ASSET ACCOUNTING

ASSET ACCOUNTING

Bad debits:

1. Creation of GL Master  :Provision for bad debts reconciliation A/c No.200112
2. Link between sundry debtors and provision for bad debts :OBXY

E         Reserve for bad debt

/\

                    200110               200112

3. Sales invoice posting                                  F-22

4. Transfer from customer normal to customer special GL

E                                                         F-30

Customer special GL E       ER      Dr        Provision for bad debt

            To customer with clearing              Sundry debtors

5.   After 3 years bad debtors    Dr        F-30

                        To Customer special GL                 Provision for bad debt

Asset accounting: This is sub ledger (subsidiary ledger)

Chart of Depreciation

Asset accounting customization will be done for Chart of Depreciation will be assigned to company code/codes.

We have to copy either Germany chart of depreciation or Indian Chart of Depreciation.

Depreciation areas:

Book depreciation (Postings to accounts)

Income tax depreciation     |

Group depreciation              |à Only for information

Costing depreciation                       |

Depreciation methods;

Straight Line Method depreciation method (SLM)

Written down value depreciation method (WDV)

Depreciation keys     Rate +Method

5% SLM Rate

5% WDV Rate

Transaction types

100     External acquisition

110     In-house production \

210     Retirement with revenue

Asset debit

The debit can be use of External acquisition (Outside purchase) /In house production/Inter unit transfer/Inter company purchase.

With transaction type we will come to know because of what it is debited.

Posting keys: 

70 Asset Debit

75 Asset Credit

Asset accounting is based on 4 rules:

1. Sub asset master is to be created   with reference to main asset master.

2. Main asset master is to be created with reference to asset class

3. Account determination is specified in asset class

4. For account determination we assign GL accounts based on the nature of transaction.

	Account determination	Asset class	Main asset master	Sub asset master
Purchase
200000 P & M	1.Land	Free hold
200000 P& M	2.Building	Lease hold
		Factory Non factory
Profit on asset sale	Dept A 3. Plant & Machinery	Machine no.1 15.05.2003 Machine no.2		Motor 20.11.2008
Loss on asset Sale	Dept B Dept C
Loss due to scrapping	4. Furniture & Fixtures	Furniture & Fixtures
Depreciation	5. Vehicles	Heavy , Others
Accumulation depreciation	6. Capital work in progress	General Expansion 1 Expansion 2

Additions to specific mechanical will be created as sub asset masters.

Main asset will be have always sub number zero.

Crate machine no.1 Master                       1-0

Motor to machine no.1                    1-1

Addition to machine no.1               1-2

If we give 1-0 it gives main asset value

If we give 1-1 it gives motor value

If we give 1 it gives machines 1 with additions

Why we call Land /Buildings etc. as account determinations.

These items will determine the GL accounts to be posted automatically.

Motor purchase: .

Motor A/c       Dr        SL                   500000           Transaction type :100

                                                            2000000        P & M 50000 GL

            To Bank GL                           500000

Save

CUSTOMIZATION

Copy reference Chat of Depreciation /Depreciation Area:

Path :SPRO-Financial accounting-Asset Accounting –Organizational structures –Copy reference Chart of Depreciation /Depreciation area (Tr code is EC08)

Double click on copy reference Chart of Depreciation

From the menu select organizational object

Copy org. object (F6)

From Chart of Depreciation :Select ODE

(Maximum valuation: Germany)

To chart of Depreciation     :AML

Enter

Ignore the message press enter

Select create request button

Short depreciation :Asset customization for AML

Enter

Press enter once again to save in your request

We get a message chart of depreciation ODE copy to AML

Enter

Select back arrow

Double click on specify depreciation of Chart of Depreciation

Select position button

Chart of Depreciation                      :AML

Enter

Change the description to Chart of Depreciation for AML

Press enter to save in your request

Select back arrow

Double click copy /delete depreciation areas

Give the Chart of Depreciation :AML

Enter

Select areas 3,10,15,20,31,32,41 &51

From the menu select Edità Delete

Save

Ignore the warning message press enter

Press enter to save in your request

Assign Chart of Depreciation to Company code

Path :Up to organization structure the path is same –Assign Chart of Depreciation to company code (Tr code is OAOB)

Select position button

Give the company code      :AML

Enter

For company code AML Chart of Depreciation AML

Save

Press enter to save in your request

Specify account determination

Path :Up to the organizational structure the path is same –Asset Class-Specify account determination 

Select new entries button

Account determination	Description
AML10000	Land
AML11000	Building
AML20000	Plant & Machinery
AML30000	Furniture & Fixtures
AML31000	Vehicles
AML40000	Capital work in progress

Save

Press enter to save in your request

Create screen layout rule

Same path

Select screen layout            1000

Select screen layout            1100

Select screen layout            2000

Select screen layout            2100

Select screen layout            2500

Select screen layout            3000

Select copy as button

Change screen layout 1000 to AML1

Name                         :Land

Change screen layout 1100 to AML2

Name                         :Buildings

Change screen layout 2000 to AML3

Name                         :Plant & Machinery

Change screen layout 2100 to AML4

Name                         :Furniture & Fixtures

Change screen layout 2500 to AML5

Name                         :Vehicle

Change the screen layout 2600 to AML6

Name                         :Capital work in progress

Enter & Save

Press enter to save in your request

Define number range intervals

Path :Same path  (Tr code is AS08)

Company code         :AML

Select change intervals button

Select interval button

Number range          :01

From number           :100000

Enter

Select interval button once again

No.range                   :02

From no.                    :100001

To no.                         :200000

Enter

Select interval button

No.range                   :03

From no.                    :200001

To no.                         :300000

Enter

Select interval button

No.range                   :04

From no.                    :300001

To no.                         :400000

Enter

Select interval button

No.range                   :05

From no.                    :400001

To no.                         :500000

Enter

Select interval button

No.rage                      :06

From no.                    :500001

To no.                         :600000

Enter & Save

Define asset classes:

Path :Same path (Tr code is OAOA)

Select new entries button

Asset class    :AML1000

Description    :Free hold land

Short text also :Free hold land

Account determination       :select AML10000 Land

Screen layout rule               :select AML1 Land

No.rage                                  :01

Select included asset under inventory data

Select no.AUC or Summary Management of AUC

Save

Press enter to save in your request

Note: AUC stands for Asset Under Construction

Select next entry button  (F8)

Asset class                            :AML1100

Description                            :Factory Buildings

Short text                               : Factory Buildings

Account determination       :select AML11000 Buildings

Screen layout rule               :AML2

Number rage                        :02

Select include asset under inventory data check box

Select no.AUC or Summary Management of AUC

Save

Select next entry button  (F8)

Asset class                            :AML2000

Description                            :  Dept A

Short text                               : Dept A

Account determination       :select AML20000 P & M

Screen layout rule               :AML3

Number rage                        :03

Select include asset under inventory data check box

Select no.AUC or Summary Management of AUC

Save

Select next entry button  (F8)

Asset class                            :AML3000

Description                            :  Furniture & Fixtures

Short text                               : Furniture & Fixtures

Account determination       :select AML30000 Furniture & Fixtures

Screen layout rule               :AML4

Number rage                        :04

Select include asset under inventory data check box

Select no.AUC or Summary Management of AUC

Save

Select next entry button  (F8)

Asset class                            :AML3100

Description                            :  Vehicles and others

Short text                               : Vehicles and others

Account determination       :select AML31000 Vehicles and others

Screen layout rule               :AML5

Number rage                                    :05

Select include asset under inventory data check box

Select no.AUC or Summary Management of AUC

Save

Select next entry button  (F8)

Asset class                            :AML4000

Description                            : Capital Work in Progress -General

Short text                               : Capital Work in Progress -General

Account determination       :select AML40000 CWIP-General

Screen layout rule               :AML6

Number rage                                    :06

Select include asset under inventory data check box

Select line item settlement radio button

Save

Select include asset under inventory data check box:

Inventory means fixed inventory, whatever assets we create they will be included in fixed assets inventory.

As per companies auditors report order (CARO) – the auditor will state whether fixed assets have been physically verified by management or not.

Incase of big companies à physical verification in a phased manner

When we create an asset master – There is a field called last verification date

Asset nos                                          Last verification date

1                                                                                             31.03.2008

2                                                                                             31.03.2007

3                                                                                             31.03.2008

4                                                                                             31.03.2008

5                                                                                             31.03.2007

In the report we give the report date – From 01.04.2007 to 31.03.2008 we get the list of asset verified during the year

1             31.03.2008

2             31.03.2008

3             31.03.2008

4             31.03.2008

We have not selected for capital work in progress

We can not verify every that assets –once they are commissioned they will be shown under respective head and not under capital work in progress

For capital work progress general –Select line item settlement radio button

Machinery                 Debit to                      Asset commissioned on 22.11.2008

01/11/2008                CWIP                          as machine no.10

Fright AMT

15/11/2008

Settle from Capital Work In Progress  to machine no.10 line item wise

Commissioning charges 22/11/2008

Determine areas in the asset class

Path :SPRO-Financial accounting –Asset accounting-Valuation –Determine depreciation areas in the asset class (Tr.Code is OAYZ)

Give the chat of depreciation                     :AML

Enter

Select position button

Asset class :AML1000 (Free hold land)

Enter

Select AML1000 (Free hold land)

Double click depreciation areas folder

Deselect deactivation check box for area 01 Book depreciation

Layout                        :Select 2000 depreciation on asset sub-no level

For area 01 layout 2000

For area 02 layout 2000

For area 30 layout 2000

Save

Press enter to save in your request

Select back arrow

The same procedure the followed for asset class

AML1100                   Factory building

AML2000                   Dept A

AML3000                   Furniture & Fixtures

AML3100                   Vehicles & other                 

AML4000                   Capital work in progress

Deselect deactivation check box for area 01 for land there is no depreciation

In asset master creation-Capitalization date –required  Land purchase details registration date

Depreciation key(Rate)                               0%

For area 01- Select 2000 – Depreciation on asset sub number level

                        Asset no.                               Sub.no.

Machine 10   1          -                                   0                      10/08/2005

Motor              1          -                                   1                      22/11/2008

Creation of 15 General ledger master FS00

S.No.	GL Account No.	Account No.to copy	Parameters to Maintain
1	200000  Land	200110 Sundry debtors	-Account group – Fixed assets -200000-20009 -Change the account group Fixed Assets -Sort key -018 Asset number Reconciliation A/c for  account type –Asset -Field status group 067 Reconciliation accounts.
2	200005    Buildings	200000 Land	-Do -
3.	200010  Plant & Machinery	-Do-	-Do -
4.	200015  Furniture & Fixtures	-Do-	-Do -
5.	200020  Vehicles	-Do-	-Do -
6.	200025 Capital work in progress	-Do-	-Do -
7	100200 Accumulate depreciation- Building	-Do-	Account group-Accumulate depreciation -100200-100299 -Sort key -018 Asset number -Reconciliation A/c for account type –Assets -Field Status group- 067 Reconciliation accounts
8	100205 Accumulated depreciation –Plant & Machinery	100200 Depreciation -Buildings	-Do -
9.	100210 Accumulated depreciation –Furniture & Fixtures	-Do-	-Do-
10	100215 Accumulated depreciation –Vehicles	-Do-	-Do-
11.	300102 Assets sales	300100 Exchange gain	Account group –other income 300100-300199 Sort key -018 Asset number Field status group G052
12	300103 Profit on asset sale	-Do-	-Account group other Income -300100-300199 -Sort key 018 Asset number -Field status group -G001
13	400302 Loss on asset sale	-Do-	-Do-
14	400303 Loss due to scrapping	-Do-	-Do-
15	400500 Depreciation		Change the Account group Depreciation 400500-400599 Sort key -018 Asset number Filed status group-G001

                                                                                                           

Assignment of accounts for automatic postings:

Path :SPRO-Financial accounting –Asset accounting-Integration with the general ledger-Assign GL accounts.

Give the your Chat of Depreciation                      :AML

Enter

The Transaction code is AO90

Select chant of accounts                                       :AML

Double click on account determination folder

Select account determination                               :AML10000 Land

Double click on Balance sheet accounts folder

Acquisition column :Acquisition and production costs Give the A/c No.:200000 Land

Loss made on asset retirement w/o revenue.(w/o revenue mean scrap)

Give the account no.400303 loss to scraping

Clearing account revenue from asset sale         :300102

Gain from asset sale                                               :300103

Loss from asset sales                                             :400302

Press enter

Select save button

Ignore the warning message press enter

Press enter to save in your request

Double click on account determination folder

Select account determination                               :AML11000 Buildings

Double click on Balance Sheet accounts folder

Acquisition column acquisition and production cost a/c no.200005

Loss made on asset retirement w/o revenue      :400303

Clearing account revenue from asset sale         :300102

Gain from asset sale                                               :300103

Loss from asset sale                                               :400302

Save

Ignore the message press enter

Double click on depreciation folder

Accumulated depreciation for ordinary depreciation 100200 accumulated depreciation buildings

Expense account for ordinary depreciation 400500 Depreciation account

Save

Ignore the message press enter

Double click on account determination folder

Select account determination                               :AML 20000 P & M

Double click on Balance Sheet accounts folder

Acquisition column acquisition  and production cost Give the GL account no.:200010

Loss made on asset retirement (without) w/o revenue 400303

Clearing account revenue from asset sales       :300102

Gain from asset sale                                               :300103

Loss from asset sale                                               :400302

Select save button or Ctrl+S

Double click on depreciation folder

Accumulated depreciation account for ordinary depreciation a/c no.100205

Expense account for ordinary deprecation         :400500

Save

Ignore the message press enter

Double click on account determination folder

Select account determination                               :AML30000 Furniture & Fixtures

Double click on balance sheet account folder

Acquisition :Acquisition and production costs 200015 (Furniture & Fixtures a/c)

Loss made on asset retirement w/o revenue      :400303

Clearing account revenue from asset sale         :300102

Gain from asset sale                                               : 300103

Loss from asset sale                                               :400302

save

Ignore the message press enter

Double click on depreciation folder

Accumulated depreciation account for ordinary depreciation 100210

Expense for ordinary deprecation                        :400500

Save

Ignore the message press enter

Double click on account determination folder

Select account determination                                           :AML 31000 vehicles

Double click on Balance Sheet accounts folder

Acquisition: Acquisition production costs                       :200020

Loss made on asset retirement w/o revenue                  :400303

Clearing account revenue from asset sale                     :300102

Gain from asset sale                                                           :300103

Loss from asset sale                                                           :400302

Save

Ignore the message press enter

Double click on depreciation folder

Accumulate depreciation for ordinary depreciation      :100215

Expenses account for ordinary depreciation                  :400500

Save

Ignore the message press enter

Double click on account determination folder

Select account determination                                           :AML40000 Capital Work In progress

Double click on Balance Sheet accounts folder

Acquisition :Acquisition and production cost                 :200025

Loss made on asset retirement w/o revenue                  :400303

Clearing accounts revenue from asset sale                   :300102

Gain from asset sale                                                           :300103

Loss from asset sale                                                           :400302

Select save button or Ctrl+S

 Ignore the message press enter

Specify document type for posting of deprecation:

Up to integration with general ledger the path is same –Post-Deprecation  to the GL –Specify Document type for posting deprecation-Double click on define document type (Tr code is OBA7)

Select type AF Deprecation postings

Select details button

Note the number range 04

Select number range information button

Give the company code      :AML

Select change intervals button

Select intervals button

Number range                      :04

Year                                        :2008

From no.                                :700001

To no.                                     :800000

Select external check box

Enter and save

Ignore the warning message press enter

ü  As per SAP documentation :

ü  From ECC5 onwards                                  Not to select external check box

ü  Up to 4.7 EE                                                  Select external check box

When we select external check box, we have to give what should be the document number at the time of posting.

There is an exception –for deprecation postings also we have to select external check box

In normal postings we are posting are document at a time.

Incase of deprecation / when we run depreciation number of documents will be generated at a time based on account determination

04-2008 -700001 -800000 Select external check box

AML 10000 Land

AML11000 Buildings                      Depreciation account

AML20000 Plant & Machinery      Assessment for

AML30000 Furniture & Fixtures    Account determination

AML31000 Vehicles

AML40000  Capital work in Progress

When we run depreciation 4 documents will be generated automatically every month.

700001           Depreciation DR

                        To Acc Dep Buildings

700002           Depreciation DR

                        To Acc. Dep-Plant & Machinery

700003           Depreciation DR

                        To Acc Dep Furniture & Fixtures

700004           Depreciation DR

                        To Acc Dep -Vehicles        

Specify intervals and posting rules:

Same path (next step) (Tr code is OAYR)

Select company code                     AML

Double click on posting rules folder

Select monthly posting radio button

Save

Press enter to save in your request

Specify rounding for net book value and /or deprecation:

Path :SPRO-Financial accounting-Asset accounting-Valuation –Amount specifications (company code/Deprecation area) –Specify rounding of net book value and /or deprecation

Ignore the message press enter

Select company code                     :AML

Double click on rounding specifications folder

Select area 01 book deprecation

Select details button

Select automatically calculated depreciation check box

Select arithmetic rounding radio button

Save

Press enter to save in your request

Define screen layout for asset master data:

Path :SPRO-Financial accounting-Asset accounting-Master data-Screen layout-Define screen layout for asset master data

Double click on define screen layout for asset master data

Select layout             :AML1 Land

Double click on logical fields groups folder

Select 2 posting information

Double click on field group rules folder

Capitalization data make it required entry field

Select main number check box

Select sub-no check box

Select copy check box

We have created AML1 by copying layout 1000

Afterwards we create XYZ layout by copying

AML1 what ever fields we have chosen for AML1 should be copied XYZ

Select save button or Ctrl+S

Press enter to save in your request

Select back arrow

Select 3 time dependent date

Double click on filed group rules folder

Business area make it required entry field

Select main no.check box, sub no.check box

Save

Select back arrow two times

The same procedure is to the followed for layout AML 2 Buildings

                                                                                      AML 3 Plant & Machinery

                                                                                      AML10 Furniture & Fixtures

                                                                                      AML5 Vehicles

                                                                                      AML6 Capital Work in Progress

Define screen layout for asset deprecation areas:

Same path (Tr code is AO21)

Select screen layout 2000 deprecation on asset sub no.level

Double click on field groups folder

Depreciation keys make it required entry filed

Select main no.check box

Select sub-no.check box

Select copy check box

Save

Deprecation keys creation (Rate+ Methods)

1.    Define base methods

2.    Define declining balance method

3.    Define period control methods

4.    Define period control methods

5.    Maintain deprecation key

First steps will be assigned in 5^th step and 5^th step will be assigned in Asset master.

1. Define base methods:

Path :SPRO –Financial accounting-Asset accounting-Depreciation –Valuation methods –Depreciation key-Calculation methods –Define base methods

           

Base method            :0014 Ordinary :Explicit percentage (after end of life)

A)   Ordinary deprecation

B)   Explicit percentage –creation percentages  rate given in Companies Act Schedule XIV

C)   After end of line –If the next box value becomes zero no depreciation should be calculated.

Define declining balance methods

Same path

Give the Char of Depreciation AML

Enter

Note down decimal  balance 001

002

Decimal factor 2

Max percentage 20

Beginning years :Wear and tear will be less

Acquisition value                 100000

Rate of depreciation                        5%

First year                                            5

Second year                                                 5

Third  year                                         5

Fourth year                                       5

                                                            ---

                                                            20

First 4 years :100000*5% *98% (2% discount as per companies act)

5^th year onwards :100000*5%

Define multi level methods: (Tr code is AFAMS)

same path

select new entries button

multilevel method    :A

Description                :5% SLM

Validity star               :Select from ordinary deprecation on star date

Save

Press enter to save in your request

Double click on levels folder

Select new entries button

Acquisition year       :9999

Year                            :999

Periods                      :12

Base value                :Select 01 Acquisition value

Percentage               :5

Save

Acquisition year       :9999

We have given say any year 2008- This rate is applicable for the assets purchased in the year 2008 –Next year also we are purchasing an asset having 5% rate-we have to create acquisition year once again in the next year.

When we give 9999 purchase can be in the year

2.  Years 999

A) 5% SLM rate 20 years (100/5)

B) 5% WDV rate       ?

C) 1% SLM rate 100 years (100/1)

D) 1% WDV rate       ?

999 max no. of year

In base method –once the net book value becomes zero –Do’t calculate depreciation .

In some countries.

First 5 years 5%

Next 5 years 10%

Next 5 years  15%

3. Periods 12 months
4. Base value 01 Acquisition value in case of SLM

        24 Net book value incase of WDV

       5. Percent 5 rate of depreciation

6. Reduction 1

Acquisition vale       100000

1% Scrap value        1000

                                    ------

                                    99000

Dep 5% only on 99000

7. Remine life                       Percentage method             Useful life method

                                                India                                       Machine no.1-In year 2003

                                                                                                Useful life :20 Years

                                                                                                Going for SAP in 2008

                                                                                                Select rem life

                                                                                                Asset master -15 Years

Select acquisition year 9999

Double click on Multi level method folder

Select next entry button

Multilevel method A2

Description    :5% WDV

Validity star   :From ordinary depreciation star date

Save

Select acquisition year 9999

Double click on levels folder

Select new entries button

Acquisition year       :9999

Year                            :999

Periods                      :12

Base value                :Select 24 net book value

Percent                      :5

Save

Maintain period control methods:

Same path

Give the Chart of deprecation :AML

Enter

Select new entries button

Period method                      :006

Description                :AML period control method

Acquisition year       :Select 01 pro rate at period start date

Add year                    :Select 01

Retirement year       :01 (Retirement mean sale)

Transfer year            :01

Press enter to save in your request

Maintain deprecation key:

Same path Tr code is AFAMA

Select new entries button

Depreciation key      :AML1

Description                :5% Straight line dep.method

Select period control according to fiscal year check box

Select dep. to the day check box

Save

Ignore the warning message press enter

Press enter to save in your request

Double click on assignment of calculation methods folder

Select new entries button

Depreciation type     :Select ordinary deprecation

Phase                                    :Select from the start of depreciation

Base method                        :0014

Declare balance method     :001

Period control method        :006

Multilevel method                :A1

Class                                      :Select straight line depreciation

Save

Select back arrow 4 times

Select depreciation key      :AML1

Select activate button

Save

Select new entries button

Depreciation key                  :AML2

Depreciation                                     :5% written Down Value Deprecation method

Period control according to Fiscal year check box

Select depreciation to the day check box

Save

Ignore the warning message press enter

Double click assignment of calculation methods folder

Select new entries button

Depreciation type     :Select ordinary depreciation

Phase                                    :Select from the start of depreciation

Base method                        :0014

Declare balance method:001

Period control method :006

Multilevel method    :A2

Class                          :Select declining –balance depreciation

Save

Select back arrow four times

Select depreciation key AML2

Select activate button

Save

Select first page control page up button

Select depreciation key      :0000(no depreciation no interest )

Select activate button

Save