- SAP Managed Tags:
Asset Accounting in SAP (FI-AA) is a component of the SAP system that helps manage and monitor fixed assets. It's a subsidiary ledger to the general ledger, providing detailed information on fixed asset transactions.
Here are some of the key features of Asset Accounting in SAP:
- Acquisition costs - Provides the correct acquisition costs for fixed assets, such as a purchased laptop or a self-produced machine
- Value changes - Documents and posts value changes for assets throughout their life cycle
- Balance sheet and profit and loss statement - Displays individual asset values in aggregated form in the balance sheet and profit and loss statement
- Customizing - Allows users to give the component a country-specific and company-specific character
- SAP Fiori launchpad -Users can use the SAP Fiori launchpad for daily work, as several important Asset Accounting apps are only available as SAP Fiori apps
What you can do with Asset Accounting in SAP FICO
In addition, SAP has designed Asset accounting to manage the entire lifecycle of fixed assets. It starts with purchasing to retirement or scrapping. Thus, using this we can calculate the depreciation of assets, automatically and manually,. Many also called it Fixed Asset Accounting in SAP.
Further, Asset Accounting in SAP FICO provides real-time integration with FI for simultaneous recording of asset transactions. This includes initial and subsequent acquisition, retirement, transfer and scrapping.
- Directly post the goods or invoice receipt from MM or PP to FI-AA
- Post asset sales from FI-AA to a customer account using FI-AR
- Further, Capitalize the asset maintenance expenses in FI-AA using asset settlements through the PM module
- Lastly, Pass depreciation from FI-AA to SAP CO
What Is an Impaired Asset?
An impaired asset is an asset that has a market value less than the value listed on the company’s balance sheet. When an asset is deemed to be impaired, it will need to be written down on the company’s balance sheet to its current market value.
Asset Depreciation vs. Asset Impairment
A capital asset is depreciated on a regular basis in order to account for typical wear and tear on the item over time. The amount of depreciation taken each accounting period is based on a predetermined schedule using either straight line or one of multiple accelerated depreciation methods. Depreciation differs from impairment, which is recorded as the result of a one-time or unusual drop in the market value of an asset.
When a capital asset is impaired, the periodic amount of depreciation is adjusted moving forward. Retroactive changes are not required for adjusting the previous depreciation already taken. However, depreciation charges are recalculated for the remainder of the asset’s useful life based on the impaired asset’s new carrying value as of the date of the impairment.
Where Does Impairment Show Up on My Company’s Financial Statements?
An impairment loss shows up as a negative value on the income statement. If you keep a contra asset account for the value of the impairment to preserve the historical cost of the asset, it would be reported directly below the asset on your balance sheet. A contra asset account has a natural balance that is opposite that of a standard asset account, a credit.
CONFIGURATION STEP IN SAP:
1.Determine the depreciation areas:
| Transaction Code | OABW |
| Configuration Path | Financial Accounting (New) => Asset Accounting => Special Valuation Revaluation of Fixed Assets => Revaluation for the Balance Sheet => Determine Depreciation Areas |
In this activity, you determine the depreciation areas in which you want to manage revaluations. Depending on the country-specific/region-specific standard chart of depreciation, SAP provides depreciation areas for managing revaluations.
For each depreciation area, you have specified that impairments can be posted both as revaluation of acquisition and production costs and as depreciation revaluation:
The revaluation function enables you to adjust the value of individual fixed assets to the fair market value.
Posting the Business Transaction
When you revaluate a fixed asset, the following values are changed depending on whether the adjustment refers to the acquisition and production costs or the accumulated depreciation:
The historical acquisition and product costs on the fixed asset account in the general ledger
The accumulated depreciation on the adjustment account in the general ledger.
Revaluation of Historical Acquisition and Production Costs:
Disregarding any differentiation by means of account determination groups, the posting record for this business transaction would appear as follows:
Debit Credit
Historic Acquisition Costs (Acquisition and production costs) |
|
| Offsetting Account |
You can refine this posting record using account determination groups, and specify any number of G/L accounts for historic acquisition costs.
Revaluation of Accumulated Depreciation:
Disregarding any differentiation by means of account determination groups, the posting record for this business transaction would appear as follows:
Debit Credit
Offsetting Account |
|
| Accumulated Depreciation |
You can refine this posting record utilizing account determination groups, which allow you to specify any number of G/L accounts for accumulated depreciation.
In this blog, I will be explaining the configuration of Revaluation of Historical Acquisition and Production Costs:
Defining the posting rule:
1.Determine the depreciation areas:
| Transaction Code | OAYR |
| Configuration Path | Financial Accounting (New) => Asset Accounting Integration with General Ledger Accounting => Post Depreciation to General Ledger Accounting => Specify Intervals and Posting Rules. |
In this step, you define the posting rules for the depreciation areas that post depreciation values to Financial Accounting. You define the posting cycle (how often depreciation is posted) and the account assignment rules for the depreciation posting run.
Go to OAYR and select the company code.
Then click on the posting rules.
In the book depreciation area, go to other posting settings.
Defining G/L accounts for Impairment:
| Transaction Code | AO90 |
| Configuration Path | Financial Accounting (New) => Asset Accounting Integration with General Ledger Accounting => Assign G/L Accounts |
Go to tcode AO90 and create a revaluation APC for each fixed asset class and clearing account Revalutaion APC.
Select Chart Of Accounts
Select Account Determination /Asset Class:
Select Depreciation Area:
Assign Balance sheet Account and P and L account:
Note: The revaluation APC has to be a reconciliation account and the revaluation offsetting account P&L category
Reconciliation Account: Revaluation | The balance sheet accounts for the revaluation of acquisition and production costs of assets. (Reconciliation account) |
Offsetting Account for Revaluation | Clearing accounts for appreciation to the acquisition and production costs of assets. (P and L Account) |
Create transaction type for Impairment:
| Transaction Code | AO84 |
| Configuration Path | Financial Accounting (New) => Asset Accounting => Special Valuation Revaluation of Fixed Assets => Revaluation for the Balance Sheet => Define Transaction Types for Revaluation |
If you are using the new depreciation calculation, you have activated the FIN EA-APPL add-on.
You have created the following new transaction types :
- Transaction type for impairment according to IAS36 (debit) for current year (transaction type group A2 )
- Transaction type for impairment according to IAS36 (debit) for prior year (transaction type group A1 )
- Transaction type for impairment according to IAS36 (credit) for current year (transaction type group A2 )
- Transaction type for impairment according to IAS36 (credit) for prior year (transaction type group A1 )
Note :If you are using the old depreciation calculation, then instead of transaction type groups A1 and A2 , you have to use transaction type groups 81 and 82 .
We have created the transaction type for illustration purposes ‘Z81’, ‘Z82’, ‘Z83’‘Z84’,
Transaction Type | Description | Consolidated Transaction type | Dcoument Type |
Z81 | Asset Impairment - Prior Year(Debit) | 943 | AA |
Z82 | Asset Impairment - Current Year(Debit) | 943 | AA |
Z83 | Asset Impairment - Current Year(Credit) | 943 | AA |
Z84 | Asset Impairment - Prior Year(Credit) | 943 | AA |
Create Transaction Type Z81:
Create Transaction Type Z82:
Create Transaction Type Z83:
Create Transaction Type Z84:
Testing the Asset Impairment In the System:
Create New Asset:
| Transaction Code | AS01 |
| New Asset Number | 60402 |
Post APC:
| Transaction Code | ABZON / ABZOL |
Review Asset Value:
| Transaction Code | AS03 |
Post Asset Impairment:
| Transaction Code | ABAW |
Now, go to tcode ABAW, select the asset to be impaired. Put the transaction type as Z81, press Enter.
In the next screen give an asset value date, amount to be posted as Impairment. Now, click Save.
An asset accounting document will be generated.
Review Asset Value:
| Transaction Code | AS03 |
Run Depreciation:
| Transaction Code | AFAB |
NOTE: This impairment amount will NOT be posted automatically. Once depreciation run takes place then only the amount gets posted to GL account.
Review the Posted Document:
| Transaction Code | FB03 |
Transaction type in balance sheet account => 943
Review Asset Value:
| Transaction Code | AS03 |
Conclusion:
By following the above steps you can do asset impairment with simple configurations.
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