Business Scenario

As of now Asset Module is not active for IN01 & IN03.

 
Assumption
Now it is going to implement Asset Module for Indian Company Codes IN01 & IN03 with the following
of GT model and Business requirement of Tax Depreciation activity which is specific for Indian Income
Tax act of 1961. The following are the very important for IT Depreciation India: IT Act 1961.
 In depreciation computation as per the Indian Income Tax Act 1961, the The income Tax Act of
1961 requires depreciation to be computed on the block of assets and not on individual assets.
 The assets blocks and their corresponding rates of depreciation are prescribed by the law.
 Depreciation is calculated on the written down value (WDV) of the asset block after posting
relevant asset transactions during the given financial year.
 The closing WDV of an asset block for the current year is used as the Opening WDV of the asset
block for the following year.
 
Solution:
The following activities has to be performed by IT team.
1)      Asset Accounting GT settings has to be copied from IT02 Chart of Depreciation to IN01 and
IN03 Chart of Depreciation.
  In order to perform for Tax Depreciation, the following customising  has to be done for India
specific settings..
  As per OSS Note 738919 suggested, the following has to be activated in SFW5 t.code.
       Activation of Enterprise Extension EA-FIN(Financials Extension).
  Activation of Business Function FIN_LOC_CI_8 (FI-AA Localization topics for
India, Japan and Russia).
  After activation of above, it is required to active Country specific data (e.g. Asset Block
key etc…) which is for India with includes of Activation of table
“GLO_S_IN_DEPCAL_TI”. in t.code S_AEN_10000938.

  The next important activity of “Group Box – S0400” must be added to Tab Layout of
Asset Classes. Based on this activity in Asset master for Indian Company “Indian
Specific Data” tab will appear with the input field option of Block Key / Additional
Block Key / Put to use Date which is used for computation of Depreciation as per Indian
Income Tax Act 1961 stated that depreciation calculation on Asset Block and not on
individual Assets.
   This activity is only applicable for India. During data migration the new fields
Block Key and Put to use Date which is available in Asset master  India
Specific Data has to be filled in order to perform for Tax Depreciation.
  Transaction Types 100 / 105 / 110 / 150 / 200 / 250 / 260 / 320 / 330 / 346 / 400 has to be
assigned to relevant Transaction Type Group in Fixed Assets  Information System 
Country Spec. Data  India  Assign Transaction Types to Transaction Types Group as
per Note suggestion.
 
Trans.
Type Description Trans. Type Group
100 External asset acquisition Acquisition
105 Credit memo in invoice year Credit Memo
110 In-house acquisition Acquisition
150 Acquisition from an affiliated company Acquisition
200 Retirement without revenue Retirement
250 Retirement of new acquisition without revenue Retirement
260 Retirement of new acquisition with revenue Retirement
320 Transfer (retiring) of new acquisition Transfer Out
330 Receiving transfer of new acquisition Transfer In
346 Transfer acquis. of new acquisition from AuC Inverstment Purpose
400 Post-capitalization Acquisition

 
  Depreciation Area 02 has to be maintained for Chart of Depreciation IN01 & IN03 in order
to calculate the Tax Depreciation for Asset Transaction in Fixed Assets  Information
System  Country Spec. Data  India  Maintain Tax Depreciation Area as per Note
suggestion.
  Asset Blocks has to be created for Tax Depreciation purpose as Block – I / Block – II /
Block – III with proper maintenance of Depreciation % as per Business requirement in
the setting of Asset Master Data  Country Specific Function India.
 
Depn. For Tax Depn.
Key Description 02 (%)
Block – I – Buildings - Not using for Residential purpose @ 10% for
INT1 IN01 10%
INT2 Block – II – Furniture & Fixtures @ 10% for IN01 10%
Block – III – Plant & Machinery (Plant & Machinery) @35% for
INT3 IN01 35%
Block – III – Plant & Machinery (Tools & Instrument) @ 15% for
INT4 IN01 15%
INT5 Block – III – Plant & Machinery (Computers) @ 60% for IN01 60%
 INT6 Block – III – Plant & Machinery (Intangible Assets) @ 60% for IN01 60%
Block – III – Plant & Machinery - For Specific Plant 370 - Open
INT7 WDV @ 15% for IN01 15%
Block – III – Plant & Machinery - For Specific Plant 370 - Additional
INT8 Purchase for Current Year @ 20% for IN01 20%

   As per requirement from the Business and to meet legal requirement refer the below one
for INT7 and INT8:
As per SAP suggested regarding 35%  & 15% Tax Depreciation consideration.
1) INT7 Tax Depreciation – 15% Valid from 01.04.2013 to 31.03.9999
2) INT8 Addition Purchase During Year – 20% Valid from 01.04.2013 to
31.03.2014
During Current Year Acquisition, In Asset Master India Specic Data tab, Block Key
should be filled with INT7 and Additional Block Key should be filled with INT8.
Based on the above assignment, system will consider 35% (15%+20%) for the first Year
Tax Depreciation calculation.
And for the next year, it is required to remove INT8 Block Key from Asset master which
to be performed through LSMW.
So, once the above activity is done system will consider only 15% Tax Depreciation for
the next year.
  The above created Asset Blocks has to be assigned to Asset master  Indian Specific Data
for the Asset Classes 160 / 181 / 305 / 310 / 370 / 380 / 395 / 400 / 415 / 420 / 430 / 431 /
435 as per Business requirement and provided xls file.
 
  New Depreciation Keys has to be created for India, Depreciation calculation will be customised as
per Business requirement for Depreciation Area 01 and 02.
  Depreciation Area 01 – Book Depreciation Calculate Depreciation on individual Assets. In
Asset classes master data for the correspondent depr. Areas will be maintained below
depr. Keys and useful life as per received xls file. Depreciation calculation for Area 01
will be executed through AFAB as per GT.
  We can use this Depreciation Keys for both IN01 & IN03 Chart of Depreciations.
  Since the naming convention for Depreciation keys can be maintained only 4
characters. So we have set like for Book Depreciation(01) as IND1,
IND2…..IND7 and for Tax Depreciation (02) as INT1, INT2..…INT7
         IND - India Book Depreciation.
         INT – India Tax Depreciation
  
Depn. For Book Depn. Area  01
Description
Key (%)
IND1 India - Book Depn. for Buildings - 3.34% 3.34%
IND2 India - Book Depn. for Furn. & Fixt. - 12% 12%
IND3 India - Book Depn. for Pln & Mach. - 10.34% 10.34%
IND4 India - Book Depn. for Tools/Comp./Off.Equip- 25% 25%
IND5 India - Book Depn. for Testing Inst. - 15.50% 15.50%
IND6 India - Book Depn. for Motor Vehicle - 20% 20%
IND7 India - Book Depn. for Intang. Assets - 33.33% 33.33%

 
  Depreciation Area 02 (Tax) calculate on Asset Block wise. In asset classes master data for
the             correspondent depr. Areas will be maintained below depr. Keys and useful life
as per received xls file. Tax Depreciation there is no postings will be happened and user
can be check it in the t.codes J1IPROJDEPCAL - Calculation of  Projection
Depreciation Values / J1IDEPCALPOST - Income Tax Depreciation Calculation
Report. Below are the new Depn. Key for Depn. Area 02:
 
For Tax
Depn.
Description Depn. Area
Key
02 (%)
Y000 Book Depreciation 0% 0%

            Note:
Tax Depreciation will be calculated in India Specific Settings with the separate t.code.
The relevant Calculation procedure will be created separately in India Specific settings.
So, it is not required to create new Depreciation Keys with Tax Depreciation %
separately. Tax Depreciation will be assigned directly to Tax Asset Block Keys as per
requirement.
2)      As per standard SAP behaviour for Sub Asset, useful life will be picked from main Asset only
(Not residual life of main asset). If Business wants different useful life for Sub Asset (for
example residual useful life), user can able to change life of Sub Asset during Asset master
creation by manually in AS11 t.code.
3)      To meet the Business and Legal requirement New Chart of Depreciations IN01 & IN03 will be
created separately. For the Asset master Number Ranges will be different as per Business
requirement. So same Number ranges will not be generated for them during Asset master creation
in order to avoid confusion.
4)      Depreciation Area 01 / 02 / 30 / 40 will be created as per Business & Legal requirement for IN01
& IN03 Chart of Depreciation.
  Asset useful life will be maintained as per document attached in share point.
  Depreciation Area 01 only will be posted for Depreciation posting and Depreciation Area
02 will not be posted.
  For Depreciation, calculation will be based on Straight Line method for Depreciation Area
01 – Book Deprecation and Written Down Value (WDV) for Depreciation Area 02 – Tax
Depreciation.
  Book Depreciation 01 will be calculated for every month and Tax Depreciation 02 will be
calculated for yearly once.
  For Tax Depreciation will be calculated on Net Book value of WDV.
  If any Sale of Assets happened during the year, the Sales value will be reduced from the
Block value and the Depreciation will be calculated for Net Book value only.
  Scrapping of Assets will not be considering for Book Depreciation (01) and Tax
Depreciation (02).
  If the net book value becomes negative ( - ve) value, it will be brought down to Zero and
will not be consider for Depreciation.
  If Exchange gain or loss happening during MIRO, the final settlement of Exchange gain or
loss will be adjusted to Block value by the Foreign Vendor as per standard SAP
behaviour.
  For Tax Depreciation calculation will be consider in two different ways as per below.
  If the Asset is using more than 180 days from the date of acquisition for the
assessment year – 100% Asset Block value will be consider for Depreciation
calculation.
  If the Asset is using less than 180 days from the date of acquisition for the
assessment year – 50% of Asset Block value only has to consider for
Depreciation calculation.
 
 
5)      For Asset tracking purpose,
  Users must maintain below information for assets located in Vendor Plant:
  Vendor Number in Origin Tab,
  Sub-Location (text free field in Time dependent tab) in order maintain additional
information,
  For Assets we have in Plants (IN01 or IN03), Users have to maintain in tab Time
Dependent, below information:
  Plant (IN01 or IN03 as fixed values),
  Location based on the provided list,
  Room (text free field),
  As per Business requirement Sub Location field has to be filled from Users side in Asset
master for the purpose of Reporting. So, as per OSS Note 439407 suggestion, the
following enhancement AIST0002 has to be performed with technical team and the Sub
Location field will be included in Asset master  Time Dependent Tab (create / change /
display). Based on this in future user can track the Asset Report.
  Based on Location / Sub Location maintain in Asset master, it can be used for Asset track.
  Reports by Location will be S_ALR_87011980 Inventory List – by Location,
  Reports by Plant will be S_ALR_87011982 Inventory List - by Plant,
  Reports by Sub-location – User can use above 2 Reports S_ALR_87011980 /
S_ALR_87011982 to take Asset Report as Sub Location wise to give as input
value of Sub Location by choose the option of Dynamic Selection  Time
Dependent Data  Sub Location.
  After confirming from Business side about Location details, the Location list has to be
customised in OIAS t.code.
  From IT side, new LSMW will be provided with including of Plant / Location / Room /
Sub Location in order to perform Data migration.
 
6)      Regarding Asset History Report, the standard t.code AR02 has to be used. IT will
customize a new Sort variant adding field names as below based on Business requirement
in order to track of check Asset History with the information of last date of asset check
and who has changed.
        As
Per Procedure Users has to maintain in Asset master data information (at the
moment of inventory):
 Inventory Indicator (fixed value flag) – field name INKEN
 Last Inventory - field name IVDAT
 Inventory Note - field name INVZU
 Only in this way Report will extract updated information. SAP will store automatically
below information also:
         Changed by - field name AENAM
         Changed on - field name AEDAT
For the technical reference document is attached.
 
7)      To meet the requirement following Assets Classes 160 / 181 / 305 / 310 / 370 / 380 / 395 / 400 /
415 / 420 / 430 / 431 / 435 only can be used for IN01 & IN03 Chart of Depreciation. The
remaining Assets Classes which are available as per GT will be deactivated by using Lock
indicator.
         LOCK indicator should be set in chart of Depreciation level.
         If Lock indicator is Set then it prevents new assets from being created in this
asset class. (specific to chart of depreciation)
           
8)      As per standard SAP behaviour, multiple MIRO for one Asset system will not increase the
Quantity of assets in Asset master.
 
Business Activities
The following activities has to be done by Business.
1)      During data migration time, Business has to provide Location / Sub Location / Vendor
details. Based on this only we can tract Asset Report.
2)      In order to perform customising activity as per point 5 in solution, Business has to
provide list of Location which will be maintained in Asset master. It is pre-requisite to
Data migration.
3)      During data migration time, Business has to provide Written Down Value (WDV) of Asset
value in order to perform for Depreciation calculation.
4)      For INT7 and INT8 related – Removal of INT8 from Asset master data in order to consider
15% tax depreciation for the Next year, Business has to provide LSMW file for every year.