation Key Configuration Refer to System Walkthrough 4.3 Depreciation Key Configuration in your Faculty Guide. Depreciation Key Determine depreciation areas GL account determination 43

Questions 45

Agenda Day 4 Review of Day 3 Asset Accounting Key Concepts & Organisation Structure Asset Accounting Master Data Asset Accounting Business Transactions Asset Accounting Period End Closing & Reporting New GL Online Document Splitting 46

Asset Accounting : Master Data : Asset Number & Sub Number : Asset Master : Mass Changes to Master Data : Asset Master Data Conversion 47

Master Data Asset Number : Asset will be assigned an asset number within the asset class number range in a company code : Every uniquely identifiable asset, for which valuation/depreciation has to be recorded and maintained separately, is identified in the AA with a unique asset master record. : Each asset master record is a sub-ledger, linked to the General Ledger through account determination. : Excluding depreciation journal, every asset transaction should be posted to the asset number; i.e., asset account. : General Ledger can be posted in real time or in batch mode, based on the configuration setup for the depreciation area in the chart of depreciation. 48

Master Data Asset Sub-number : Sub-number can be used for differentiating part of the main asset : Four-digit suffix of the main asset number : Main asset fields can be copied to sub number master data as set up in the screen layout configuration; e.g., cost centre is usually maintained at the main asset level : Asset sub number is an independent asset : Effort for maintaining asset with 1 sub number will be doubled : Retirement needs to be done for main asset and each sub number : Depreciation can be calculated differently from the main asset. For example, Machine A with asset number 150056 has 3 major components that need individual maintenance and tracking: They are created as sub-asset numbers to the main asset 150056-0001 Power supply, 150056-0002 Conveyor belt, 150056-0003 Coolant. 49

Asset Master : Store asset specification & detailed information. Optional and mandatory fields are set up by defining screen layout rules at the asset class level General Info (Description) Time-dependent assignment 50 Description 1 Description 2 We can specify information validity using Time Interval Plant: physical plant of the asset as set up in Material Management module Cost Centre: owner of the asset that will bear the depreciation expense. Can be used as account assignment object to derive segment for segment reporting.

Asset Management Allocation Origin Depreciation Areas 51 Evaluation group: Additional information for reporting purpose. There are 5 evaluation groups available with user-defined values in configuration. For example, evaluation group 1 for location of the asset (e.g., area 1, area 2, etc); evaluation group 2 for describing the production line (e.g., process 1, process 2, etc.) Vendor: supplier of the asset, it will be populated automatically upon asset acquisition Depreciation key: how the depreciation is calculated; e.g., straight line method, double declining method Useful life: how long the depreciation will be calculated Ordinary Depreciation start date: when the depreciation is started Depreciation key and useful life are defaulted per asset class based on configuration Depreciation terms can also be set as time-dependent in later version (ECC 6.0)

System Walkthrough 4.4 Asset Master : Refer to System Walkthrough 4.4 Asset Master in your Faculty Guide. : Display/Create Asset 52

Mass Changes to Master Data : Asset Accounting provides capability to update fields in several asset master records using mass changes. Some instances for mass changes are given below : When there is a change to the Cost Centre structure, you have to change the Cost Centre assignment of all assets affected : Changes made at the asset class level. Changes at this level affect only those assets that are created after the change was made. This change should be applied to the already existing assets : User error for large number of assets 53

Mass Changes to Master Data (cont.) : Steps to execute mass changes: : Defining the change rules using Validation & Substitution rule (transaction OA02) what the changes are : Selecting the assets and entering them in a worklist (transaction AR01) verification step that only the asset listed are to be changed : Checking and correcting the worklist, and releasing the worklist (transaction AR31) execution of the mass changes Define the change rule Asset selection to worklist Release the worklist e.g., change cost centre A to B 54 e.g., if asset class = machinery for company code A, acquisition date after 01.01.2005

Asset Master Data Conversion (1 of 3) : Use transaction AS91 Create Legacy Data to create converted asset (AS92 to Change legacy data already created) : Take over values (i.e., asset values at the change over date/sap go live date) by depreciation area need to be uploaded per asset master : The take over values to be populated are depending on the Depreciation Area setup (how the depreciation area gets the value) : Generally you should convert gross values (original acquisition cost and current accumulated depreciation) rather than net values (net value of assets at time of conversion) : GL Balance is uploaded separately from the asset values in Asset Accounting : AS91 posts only to FI-AA and does NOT update the GL account balance : Reconciliation between the GL balance and total asset values needs to be done after to data upload ensure they match! 55

Asset Master Data Conversion (2 of 3) : Take over values are maintained for each Asset master during legacy data transfer 56

Asset Master Data Conversion (3 of 3) Acquisition value Accumulated depreciation - up to the end of last fiscal year Depreciation value from the beginning of the year until the last period before the take over date 57

System Walkthrough 4.5 Legacy Old Asset : Refer to System Walkthrough 4.5 Legacy Old Asset in your Faculty Guide. : Display Legacy Asset : Mass Changes 58

Exercise 4.1 Create Asset : Refer to Exercise 4.1 - Create Asset in your Participant Workbook. : Your task is to create an asset master. 59

Exercise 4.2 Create Asset Sub Number : Refer to Exercise 4.2 - Create Asset Sub Number in your Participant Workbook. : Your task is to create an asset sub number for the asset created in Exercise 4.1. 60

Exercise 4.3 Configuration: Add Values to Evaluation Group : Refer to Exercise 4.3 Configuration: Add Values to Evaluation Group in your Participant Workbook. : Your task is to add a new value to an evaluation group. 61

Questions 62

Asset Business Transactions Overview : Asset business transactions include Acquisitions, Transfers, Retirements. : Key parameters that govern asset accounting transactions include document type, posting key, transaction type. : FI Document types used for Asset business transactions: : AA Asset Posting : AF Depreciation Posting : Posting key used for postings Asset related transactions : 70 Debit Asset : 75 Credit Asset : Transaction type : Mandatory information for every asset posting to differentiate business transactions (acquisitions, transfers, retirements, etc.) : Each transaction type belongs a transaction type group (which reflects a category of business transactions) : SAP Standard transaction types are commonly used. 64

Asset Business Transactions Overview (cont.) : Transaction type - Examples: 1xx Acquisition 2xx Retirement 3xx Transfer e.g., 100 External acquisition, 110 In-house acquisition e.g., 200 Retirement without revenue, 260 Retirement for new acquisition with revenue e.g., 320 Transfer (retiring) of new acquisition, 330 Receiving transfer of new acquisition Each asset transaction creates an Asset Accounting document as well as an FI accounting document at the minimum 65

Asset Business Transactions Overview Asset Document Transaction Type 100 is used here for external acquisition (i.e., acquisition from vendor) 66

Asset Business Transactions Overview Asset Document (cont.) 67

Asset Acquisition Direct FI Process : Manual asset acquisition posting in FI (Accounts Payable) through vendor invoice; i.e., transaction F- 90 : Asset document and an FI accounting document are created Ps. Key Account D/C 70 Asset account Dr 31 Vendor account Cr 68

Asset Acquisition Purchase Process : If MM module is implemented, asset posting can be automatically generated using account assigned purchase orders. Purchase Requisition/Purchase order should be specified with account assignment category A (= Asset) FI - AA MM - Purchasing MM - Purchasing MM - Purchasing Create Asset Master Create Purchase Requisition (PR) Create Purchase Order (PO) Goods Receipt Asset Master needs to be created before PR creation as the number should be specified in PR/PO User should put asset number in the PR/PO Asset acquisition: Dr. Asset Cr. GR/IR clearing 69

Asset Acquisition Purchase Process Example (1 of 3) 70

Asset Acquisition Purchase Process Example (2 of 3) Configuration of account assignment category A Consumption indicator is A (Assets) Field Status is set for field Asset as mandatory entry. 71

Asset Acquisition Purchase Process Example (3 of 3) Material document is created at the time of goods receipt. Asset document and FI accounting document are automatically generated Asset acquisition (Purchase Process) Dr. Asset Cr. GR/IR clearing 72

Asset Retirement : There are three types of asset retirement: Retirement with revenue to customer (F-92) Retirement with revenue without specifying the customer (ABAON) Retirement without revenue/scrapping (ABAVN) 73 Dr. Accum depreciation Dr. Customer Dr. Proceed on asset sale Cr.Proceed on asset sale Cr. Asset Cr. VAT out Dr/Cr. Gain/loss on property Dr. Proceed from asset sale Dr. Accumulated Depreciation Dr/Cr. Gain/Loss on asset sale Cr. Asset Dr. Accumulated depreciation Dr. Write-off expense/ Loss on property Cr. Asset Dr. Bank clearing Cr. Customer Note: Proceed on asset sale account need to be defined in configuration Dr. Bank clearing Cr. Proceed from asset sale Cr. Vat out

Asset Transfer : Transfer from one cost centre to the other (AS02) : This is done through asset master data change; i.e., cost centre change : No Accounting document is created : Transfer location (AS02) : This is also done through asset master data change, i.e., depending on the setup, can be plant change, evaluation group change, or other field change : No FI document is created 74

Asset Transfer (cont.) : Transfer between company codes (ABT1N) : This is done through FI document posting : Can be done separately, i.e., asset retirement in one company and asset acquisition in the other company, or if intercompany transaction is setup through intercompany journal : Transfer between one asset to another asset (ABUMN) : This is done through FI document posting : Both acquisition and accumulated depreciation values are transferred Dr. Asset (target) Cr. Accumulated depr (target) 75 Dr. Accumulated depr (source) Cr. Asset (source)

Asset Business Transactions Segment Reporting (1 of 5) Asset Accounting component facilitates segment reporting. Use of Account Assignment Objects is necessary to achieve Segment Reporting using the New GL. Example : Cost centre (Object Name: KOSTL) has been activated Note: Users cannot add to the list of account assignment objects. Activation status can be changed based on business requirements 76

Asset Business Transactions Segment Reporting (2 of 5) Profit centre & segment can be derived from other cost (e.g., via cost centre) For segment reporting, assign the account assignment types (APC Values and depreciation posting) to the Account. Assignment Object, for the transactions, for each of the company codes 77

Asset Business Transactions Segment Reporting (3 of 5) 1 2 3 Segment: EMEA is thus derived for asset 3000 0 78

Asset Business Transactions Segment Reporting (4 of 5) FI Invoice posting for asset acquisition -> Derivation of segment 79

Asset Business Transactions Segment Reporting (5 of 5) Document Splitting Vendor/tax line items are split into multiple line items based on the segments derived in the offsetting line items, in this case, the asset line items Document line items are split for the scenarios that have been configured in FI-GL for segment reporting 80

System Walkthrough 4.6 Asset Business Transactions : Refer to System Walkthrough 4.6 Asset Business Transactions in your Faculty Guide. : Asset Acquisition : Asset Change Cost Centre : Transfer Asset to Asset : Retirement with Revenue : Scrapping 81

Exercise 4.4 Asset Acquisition from FI : Refer to Exercise 4.4 Asset Acquisition from FI in your Participant Workbook. : Your task is to post an asset acquisition to the asset master created in Exercise 4.1. 82

Exercise 4.5 Asset Explorer : Refer to Exercise 4.5 Asset Explorer in your Participant Workbook. : Your task is to display the asset. 83

Exercise 4.6 Asset Transfer Change Cost Centre : Refer to Exercise 4.6 Asset Transfer Change Cost Centre in your Participant Workbook. : Your task is to transfer an asset from one department to another. 84

Exercise 4.7 Asset Transfer Asset to Asset : Refer to Exercise 4.7 Asset Transfer Asset to Asset in your Participant Workbook. : Your task is to reclassify an asset. 85

Exercise 4.8 Asset Retirement with Revenue to Customer : Refer to Exercise 4.8 Asset Retirement with Revenue to Customer in your Participant Workbook. : Your task is to record the sale of an asset with revenue to a customer. 86

Exercise 4.9 Display Asset Document : Refer to Exercise 4.9 Display Asset Document in your Participant Workbook. : Your task is to display the asset documents. 87

Questions 88

Period End Closing & Reporting : Depreciation Run : Asset Under Construction (AUC) Settlement : Year End Closing : Open & Close Period for Asset : Fiscal Year Change : Reporting 90

Depreciation Run : Depreciation must be run sequentially by period; i.e., period 1 should be run successfully before period 2 depreciation : Depreciation run options: : Planned Depreciation: run this every end of period (month end) : Repeat Run: if depreciation has already been run and it is required to run the depreciation again. SAP will only post depreciation that has not been posted; i.e., there will not be double posting 91

Depreciation Run (cont.) : Depreciation run options (cont.): : Restart Posting Run: if there are errors during depreciation posting, after correcting the error (for instance, GL account not found), execute restart posting run (the old session should be deleted) : Unplanned Posting Run: to run depreciation for several periods, e.g., if period 1 and 2 have not been run and it is desired to run period 3, choose unplanned posting run for period 3 92

Depreciation Run Process Flow Test Run Depreciation Rectify the Error (if any) Run Actual Depreciation Check Depreciation Run Log Rectify the Error (if any) & Repeat Depreciation Run Dr. Depreciation Expense Cr. Accumulated Depreciation 93

Asset Under Construction (AUC) Settlement (1 of 5) : AUC represents asset that has not finished being constructed, i.e., capital work in progress, and therefore not being depreciated. Once the work is completed, AUC should be settled to fixed asset : AUC will collect all the cost from external (purchase), internal work, and material consumption. It is defined as separate asset class with separate account determination 94

Asset Under Construction (AUC) Settlement (2 of 5) Expense Expense Expense Material Material Material Repairs e.g., Plant Maintenance Order (for repair maintenance) WBS Project System (for project) Settlement to AUC Month End AUC Settlement to fixed asset Month End After the repair/project finish Fixed Asset AuC Settlement Process Flow in SAP system Create AuC Asset master in AuC asset class AuC Asset receives postings Create Final asset master Define Distribution Rules for AuC asset Execute AuC Settlement 95

Asset Under Construction (AUC) Settlement (3 of 5) : There are two types of settlement: : AUC Settlement without Line Item Management : AUC Settlement with Line Item Management 96

Asset Under Construction (AUC) Settlement (4 of 5) : AUC Settlement without Line Item Management : Similar to transfer between two assets within the same company code Dr. Asset Cr. AUC 97

Asset Under Construction (AUC) Settlement (5 of 5) : AUC Settlement with Line Item Management : Distribution rule needs to be defined per AUC to set the target settlement and % of distribution : Line items in the current year that do not require capitalization (i.e., expense) can be settled as adjustment Dr. Asset postings to Cost Centre Cr. AUC 98 20 %

Year End Closing (1 of 3) : Fiscal year change (AJRW): the opening of a new fiscal year for a company code. Asset values from the previous fiscal year are carried forward cumulatively into the new fiscal year : No posting can be made to the new fiscal year before fiscal year change : Before changing to fiscal year YYYY, fiscal year YYYY 2 should be closed : Carried 99 out as background processing for

Year End Closing (2 of 3) : Close fiscal year (AJAB): Once the fiscal year is closed, no posting can be made to Asset Accounting in that fiscal year : Current fiscal year cannot be closed : Fiscal year can be re-opened if necessary. This is not a recommended practice, though : Should be done sequentially; i.e., close fiscal year the year following the last closed fiscal year : Carried out as background processing for performance reasons 100

Year End Closing (3 of 3) : Fiscal year can only be closed if: : All depreciation runs for the year are completed without any error : All assets acquired in the fiscal year have already been capitalized. Exclusion can be made for asset under construction : All incomplete assets (master records) have been rectified 101

Reporting (1 of 4) : All standard reporting can be accessed from Information System folder : Asset History Sheet list of asset values with detail of asset transactions : Asset Balance by Asset number list of asset values : Posted Depreciation Related to Cost Centres list of posted depreciation per cost centre per period : List of Origins of Asset Debit list of asset 102

Reporting (2 of 4) : All standard reporting can be accessed from Information System folder (cont.) : Asset Transactions, Asset Acquisition, Asset Retirement : Directory of Unposted Asset list of asset master without value : Depreciation Forecast simulate depreciation/asset values for current or future fiscal year 103

Reporting (3 of 4) : Sort Version: control data sorting and totaling in asset reports : Maintained in configuration : User-defined sort version starts with Z : For example: 0007 Company Code/Asset Class sort records based on company code asset class Z001 Company Code/Asset Class/Cost Centre/Eval Group 1 sort records based on company code asset class cost centre eval group 1 104

Reporting (4 of 4) : Depreciation Simulation: simulate asset values/depreciation using different depreciation key for future fiscal years : Need to create/maintain Simulation Version before running the report (OAV7) : E.g., Z1 Simulate values for all asset belonging to asset class 2000 with depreciation key DG30 to use new depreciation key LINK and increase the useful life by 20% : Run Depreciation Forecast report and specify the 105

System Walkthrough 4.7 Depreciation : Refer to System Walkthrough 4.7 Depreciation in your Faculty Guide. : Depreciation and Log : AUC Line Settlement : Maintain Sort Version (OAVI) : Simulation Version (OAV7) 106

System Walkthrough 4.8 Reporting : Refer to System Walkthrough 4.8 Reporting in your Faculty Guide. : Asset History Sheet - S_ALR_87011990 : Asset Balance by Asset Number S_ALR_87011963 : Posted Depreciation Related to Cost Centres - S_ALR_87010175 : List of Origins of Asset Debit - S_ALR_87012058 : Asset Transactions, Asset Acquisition, Asset Retirement S_ALR_87012048, S_ALR_87012051, S_ALR_87012052 : Directory of Un posted Asset - S_ALR_87012056 : Depreciation Current Year- S_ALR_87012026 107

Exercise 4.10 AUC Settlement : Refer to Exercise 4.10 - AUC Settlement in your Participant Workbook. : Your task is to create receiver asset (fixed asset), create a settlement rule from the AUC to the fixed asset, and post the settlement. 109

Exercise 4.11 Configuration: Maintain Sort Version : Refer to Exercise 4.11 Configuration: Maintain Sort Version in your Participant Workbook. : Your task is to create a new sort variant to be used in Asset reporting. 110

Exercises 4.12 through 4.19 Reporting : Refer to Exercises 4.12 to 4.19 in your Participant Workbook. : Your task is to execute the asset accountingrelated reports 111

Optional Class Exercises : Refer to the Optional Class Exercises in your Participant Workbook. : Run planned depreciation and display log for the period : Each participant can do Repeat Run after the planned depreciation for a particular asset 112

Online Document Splitting New GL Functionality Example Document Splitting Document Splitting & Zero Balancing Configuration Logic for Document Splitting Logic Customizing Steps Extended Document Splitting Document Splitting Rule Examples of Document Splitting & Zero Balancing Recommendations 114

Example Document Splitting 115

Document Splitting & Zero Balancing : Activate Document Splitting for the client and at the same time it can be deactivated for a specific company code : Recommendations: : Inheritance - activate the inheritance : If no characteristics are specified, characteristics will be inherited from the lines with characteristics : Default assignment : Make sure that you specify a default assignment for cases where the characteristics cannot be determined : General Ledger Account Assignment to Item Categories : Revenue, Expense, Balance Sheet accounts have to be assigned to the correct item categories (e.g., 30000, 20000, and 10000) 116

Document Splitting Configuration (1 of 5) Document Splitting - Business Transaction Business Transaction (BT): A business transaction is an event that leads to a value update in accounting 117

Document Splitting Configuration (2 of 5) Document Splitting - Item Category Item category: The item category characterised the items of an accounting document 118

Document Splitting Configuration (3 of 5) Document Splitting - BTV Business Transaction Variant (BTV): A BTV is a special version of a business transaction in which you can further limit the item categories that are specified in the business transaction See the BTV 0001 for BT 0300 Note: The vendor item is required for this BTV 119

Document Splitting Configuration (4 of 5) Document Splitting - Splitting Method The splitting method defines how the split is performed The splitting method combined with the Business Transaction and the Business Transaction Variant produce a rule Procedure 0000000012 is the standard (recommended to customers) 120

Document Splitting Configuration (5 of 5) Document Splitting - Splitting Rule Rule: Determines which item categories will be split, as well as which base can be used for splitting E.g., the Customer Invoices Business Transaction (0200) with BTV (0001) will be split along with Taxes on Sales/Purchases items based on item categories 01000, 01100, 07000, 20000 and 30000 121

Logic for Document Splitting Document Splitting - Splitting Rule Logic Determines which item categories will be split as well as which base can be used for splitting E.g., the Customer Invoices Business Transaction (0200) with BTV (0001) will be split along with Taxes on Sales/Purchases items bases on item categories 01000, 01100, 07000, 2000, 30000 122

Key Customizing Steps Document Splitting - Key Customizing Steps Classify GL Accounts for Document Splitting Classify Document Types for Document Splitting Define a Zero-Balance Clearing Account Define Document Splitting Characteristics for General Ledger Accounting Define Document Splitting Characteristics for Controlling Define Post-Capitalization of Cash Discount to Assets Edit Constants for Non-assigned Processes Activate Document Splitting Define You Own Splitting Rules (Optional) 123

Classify GL Accounts for Document Splitting Classify the GL accounts that are linked to the item category for Document Splitting 124

Classify Document Types for Document Splitting (1 of 3) Add your customer created document types 125

Classify Document Types for Document Splitting (2 of 3) : Customizing menu path: Financial Accounting (New) > General Ledger Accounting > (New) > Business Transactions > Document Splitting > Classify Document Types for Document Splitting : All documents that are posted must refer to a combination of business transaction and transaction variant. The transaction variant controls the processing in the document split : Some transactions are automatically assigned within the program to a combination of business transaction and variant (Clearing case: FB1D, FB1K, FB1S, FBRA), because these always proceed in the same way (internal Customizing table V_T8G10/SM30). In these cases, certain processes are used for the split (business transactions: 1010 and 1020) 126

Classify Document Types for Document Splitting (3 of 3) : Consultant: Derivation via the transaction assumes that the processing of the respective transaction with respect to the business transaction is always identical (Examples: Transaction MIRO as an alternative to the hereby entry RE..., transaction MR11 or negative example: FB50, FB01 etc ) : For all further postings that are also actually carried out in the system, all possible document types must be assigned business transaction and variant! That is, assignments that are not stored here cause an error message for the respective posting. : Attention: Through this control (processing in the document split), the significance of the document type is increased considerably in comparison to its use previously 127

Define a Zero Balance Clearing Account For account assignment objects for which you want to have a zero balance setting, the system checks whether the balance of account assignment object is zero after document splitting. If this is not the case, the system generates additional clearing items for which we create a clearing account for these additional clearing items 128

Characteristics for GL Accounting (1 of 3) Define the characteristics for which document splitting is required for GL accounting 129

Characteristics for GL Accounting (2 of 3) : Customizing menu path: Financial Accounting (New) > General Ledger Accounting (new) > Business Transactions > Document Splitting > Define Document Splitting Characteristics for General Ledgers : This setting provides the characteristics that have been created as a scenario by SAP and as customer fields : Zero balance switch: If the indicator is set, the system checks while posting whether the balance is zero for the characteristic. If this is not the case, then the system creates in the document additional clearing lines on clearing accounts that produce the zero balance. This setting generally makes sense if balance reporting is to be carried out on this characteristic 130

Characteristics for GL Accounting (3 of 3) : Mandatory Field switch: If the indicator is set, then all postings for which no value is set after the document split for the specified field are rejected by an error message. (Emergency switch, if postings do not go through and should definitely take place, despite this. Attention, in this case a complete balance on the respective dimension is at risk) 131

Define Document Splitting Characteristics for Controlling 132

Define Post-Capitalization of Cash Discount to Assets 133

Edit Constants for Non-Assigned Processes 134

Activate Document Splitting 135

Define Your Own Splitting Rules Do not change SAP-delivered rules If you want to extend the splitting rules, copy them to your own rules (Note: You need to define your own splitting method first) Tip: The split is not rule-based in case of clearing and if a zero balance is generated. The split is always performed for these processes 136

Extended Document Splitting Document Splitting Rule Extended Document Splitting 137

Splitting Results in Two Ways to View a Document : The entry view of a document shows the base journal input : The GL View shows the additional splits generated by the system. This is sometimes called Enhanced or Enriched 139 Entry View

Documents Show the Traditional Journal Entry Lines 140

Example GL Views of Documents Show Online Splits 141

Example Zero Balancing Splitting Document Splitting Simulation with Zero Balancing Example This is a great feature that is available with SAP ECC 6.0 142

Example Zero Balancing Splitting (cont.) Document Splitting Simulation with Zero Balancing Example (cont.) 143

Recommendations : Document Splitting and Zero Balancing : Define your splitting characteristics : I.e., characteristics that will be used to produce your B/S and P&L : Define profit centre and segment as splitting characteristics : Zero balancing characteristics : Make sure that you select this option for your splitting characteristics : Doing so will make sure that zero balance is secured in each document : Mandatory characteristics : Make sure that you select this option for your splitting characteristics : Doing so will make sure that the selected characteristics are populated in each document line 144

Recommendations (cont.) Use splitting and zero balancing functionalities to enable line items to be divided for selected characteristics to produce financial statements for the selected characteristics These functionalities are available for segment, profit centre and business area Make sure that you select zero balancing and the mandatory option for your splitting characteristics. By doing so, you will make sure that a characteristic is populated for each line and zero balance per characteristic is secured in each document The extended data structure of new GL is available for standard reporting 145

Visibility of Online Document Splitting Important! : Document splitting is only visible in the General Ledger : The sub-ledgers only contain the Entry View of the document 146

Company Code Global Parameters : Enter Company Code Global Parameters (OBY6) IMG Path: Financial Accounting>Financial Accounting Global Settings>Company Code>Enter Global Parameter Country & Currency Chart of Accounts Fiscal year variant Field status variant & Posting period variant 147

Knowledge Check 1. What is the highest level of organisation in Asset Accounting? 2. Why are multiple depreciation areas setup? 3. What are some of the instances for making mass changes to asset master records? 4. What are the three types of asset retirement? 5. What does the document splitting rule logic determine? 148

End of Day Q & A 149

Day 4 Lessons Learned (1 of 4) : Organisation Structure : Chart of depreciation : Directory of depreciation areas : Highest organisation unit in asset accounting : Depreciation Area : Facilitates valuation of assets : One depreciation area for each method of accounting : Facilitates parallel accounting : Controls postings to GL (Real time, periodic, no postings, etc.) 150