AC605 Profitability Analysis

AA007 – Special Scenarios

Content developed by Kavita Agarwal /Ajay Maheshwari

Course Overview Diagram
Overview 1
& Org elements

Special scenarios 7 Master data &

2
Asset acquisition

Information 6 Depreciation 3
System

YE Closing 5 Retirements 4
& transfers

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Chapter Contents

Manual value correction

Post capitalization
Time dependant depreciation terms
Setting up depreciation areas for parallel reporting
Setting up depreciation areas for parallel currency
Enable Segmental reporting for AA

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Manual Value correction
Certain business situations might warrant to do some manual value correction in
the value of assets
These may be oriented towards increasing or decreasing the NBV of asset
Various options to do manual value correction are
− Unplanned depreciation
− Manual depreciation
− Asset write up

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Posting Unplanned depreciation and Manual depreciation
Unplanned depreciation can be posted to account for any reduction in the
NBV of an asset due to some abnormal circumstances
− Unplanned depreciation is posted using ABAA before executing depreciation run
(AFAB). Note that ABAA updates only AA ledger and updates FI-GL upon AFAB
Manual depreciation is (rarely) used when the depreciation amount cant be
ascertained using any of the calculation methods. It can only be ascertained
manually depending on the physical condition of the asset
− Manual depreciation is posted using ABMA before executing depreciation run (AFAB).
Note that ABMA updates only AA ledger and updates FI-GL upon AFAB
− In order to post manual depreciation, the same must be allowed in the depreciation
key (Depreciation Key MANU in the standard system)
Asset writeup is used to increase the NBV of an asset when the depreciation
charged in the previous years was more than required
− Depreciation was charged more either by mistake or as a result of change in the
depreciation rate at a later date or due to reduction in the APC value on account of
credit memo)
− Writeup can be posted to ordinary depreciation, special depreciation, unplanned
depreciation, etc
− Writeup is usually posted with value date = start date of the current fiscal year
... Continued
Asset writeup:
Excessive depreciation was posted in the following years as a result of change in
depreciation rate in the FY 2014
As a result, asset writeup for 2000 USD will be posted with value date = 01.01.2014
− Asset APC account is debited
−Income from writeup account is credited

Year Planned dep Posted dep Difference

2010 1500 USD 2000 USD 500 USD

2011 1500 USD 2000 USD 500 USD

2012 1500 USD 2000 USD 500 USD

2013 1500 USD 2000 USD 500 USD

System Demo:

Area Demo T Code (s)

Configuration

End User •Post unplanned depreciation ABAA

•Post manual depreciation ABMA
•Asset write-up ABZU

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Post Capitalization
Post Capitalization process is used
−When an asset is to be capitalized in a fiscal year that is closed
−When a particular expense is to be capitalized on an asset in a fiscal year that is closed
Post Capitalization is accounted with asset value date = the date on which the
asset / expense is to be capitalized
E.g. Asset originally capitalized on July 1 2010, with useful life of 10 yrs. Additional
expense 10000 USD being posted to the asset on July 1 2014
Upon post capitalization, following accounting entry will be posted for the asset

PK Account Amount Remark

70 Asset APC a/c 10000 Amount of transaction = APC amount

75 Accum. Dep. a/c 3500 Dep on $ 10000 from July 1 2010 till Dec
31 2013 (i.e. previous year)
50 Income from Post-Cap 6500 Off-setting

Depreciation for the current year 2014 and onwards will increase by $1000 p.a.

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System Demo:

Area Demo T Code (s)

Configuration

End User Posting Post- Capitalization ABNAN

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Time Dependant Depreciation Terms
This is a new feature available upon activation of Enterprise Extension EA-FIN
Earlier, a change in depreciation key would apply to all the open periods (Current &
previous fiscal year)
With the new feature, depreciation keys can now be changed “w.e.f.” option
E.g. Asset APC $10000, has dep. key with rate of 20%. Dep. Key changed to 15%
on July 1st 20XX
System response (before activation of EA-FIN)
−Depreciation for Jan-Jun: $1000 (@ 20%)
−Depreciation for Jul-Dec: $500 ($1500 - $1000)

System response (after activation of EA-FIN)

−Depreciation for Jan-Jun: $1000 (@ 20%)
−Depreciation for Jul-Dec: $750 (@ 15%)

Upon activation of EA-FIN, the old depreciation calculation program is replaced by

a new one. The new program provides better flexibility for custom enhancements
in addition to providing certain new features

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Key SAP notes related to the new DCP & other tips
The following notes related to new DCP must be kept handy

−965032 - Differences between old and new depreciation calculation

−1113840 - Check of time-dependent depreciation terms (Some new checks introduced for
the new program)
−1451307 - Restrictions when using time-dependent depreciation terms
−1498047 - Changeover from old to new depreciation calculation (during upgrade)
−988238 - FAQ New depreciation calculation (Series of notes to be implemented for New
DCP)

T code AW01_AFAR shows depreciation as per old program even when new program
is active

It is possible to continue using the Old DCP. However, it is recommended to use the
new DCP so as to take the benefit of future developments

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Setting up depreciation areas for Parallel reporting
• Where an organization reports on multiple set of accounting principles such as
Local GAAP & IFRS, there can be differences in the way AA is carried out, due to
– Different methods of depreciation, say, % based and useful life based
– Different accounting treatments in the case of acquisitions or retirements, etc.
• Different depreciation areas are defined for each accounting principle, say, US
GAAP and IFRS
– The book depreciation area 01 usually corresponds to the local GAAP. This is assigned to
Leading Ledger 0L
– The IFRS depreciation area may be assigned to the non-leading ledger in this case
– In this case, a Delta Depreciation area is also needed to account for the differences
between the local GAAP and IFRS. This is also assigned to the non-leading ledger
• APC posting (F-90/MIGO etc..) takes place in all ledgers/dep. areas at the same
time. Any adjustment to be made in APC in a specific dep. area can be posted
separately
• The depreciation posting into both the depreciation areas takes place in real-time

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… Continued
• With the below dep. Area set up and assignment to Ledgers, parallel reporting for
fixed assets can be managed
– Dep. Area 01 posts to Leading Ledger for Local GAAP
– Dep. Area 15 does not post to GL (Income Tax)
– Dep. Area 20 posts to Non-leading Ledger for IFRS.
– Dep. Area 40 is a derived (delta) dep. area (20-01) to account for any differences
between Local GAAP and IFRS

IFRS Depreciation

• Before New GL, each dep. area was individually assigned to separate set of GL
accounts. With New GL, the account determination for dep. area 01 can be made
applicable to all other dep. areas

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… Continued
Example 1:
• Asset is procured for 1200 USD, which includes 200 towards freight. You don’t
want to capitalize freight expenses on the asset for IFRS purpose

LGAP (0L) FI-AA

$ 1200 (1)

01 LGAP $1200 (1)

20 IFRS $ 1200 (1)
20 IFRS $ -200 (2)
IFRS (N0)
40 Delta $-200 (3)
$ 1200 (1)
$ -200 (3)

(1) – Acquisition posting

(2) – Adj. Posting to 20 dep. area (ABSO)
(3) – Adj. Posting to FI-GL (ASKBN)

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… Continued
• Depreciation assuming a useful life of 5 yrs will be posted as below

LGAP (0L) FI-AA

$ 240 (1)

01 LGAP $ 240 (1)

20 IFRS $ 200 (1)

IFRS (N0)
$ 200(1)

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System Demo:

Area Demo T Code (s)

Configuration •Create a transaction type for adj. posting
•Limit the transaction type for parallel dep. area

End User Posting adjustment to parallel dep. Area ABSO

Periodic asset posting to FI-GL ASKBN

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… Continued
Example 2:
• Asset having APC of 1000 USD is retired for 500 USD. Due to different
depreciation terms, Local and IFRS dep. areas have different depreciation
amounts (400 USD and 600 USD respectively)

LGAP (0L) FI-AA

$ 1000/400/500/-100 (1)

01 LGAP $ 1000/400/500 (1)

20 IFRS $ 1000/600/500 (1)

40 Delta $ 200 (2)
IFRS (N0)
$1000/400/500/-100 (1)
$ 0/200/0/200 (2)

(1) – Acquisition posting

(2) – Adj. Posting to FI-GL (ASKBN)

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Setting up depreciation areas for Parallel Currency
Where an organization uses parallel currencies in FI, a depreciation area must be
set up for each currency in AA
Example: ABC Ltd operating in IN, uses 1st currency (Functional currency) as INR
and 2nd currency (Group currency) as USD
– In this scenario, for each depreciation area in AA, there must be a corresponding
depreciation area in Group currency
– Book dep. area 01 always corresponds to the 1st currency (& Local GAAP, ofcourse)
– A dep. area corresponding to area 01 (say, 10) must be created, which manages the
parallel (Group) currency
– The APC and Depreciation terms MUST be identical to the dep. area 01
– The APC postings made in area 01 are translated into parallel currency according to the
translation logic defined for the company code
– Depreciation /retirements are always calculated at historical exchange rates,
independently of dep. area 01, so as to achieve the NBV of zero at the end of life.

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... Continued

Date Transaction Fx. Rate Transaction

(FI-AA) (FI-GL)
01.01.20XX Acquisition
1 USD/50 INR Acquisition
01 (INR) 10000
01 (INR) 10000
10 (USD) 200
10 (USD) 200
30.01.20XX Depreciation
(useful life 10 months) 1 USD/55 INR Depreciation

01 (INR) 1000 01 (INR) 1000

10 (USD) 20 10 (USD) 20

31.10.20XX Depreciation 1 USD/55 INR Depreciation

(useful life 10 months)

01 (INR) 10000 01 (INR) 10000

10 (USD) 200 10 (USD) 200

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System Demo:

Area Demo T Code (s)

Configuration •Specify the Use of Parallel Currencies
•Specify transfer of APC values
•Specify transfer of Depreciation terms

End User

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Enable Segmental reporting in AA
Segmental reporting in AA can be activated starting EhP5. As a result, the fields
PROFIT CENTER & SEGMENT are part of asset master now.
Profit center can be derived indirectly from the CO objects maintained in the
asset master or directly by means of data entry in the asset master. However,
the same has to be unique
SEGMENT is always derived from the Profit center master data
A new report in New GL is made available for the purpose of Segment reporting
for fixed assets (“Aggregated report on changes in tangible fixed assets”)
– Note that this is a GL based report and asset number is not available
The following slides summarize the key configuration changes and the data
conversion needed to achieve Segment reporting out of AA

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Key configuration changes for Segment reporting in AA
Sr. No. Purpose
1 Activate Segment Reporting
[Can’t be deactivated]
2 Activation of Account Assignment
Object (PC & Segment)
3 Acct Assignment Object Same in
Asset Master and Posting
[This is needed to output the fields in
SAP Queries based on logical DB ADA]
4 Derive PC & Segment from asset
master in posting line items
5 Maintain PC & Segment in the
screen layout of asset master
6 Enable PC, Segment and
Consolidation TTY in the FSG
7 Assign Scenarios to Ledgers
(FIN_AASEG or FIN_CONS)
8 Assign Consolidation TTY to asset
TTY
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IMG Path / T. Code
IMG>AA>Integration with General
Ledger > Segment Reporting
IMG>AA>Integration with General
Ledger > Additional AAO > Activate AAO
IMG>AA>Integration with General
Ledger > Additional AAO > Activate AAO
IMG>AA>Integration with General
Ledger > Additional AAO > Specify
Account Assignment Types for AAO
IMG>AA>Master Data> Screen Layout >
Define screen layout for asset master
(Logical Field Groups > Time Dep. Data)
OBC4 (GL Account) and OB41 (Posting
Keys)
IMG>Financial Accounting Global
Settings (New) > Ledger >Assign
Scenarios to Ledgers
IMG>AA>Special Valuation>Preparation
for Cons. > Specify Cons TTY for APC
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Key data conversions for Segment reporting in AA

Sr. No. Purpose IMG Path / T. Code

1 Populate PC & Segment in existing
asset masters
2 Populate Consolidation TTY in asset
line items in New GL
IMG>AA>Integration with General
Ledger > Segment Reporting > Fill
Master Data for Segment Reporting
IMG>AA>Integration with General
Ledger > Segment Reporting > Fill
Consolidation Transaction Type for
Segment Reports in GL Accounting

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Reports for Segment Reporting in AA
The report “Aggregated report on changes to tangible fixed assets” is based on
POWL technology (Netweaver Portal)
The report is available after the next balance carry forward
To be able to use the report, business function “Reporting Financials 3”
(FIN_REP_SIMPL_3) must be activated and the portal role FINREP needs to be
assigned in the user master
For the report, two sets are needed (Custom sets can be created)
−Column Set: In the columns of the report, the consolidation transaction type (RMVCT)
is used. The standard delivery contains the example set for columns:
FAGL_CONS_TRANSACTION.

−Row set: As the Fixed Asset field is not available in new General Ledger Accounting, the
G/L account is used for the rows (field RACCT). The standard delivery contains the
example set for rows: FAGL_ASSET _ HISTORY_SHEET

Two new sort variants are introduced to add the fields PC & Segment in various
standard reports (0016 & 0024)
The fields PC & Segment can also be added in the standard reports as per the
note 335065

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