Asset Accounting for Different Accounting Policies

[Former Member]

Hello All!

Currently :

1)  As per Company's Accounting Policy only the Assets above a threshold amount (say 5000$) should be considered as Asset. And if it is below the threshold, it should be expensed out.

2) However, for the Local Tax Accounting purpose, there is no threshold applicable. So the Asset even if below threshold will be an Asset.

So Ideally what Business with reference to these Low value Assets want :

1) There won' be any Asset acquired with respect to the Depreciation Area 01 ( Accounting Depreciation Area).

So it will always have 0 amount in that depreciation area for acquisition. As this amount will be expensed out.

2) However in the depreciation area 15 ( Taxation Depreciation Area) there will be ayquistion, depreciation etc on the normal rules.

Can anybody explain, how can it be acheived?

Just for the information:

1) Accounting Depreciation Area is the Real Depreciation Area.

2) Taxation Depreciation Area is statistical in nature.

Thanks in Advance!

[former_member351125 · Accepted solution]

s.apfico s.apfico,

Here are the options to resolve your issue.

1st Option

     Create an LVA asset class for your depreciation area 15 only.

     Go to OAYZ and deactivate all areas other than area 15

2nd Option

     You should create transaction type that will limit the posting in depreciation 15

     When posting an acquisition for LVA asset, depreciation area 15, use the ttype.

Hope this resolves your issue.

Thanks!

jhero

[Former Member · Accepted solution]

Thanks Jhero for your reply !

We have already tried the second Option, but somehow we are not able to restrict the Transaction type to only depreciation area 15.

May be because all other depreciation Areas except 01 are statistical in nature (?).

But will for sure will try the first Option and revert to you.

Thanks!

[former_member351125 · Accepted solution]

On the second option, please make sure that area 15 is not set as identical on the reference depreciation area via transaction code OABC and OABD.

Please uncheck the "identical" indicator.

Thanks!

Jhero

[Former Member · Accepted solution]

Thank you Jhero.

I tested  with the first Option and it has given the desired results!

And it satisfies all the requirements.

So I

Created an LVA asset class for  depreciation area 15 only.

     And  deactivated this Depreciation Area for  all areas other than area 15!

[ajaycwa1981]

Hi

This is a pretty common scenario in India

You will do LVA configuration in the system and specify the limit of 5000 for Dep Area 01 and 9999999 for Dep Area 15

Assign Dep Key with "Immediate Depreciation" (Base Method 0017) in Dep Area 01... When you post acquisition, it will post to both the Dep Areas as 5000..

However, after AFAB at period end, the entire 5000 in Dep Area 01 will be posted to depreciation i.e. expensed out.. Dep Area 15 will continue to have the value

Br. Ajay M

[Former Member]

Hi Ajay

Thank you very much for your Inputs!

Yes, Treatment of this case can be handled with LVA -Asset Class method.

But, in such a solution, Business typically says, that you are unnecessarily depreciating an Item ( for IFRS/Accounting Depreciation area) which is not an Asset as per Accounting Policy.

For example, a Printer below threshold of 500 $ should be be expensed to Printing and Stationery Account as per Accounting Policy.

By including the item in "Assets" (even if it is immediately depreciated) we are charging 500$ to depreciation instead of Printing and Stationery or similar such expenses.

But yes for sure the LVA Option is also can be considered for offering as a solution if Business accepts it.

Thanks Again!

[ajaycwa1981]

Hi

Limiting an asset master to a particular dep  area is certainly not right approach

What I suggested is the best practice recommended by sap.

In case you have to do an asset to asset to transfer for such LVAs, it will be a night mare with the option 1 you went with

And more important, business will have to do 2 transactions one for posting as expense and 2nd for dep  area 15.. Always possible that they might forget

A uniform process must be followed always

Br. Ajay M

[Former Member]

Yes. Each point you mentioned is absolutely relevant and makes sense.

Thanks for the inputs.