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Change useful life of an Asset in Tax Area only

Former Member
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Dear All,

I was asked for decreasing the asset useful life in tax area only.

in a way that the useful life would be half time than in the Book area.

The depreciation method is LINEAR.

The problem is that the change in depreciation is taking place as from now, and the total asset useful lifein the tax area  does not match the demand.

For example-

  • Asset Useful life before change = 10 years

  • Depreciation Method= Linear

  • Asset Value before depreciation start=100 USD

  • After two years the Net Book Value is 80 USD, Accum depreciation is 20 USD (10 USD per year).

  • Now (After 2 years of depreciation has passed) we change Useful life to 5 years on Tax depreciation area only -

The reult : The system would depreciate 20 USD per year (instead of 10 USD),

and the asset would finish to depreciate after 4 years from now.

Since 2 years already over, now added 4 more years - meaning the useful life would be 6 instead of 5 according to the demand.

Could anyone advise how to change the useful life of an asset that would acquire my demand?

Meaning decreasing the total useful life of an asset in half in tax area only (only AA tables), so that the total useful life in tax area would acquire my demand?

Thank you in advance!

Accepted Solutions (0)

Answers (1)

Answers (1)

former_member190588
Active Participant
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Hi Orly,

Could you enlighten me whether will you be posting depreciation in tax area or is it meant only for reporting purpose.

If the answer is for reporting I would say you can play with depreciation key where

system can post depreciation based on yearly basis.

Please explore in this area I have done this earlier but scenario is no matter the acq date system will calculate complete depreciation for the asset..

Kindly get the complete requirement certainly few things cannot be done in sap without enhancement.

regards

Plato Bose 

Former Member
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Hi Plato,

Thank you for your quick reply.

The tax area is only for reporting.

I did not clearly understand your idea by "play with depreciation key"....

Could you please give me an example?

My requirement is to decrease the asset useful life by half in tax area,

in a matter that the depreciation would be dubled (*2) every year.

Thank you,

Orly

ajaycwa1981
Active Contributor
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Hi

Your Dep Key in Tax Area should be based on "remaining useful life"

The Multi Level Method of your dep Key should have Base Value 24 and the check box for "rem life" must be ticked (read your dep key from AFAMA - > read MLM from AFAMS)

If you have these settings, the moment you reduce useful life, system would automatically, calculate yearly dep as 80/3 years = 26.67 each year

This should also work with Dep Key based on Original useful life (Base Value  =01 and rem life indicator not ticked

I just tried in my system and both of them worked

Br. Ajay M

former_member190588
Active Participant
0 Kudos

HI Orly,

when I say play with depreciation key I meant try to configure different keys to have

the characteristics you require and achieve your requirement.

Depands upon what kind of depreciation calculation method you are using. Is it St .line by useful life ?

Can you provide with your requirement in terms of figures like

Book Depreciation :

Asset Acqustion : 12000

useful life            : 10

PM                      : 100

Tax Depreciation :

Asset AcQ  : 12000

useful life : ????

expected PM Dep : ???

Provide this let me try in my system

PBB

Former Member
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Thank you Ajay!

Is there any way to update accumulated dep. for start year at tax area only,

to be 40 (instead of the current 20) so that the calculated yearly dep would be 20 USD for next 3 years?

ajaycwa1981
Active Contributor
0 Kudos

Hi

You can post an unplanned depreciation of 20 in the previous year so that accum dep at the start of year could be 40

Use ABAA to post unplanned dep

Br. Ajay M

Former Member
0 Kudos

Hi Plato,

Book Depreciation :

Asset Acqustion : 100

useful life            : 10

yearly dep                   : 10

Tax Depreciation :

Asset Acqustion : 100

useful life            : 10

yearly dep                   : 10

After two years of depreciation, we change useful life in tax area to be - 5 (instead of 10).

We would like the yearly dep to be 20 for the next 3 years.

Could you advise how to do this? 

Br

Orly

Former Member
0 Kudos

Hi Ajay,

Can I use ABAA for unplanned dep in Tax Area Only?

Thank you!!

ajaycwa1981
Active Contributor
0 Kudos

Hi

Never tried that..

If need be, you can post .01 in Dep Area 01 and 20 in Tax dep area

Br. Ajay  M

Former Member
0 Kudos

Hi,

Which Transaction type you suggest to use in ABAA?

former_member190588
Active Participant
0 Kudos

Hi Orly,

Looking at your scenario if we are using depreciation based on useful life.  Then user will have to change the useful life manually in the asset master record and let the system recalculate the values according to the changed useful life.

Alternatively, if you could consult more to your users and try to find out the depreciation % for tax reporting then can configure depreciation keys based on %.  It will be a lot but it got advantage over the depreciation by useful life method.  Personally, I went for this option in my project.

To sum up user have to manually perform few adjustment outside sap for their tax reporting in either cases.

Hope this clarifies

regards

pbb