CA550 - Inflation Accounting

CA550 Inflation Accounting
CA550
Inflation Accounting
 SAP AG 1999
System R/3
Release 4.6
Datum: März 2000
Materialnummer: 5003 7832
Copyright
Copyright 2000 SAP AG. All rights reserved.

Neither this training manual nor any part thereof may
be copied or reproduced in any form or by any means,
or translated into another language, without the prior
consent of SAP AG. The information contained in this
document is subject to change and supplement without prior
notice.
All rights reserved.
 SAP AG 1999
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Curriculum Path
Level 2
Level 1 Level 3
AC205
Financial Closing
AC010
CA550
Overview of Financial
Accounting & Reporting Inflation Accounting
AC305
Asset Accounting
LO020 AC530
Procurement processes Material Ledger
 SAP AG 1999
Course Prerequisites
In-depth knowledge of revaluation processes, fixed assets

valuation, or material valuation
Recommended courses:
AC010 Overview of Financial Accounting & Reporting
AC205 Financial Closing
AC305 Asset Accounting
LO020 Procurement Processes
AC530 Material Ledger
 SAP AG 1999
Target Group
Audience:
Project team members responsible for implementation of
inflation accounting
Accountants
Duration: 3 days
 SAP AG 1999
Course Overview Diagram
1 Introduction
2 Basics of Inflation Accounting
3 Inflation Accounting in Financial Accounting
4 Inflation Accounting in Asset Accounting
5 Inflation Accounting in Materials Management
6 Conclusion
7 Appendix
 SAP AG 1999
Introduction
Contents:
Course goals and objectives
Overview of course content
 SAP AG 1999
© SAP AG CA550 1-1

1 Introduction
6 Conclusion
7 Appendix
 SAP AG 1999
© SAP AG CA550 1-2

Introduction: Unit Objectives
At the conclusion of this unit,

you will be able to:
State the goals and objectives of the course

Identify functions covered by inflation
accounting
Describe the business scenario used
 SAP AG 1999
© SAP AG CA550 1-3

Introduction: Business Scenario
You are part of the project team responsible for the

implementation of Inflation Accounting.
You will set up the Inflation Accounting component
and explain the functions to the teams
implementing Financial Accounting, Asset
Accounting and Inventory Valuation.
 SAP AG 1999
© SAP AG CA550 1-4

Applications covered
2873,00
2856,00 Asset Accounting
2683,00
Financial Accounting
2846,00 Inflation
Inflation index
index adjustment
adjustment
2768,00
FI-GL
FI-GL index
index adjustment
adjustment
2794,00
A/P-A/R
A/P-A/R index
index adjustment
2794,00
adjustment
2768,00 X ES Material
Material Management
Management
2683,00
IN
DE
2695,00 OR
RI
C ES Inflation
Inflation index
index adjustment
adjustment
2873,00 KE
T P
Market
Market price
price determination
determination
2683,00
R
MA
 SAP AG 1999
2683,00 Goods
Goods issue
issue revaluation
revaluation
Currently the applications Financial Accounting, Asset Accounting and Material Management are
covered with the inflation accounting functionality.
© SAP AG CA550 1-5

Business Process used
2873,00
Company
Company code
code CA##
CA##
Plant
Plant CA##
CA##
Purchasing
Purchasing organization
organization CA##
2856,00
CA## ...Organizational units
2683,002846,00
Set-up
Set-up customizing
Change
customizing
Change master
master data
data
Project work
Daily business
2768,00
processes
Carry
Carry out
out transaction
transaction
2794,002794,00
Create
Create variant
variant of
of inflation
inflation program
program
Periodic processing
2768,00
Execute
Execute (variant
(variant of)
of) inflation
inflation program
program
2683,00
Create 2695,00
Create Test/Simulation
Test/Simulation Production
Production run
run
2873,00
2683,00 Create
Create posting/revaluation
posting/revaluation
values,
values,
 SAP AG 1999
2683,00 change
change master
master data
data
This slide shows typical business processes used in this course.

You maintain customizing as part of the project team to implement inflation accounting.
You process master data creation and maintenance with inflation parameters and post daily business
transactions.
Finally, you carry out periodic processes for inflation adjustment in three applications.
© SAP AG CA550 1-6

Introduction: Unit Summary
You are now able to:

State the goals and objectives of the course
Identify functions covered by inflation
accounting
Describe the business scenario used
 SAP AG 1999
© SAP AG CA550 1-7

Basics of Inflation Accounting
Contents:
Periods
Inflation indexes
Time base and exposure to inflation variants
Inflation calculation function
Definition of posting dates or variants (FI-AA)
Inflation methods
 SAP AG 1999
Inflation Accounting covers the main legal requirements from a number of different countries.
The inflation period, which can range from one day to several years, determines how often an item is
to be adjusted for inflation.
The basic features in Inflation Accounting are: indexes (definition and value maintenance), time base
and exposure to inflation variants, posting date variants (FI-AA only), and the inflation calculation
function.
The time base and exposure to inflation variant determines how the system converts a date from an
application (for example, the posting date or the last revaluation date) to a date for which it is to
calculate inflation.
The inflation index contains the inflation figures and determines by how much each item is to be
adjusted.
The inflation calculation function reads (a) the time base and exposure to inflation variant and (b) the
indexes, and applies them according to your Customizing settings.
In FI-AA, the posting date (variant) determines when the system is to post inflation adjustments. At
present, it is the only parameter that is used in just one application.
The inflation method contains general definitions for each application.
© SAP AG CA550 2-1

1 Introduction
6 Conclusion
7 Appendix
 SAP AG 1999
© SAP AG CA550 2-2

Basics of Inflation Accounting: Unit Objectives
At the conclusion of this unit,

you will be able to:
List the basic parameters for customizing

inflation methods
Explain the content of the basic parameters
and their usage for different requirements
Discuss the relationship between time base,
indexes, and inflation methods
 SAP AG 1999
© SAP AG CA550 2-3

Basics of Inflation Accounting: Business Scenario
You are part of the project team responsible for

the implementation of Inflation Accounting.
You will set up the Inflation Accounting
component and explain the functions to the
teams implementing Financial Accounting, Asset
Accounting and Inventory Valuation.
 SAP AG 1999
© SAP AG CA550 2-4

Periods
2873,00
2856,00
2683,002846,00
Periods
Other
2768,00 Month
2794,00
Fiscal period
Week
2794,00
Day
2768,00
Used for indexes and time base and exposure to inflation variants
2683,00
2695,00
Business/legal case: Indexes published
2873,00
for different periods
in different countries
2683,00
 SAP AG 1999
2683,00
These are the different periods used in indexes and time base and exposure to inflation variants. They
cover business and legal requirements.
An example of the index and time base and exposure of inflation variant follows.
© SAP AG CA550 2-5

Inflation Index
2873,00
2856,00
General: defined by government agencies
2683,00
Values: accumulated index, coefficient, or percentage
2846,00
2768,00
Accounting nature: general or specific
2794,00
Types: real or composite
2794,00
2768,00
Values: provisional or definitive
2683,00
Index version management: active
2695,00
Additional settings: decimals handling for reporting
2873,00
2683,00
 SAP AG 1999
2683,00
In the inflation indexes, you maintain the various inflation rates.
You can assign indexes to, for example, an application, a country, a company code, or a business
object, such as a G/L account or a material master record.
Different countries use different indexes, which can reflect either business requirements or legal
requirements. You can define as many indexes as you need.
Inflation figures are published in a number of formats: as percentages, coefficients, or accumulated
indexes. Indexes support all of these formats.
As well as defining the general inflation index that you want to use in, for example, a company code,
you can valuate individual objects (for example, a G/L account) using a different index (known as a
specific index).
There are two types of indexes: real indexes, which contain inflation rates; and composite indexes,
which are combinations of other indexes.
Provisional and definitive index values are subject to national regulations. You can use an index with
provisional values first and then an index with definitive values. Indexes can have versions. For each
index, you specify which version is active.
To show the accumulated index with decimals in reporting, customize the number of decimals to be
shown.
© SAP AG CA550 2-6

Customizing: Index - Version - Values
2873,00 Index header: - Real/composite
2856,00 - Maintenance method

of index values
2683,002846,00
- Active index version
- Decimals for reporting
2768,00
Real
Real index
index 11 2....X
2....X
Factor
Factor 55 5....Y
5....Y
2794,00
N 2794,00
2768,00
Version 1
a .......
2683,00
v Active version? Version Y of index 1
Version Y
i
Version X
g
a 2695,00
2873,00
t
i Values
o
n
2683,00 Provisional/definitive
 SAP AG 1999
2683,00
An index consists of a header (real or composite index, maintenance method of the index values,
which index version is the active one, the number of decimal places used for reporting) and any
number of versions. Each version contains different inflation rates, which can be either provisional
or definitive.
© SAP AG CA550 2-7

Inflation Index
2873,00
2856,00
Until date D Accum. index Index % Index coef.
2683,00
31/01/XX
2846,00
28/02/XX
X
X
-------------
1,200,570
----------
15.00000
----------
1.150000
2768,00
2794,002794,00
Definitive
2768,00
2683,00
Period starts: 02/01/XX
2695,00 Period ends: 02/28/XX
2873,00
Index value: 15%
2683,00Needed: previous date 01/31/XX
 SAP AG 1999
2683,00
This is an example of an index version with definitive values.
You maintain one index versions for each adjustment period and the period before the first
adjustment. If this period is missing, the index value for first adjustment cannot be used.
Until date shows the last date when an index is valid. The first date is the day after the last date of
the previous entry.
Index values can be provisional or definitive. You can only change a definitive value to a provisional
value if you have not used it. If you need to change a definitive value after you have used it, create a
new version of the index. You can change provisional entries to definitive values. To change a
provisional value that you have already used, convert it to a definitive value.
© SAP AG CA550 2-8

Inflation Index (Continued)
2873,00
2856,00
Versions
2683,002846,00
1 2 3 4
2768,00
Created: 12/01/XX 12/03/XX 12/06/XX 12/09/XX
2794,002794,00
New
Active
2768,00 Used for calculation
2683,00
2695,00
2873,00
Business/legal case: Final inflation index values are not
published before end of following month.
2683,00
 SAP AG 1999
2683,00
You can create multiple versions of an index. The inflation adjustment program uses the version that
is entered in the index header data as active.
© SAP AG CA550 2-9

Inflation Index (Continued)
2873,00
2856,00
Composite index
Real index 1
Real index 2
General index
Specific index
1-
1
2683,002846,00
Real index .....
Real index n
.................
.................
...
...
2768,00
2794,002794,00
Entered
in object
2768,00 to be adjusted
2683,00
2695,00 Material master
2873,00 G/L account Asset class/master
2683,00
 SAP AG 1999
2683,00
To apply several indexes at the same time, you create a composite index. A composite index can
combine any number of real indexes.
When you create a composite index, you weight each of the real indexes that you use. The weighting
of all indexes must add up to 1.
To combine specific indexes with general indexes in a composite index, the factors of the specific
indexes must total +1, and those of the general indexes –1.
© SAP AG CA550 2-10

Inflation Index: Values
2873,00
2856,00 Values
2683,002846,00
2768,00
2794,00
Period Accum. index Percentage Coefficient
2794,00
1st quarter 100,000,000 10.00000 1.100000
2768,00
2683,00
2nd quarter 111,000,000 11.00000 1.110000
2695,00
3rd quarter 124,320,000 12.00000 1.120000
2873,00 Calculated Calculated
2683,00
2683,00
Business/legal case: index given as percentage
 SAP AG 1999
As indexes are published in different formats, you can enter them in three different ways: as
percentages, coefficients, or accumulated indexes.
The system calculates the other two value formats automatically.
The system always calculates inflation adjustments using the accumulated index.
The above slide is an example of an index given as percentage.
This method is used in, for example, Colombia and Chile.
© SAP AG CA550 2-11

Inflation Index: Values
2873,00
2856,00 Values
2683,002846,00
2768,00
2794,00
Period Accum. index Percentage Coefficient
2794,00
1st quarter 100,000,000 10.00000 1.100000
2768,00
2683,00
2nd quarter 111,000,000 11.00000 1.110000
2695,00
3rd quarter 124,320,000 12.00000 1.120000
2873,00 Calculated Calculated
2683,00
2683,00
Business/legal case: index given as accumulated index
 SAP AG 1999
The above slide shows an example of an accumulated index.

This method is used in, for example, Argentina, Mexico, and Venezuela.
Accumulated indexes do not support decimals. To show the right value in reporting customize the
number of decimals required. In Venezuela, for example, an index is given as 1325.28. You set the
number of decimals to two and enter 132,528 in the index value.
© SAP AG CA550 2-12

Inflation Index: General Versus Specific
2873,00
2856,00
Amount to be adjusted: 100
2683,002846,00
General inflation: 10% (Valid for whole legal entity)
2768,00
Specific inflation: 15% (Valid for an object, e.g., G/L account)
2794,00
Adjustment total: 0.15 × 100 = 15
2794,00
2768,00
– General effect 0.10 × 100 = 10
2683,00
2695,00
Specific gain/loss = 5
2873,00
2683,00
 SAP AG 1999
2683,00
Business backround: general indexes apply to the company code as whole juridical subject and
specific indexes apply to specific objects within the company code: G/L-accounts, specific asset or
material master.
You customize two indexes – one for the general effect and one for the specific effect – and enter the
first one in a country-specific default inflation method and assign the second to a G/L account, for
example. You can also combine both indexes in a composite index.
For example in Financial Accounting you have two possibilities to use general and specific index
together:
Create a composite index (see sample above). You customize two indexes – one for the general
effect and one for the specific effect – combine both indexes in a composite index.
Or assign the general index to the company code and the specific once to a specific G/L-account.
You customize two indexes – one for the general effect and one for the specific effect – and enter
the first one in a country-specific default inflation method and assign the second to a G/L account.
The application part will explain furtheron other possibilities for the specific versus general index .
© SAP AG CA550 2-13

Inflation Index and Calculation Logic
2873,00
2856,00 Calculation logic
2683,00
Date
2846,00
Accumulated
index
Percentage
Inflation effect 05/XX–08/XX:
Base amount: 10
2768,00
04/30/XX
05/31/XX
459,497,299
505,447,029
10.00000
10.00000
Start date: 04/30/XX
2794,00
End date: 08/31/XX
06/30/XX 555,991,732 10.00000
2794,00
07/31/XX 611,590,905 10.00000 Inflation factor:
08/31/XX
2768,00672,749,996 10.00000 672,749,996/459,497,299
2683,00
= 1.4641000
2695,00
Calculation routine
Inflation effect:
10 × (1.4641000 – 1)
2873,00 = 4,641
2683,00
 SAP AG 1999
2683,00
This procedure is used by the inflation accounting basic functions to calculate the value of an
accumulated index with the original date defined in the time base and exposure to inflation variant
final date that applies to that original date.
If the system does not find an index for the original date, it determines which value to use on the
basis of the two entries that enclose that date. The inflation is assumed to be constant and a daily
calculation is carried out.
© SAP AG CA550 2-14

Periods, Time Base, Exposure to Inflation Variant
2873,00
2856,00 Time control
2683,002846,00
Time base of calculation Exposure to inflation Periods
2768,00 Days
2794,00
Monthly calculation of inflation
2794,00
Weeks
Months
Periods
2768,00
Date of transaction: 03/11/XX
Years
2683,00
Time base of the transaction: 03/31/XX Fiscal periods
2695,00 Index published for 03/XX:
2873,00 Exposure: 03/31/XX
2683,00
 SAP AG 1999
2683,00
O r i g i n a l date F i n a l date
The system calculates inflation adjustments using two dates: the original date (for example, the
posting or capitalization date of the transaction or the last inflation adjustment date of the object) and
the final date, which is when the adjustment is to be carried out.
These two dates are used in time base and exposure to inflation and the rule to get from a given
original date the final date - is the time base and exposure to inflation variant (referred to as TBE).
The system checks the TBE before accessing any indexes.
© SAP AG CA550 2-15

Time Base
2873,00
2856,00
Example
Example 11 Regular monthly calculation
2683,002846,00
Original date
03/17/XX
Time base
03/31/XX
Exposure to inflation
03/31/XX
2768,00 05/24/XX 05/31/XX 05/31/XX
2794,002794,00
12/31/XX 12/31/XX 12/31/XX
Example
Example 222768,00 Daily calculation
2683,00
Original date Time base Exposure to inflation
2695,00 03/17/XX 03/17/XX 03/17/XX
2873,00
05/24/XX 05/24/XX 05/24/XX
2683,0012/31/XX 12/31/XX 12/31/XX
 SAP AG 1999
2683,00
In the following four examples of time base and exposure to inflation, inflation indexes are published
monthly. That means that the index version contains 12 value entries per year, one for the last date of
each month. Each example covers three transactions:
First posted on 17 March
Second posted on 24 May
Third posted on 31 December
In example 1, adjustments are carried out monthly. Every posting within a given month is processed
with the same index. The posting date is converted to the time base (the last date of period). Because
there is no shift of the calculation of inflation, the exposure to inflation is equal to the time base.
Example 2 shows a daily calculation. As the index is published only monthly, the rate of inflation is
considered to be constant over the month and is spread equally across the number of days in the
month.
© SAP AG CA550 2-16

Time Base (Continued)
2873,00
2856,00
Example
Example 33 Quarterly inflation calculation
2683,002846,00
Original date
03/17/XX
Time base
03/31/XX
Exposure to inflation
03/31/XX
2768,00 05/24/XX 06/30/XX 06/30/XX
2794,002794,00
12/31/XX 12/31/XX 12/31/XX
Example
Example 442768,00 Semiannual inflation calculation with index (exposure date)
2683,00
shifted by one month
2695,00 Original date Time base Exposure to inflation
2873,00
03/17/XX 06/30/XX 05/31/XX
2683,0005/24/XX 06/30/XX 05/31/XX
 SAP AG 1999
2683,00
12/31/XX 12/31/XX 11/30/XX
Example 3: quarterly calculation – every posting within a given quarter is adjusted in the last month
of the quarter.
Example 4: semiannual calculation, with the index of the fifth month is used. The system treats all
postings as though they had been made on the last day of the sixth month. When calculating
inflation, it uses the index of the fifth month.
© SAP AG CA550 2-17

Time Base and Exposure to Inflation Variant
2873,00
2856,00
2683,002846,00
Time base
2768,00 Variant For FI-AA
2794,002794,00
Exposure to
assigned to a
posting variant
inflation
2768,00
2683,00
2695,00
2873,00 Annual
Generic
“9999”
2683,00
 SAP AG 1999
2683,00
The time base and the exposure to inflation are parts of the TBE variant.
You can assign a variant to a specific year, or to all years (to do so, enter 9999). If the inflation is to
be calculated for the previous year, set the indicator for the previous year in Customizing.
In FI-AA, assign a posting variant to the TBE variant. In the posting variant, define the exposure to
inflation date of the TBE variant to be used by the FI-AA inflation adjustment program.
© SAP AG CA550 2-18

Posting Variant
2873,00
2856,00
At present, the posting variant is only used by the Asset
Accounting inflation program. It controls what dates you can post
2683,00
revaluations on.
2846,00
You assign a posting variant to a TBE variant.
2768,00
The exposure date in the TBE variant is defined in the posting
2794,00 variant.
2794,00
Posting dates in other applications are:
2768,00
MM: Last date of previous posting period
2683,00
FI: Entered on selection screen of inflation report
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
You define the posting dates for FI-AA in the posting variant.
At present, no other applications use the posting variant, except the MM Inflation Accounting part of
the country-specific functionality for Chile (available as of Release 4.6B, see enclosure to this
course).
© SAP AG CA550 2-19

Inflation Calculation Function
2873,00
2856,00Posting date 02/15/XX Index 0001 date 01/31/XX
2683,00
Time base 02/28/XX
2846,00
Exposure to inflation 31/01/XX
2768,00
Index 0001 Version 0001 definitive
2794,00
Date Percentage Accumulated index
2794,00
31/12/XY ..... ......
31/01/XX
2768,00 15.00000 115,000
2683,00
2695,00
TBE TBE year Until TB Until TB P Until EI Until EI Previous year
2873,00
month day month day
2683,00
T1 9999 02 28 01 31
 SAP AG 1999
2683,00
When you calculate inflation, the system looks for the valid value in the index. For example, the
transaction in question was posted on 02/15/XX, the time base is therefore 02/28/9999. The date of
exposure to inflation is defined as 01/31/9999 and the index found for that date is 15%.
The system calculates the inflation using the accumulated index for the exposure date.
If there is no index, the system uses the index for entries that enclose the original date.
© SAP AG CA550 2-20

Relationship of Basic Parameters
2873,00
2856,00 Inflation
Inflation calculation
calculation function
function
2683,002846,00
2768,00
2794,00
Time base variant
2794,00
Inflation method Posting variant (FI-AA)
2768,00
2683,00
2695,00 Inflation index
2873,00 Periods
2683,00
 SAP AG 1999
2683,00
The inflation method contains the general inflation adjustment parameters that apply to the different
applications.
It contains the inflation index, time base and exposure to inflation variants, and default inflation
index.
TBE variants, inflation indexes, and posting variants work with periods.
The inflation calculation reports determine which inflation method to use.
© SAP AG CA550 2-21

Inflation Method
2873,00
2856,00 Country-specific
Contains general
2683,002846,00
application settings
2768,00 FI
2794,00 Divided by components
2794,00 MM
AA
whether used or not
2768,00
2683,00
2695,00 Assigned to company code of defined country
2873,00
2683,00
 SAP AG 1999
2683,00
Inflation methods are country-specific. You assign them to company codes.
As well as the basic parameters, there are application-specific settings that will be discussed in each
application (transaction types, document types, price definitions).
You activate each application separately.
© SAP AG CA550 2-22

Basics of Inflation Accounting: Unit Summary

List the basic parameters for customizing
inflation methods
Explain the relationship between time base,
indexes, and inflation methods and their usage
for inflation accounting
 SAP AG 1999
© SAP AG CA550 2-23

Exercise Data Sheet
Key to Icons in Exercises and Solutions
Exercises
Solutions
Objectives
Business Scenario
Hints and Tips
Warning or Caution
Data Used in Exercises

Description Data in Training Data in IDES System
System
Company Code 6000 / CA## 6000
Chart of depreciation 1MX 1MX
Chart of accounts INT INT
Plant 6000 6000
Storage location 0001 0001
Valuation area/level 6000 (plant) 6000 (plant)
Country MX MX
Purchasing organization 6000 6000
Cost center 1000 1000
Account group for GL GL GL

Field status variant / group 1000 / G001, G067 1000 / G001, G067
Depreciation areas 01 Book Depreciation 01 Book Depreciation
03 Revaluation 03 Revaluation
04 Book + Revaluation 04 Book + Revaluation
G/L-accounts 900000 Retained Earnings 900000 Retained Earnings

910000 Transfer of Profits 910000 Transfer of Profits
920000 Loss Compensation 920000 Loss Compensation
Customer 10000 10000

Vendor 1090 1090
Material T-110 T-110
© SAP AG CA550 2-24

Exercises
Unit: Basics of Inflation Accounting
At the conclusion of this exercise, you will be able to:

• Set up the basic customizing entries: posting variants, time base and
exposure to inflation variants and inflation indexes.
As part of the monthly closing procedures, inflation adjustments should

be carried out.
Different departments (such as accounting and purchasing) need to use
general and specific indexes.
You have to show the departments how to create inflation indexes,
posting variants and time base and exposure to inflation variants.
1. Different steps are needed to carry out inflation postings. The first step will be the
creation of a posting variant ## (enter your group number) with the description
"Posting variant group ##" for monthly postings with the following values:
Post. Year Post. Month Post. Day

9999 01 31
9999 02 29
9999 03 31
9999 04 30
9999 05 31
9999 06 30
9999 07 31
9999 08 31
9999 09 30
9999 10 31
9999 11 30
9999 12 31
Use 9999 instead of the current year when the posting variant is
going to be the same every year. If you put 29 days for February, the
table is going to consider normal years and leap years with the same
entry.
© SAP AG CA550 2-25

Note that only certain revaluation programs use the information of
the posting variant such as the Inflation revaluation in FI-AA.
2. The second step will be the creation of a time basis and exposure to inflation variant ##
with description ‘’Time base variant group ##’’ for regular monthly exposure to
inflation. Assign your posting variant ## to your time base variant. Then maintain the
following variant intervals:
TBE Year Until mon. Until day Post Until mon. Until day Prev. year
9999 01 31 01 31
9999 02 29 02 29
9999 03 31 03 31
9999 04 30 04 30
9999 05 31 05 31
9999 06 30 06 30
9999 07 31 07 31
9999 08 31 08 31
9999 09 30 09 30
9999 10 31 10 31
9999 11 30 11 30
9999 12 31 12 31
Once you have entered the proposed values press Enter, and after
that set the Posting date indicator on for every month. This will
make the time base and exposure to inflation variant available for
real postings.
Note that only the assignment of a posting variant makes it possible
to set the posting date indicator. Posting date indicator and posting
variant are currently only used by programs of inflation accounting
FI-AA.
Now the Posting date indicator should be switched on for every month.
© SAP AG CA550 2-26

3. The third step will be the creation of the inflation indexes needed: one general, one
specific and one composite index.
3-1 Create the general inflation index GI## copying it from the inflation index GI00.
Replace the target entries as follows:
Index GI##
Description General inflation index ##

Using the navigation buttons go to the Values level of version 1 and set the definitive
indicator on for every month. Then press enter and save your work.
3-2 Create the specific inflation index SI## copying it from the inflation index SI00.
Index SI##
Description Specific inflation index ##

Using the navigation buttons go to the Values level of version 1 and set the definitive
indicator on for every month. Then press enter and save your work.
3-3 Create the composite inflation index CO## combining indexes GI## and SI##.
Index CO##
Description Composite inflation index group ##
Header Set composite indicator
Level: Composite indexes SI## 0,5000000
GI## 0,5000000
When creating a composite index the total of all factors which

indicate the weight of real indexes should add to 1.
Exeption In the case that you need to use a composite index to

express the difference between a specific and a general index, the
factor for the specific index should be 1 and the factor for the general
index –1.
© SAP AG CA550 2-27

Solutions
Unit: Basics of Inflation Accounting

• Set up the basic customizing entries: posting variants, time base and
exposure to inflation variants and inflation indexes.
As part of the monthly closing procedures, inflation adjustments should

be carried out.
Different departments (such as accounting and purchasing) need to use
general and specific indexes.
You have to show the departments how to create inflation indexes,
posting variants and time base and exposure to inflation variants.
1. Different steps are needed to carry out inflation postings. The first step will be the
creation of a posting variant ## (enter your group number) with the description
"Posting variant group ##" for monthly postings with the following values:
Implementation Guide for R/3 Customizing (IMG) → Financial Accounting → Financial
Accounting Global Settings → Inflation → Global Settings → Maintain Posting Variants
Post. Year Post. Month Post. Day

9999 01 31
9999 02 29
9999 03 31
9999 04 30
9999 05 31
9999 06 30
9999 07 31
9999 08 31
9999 09 30
9999 10 31
9999 11 30
9999 12 31
Use 9999 instead of the current year when the posting variant is
going to be the same every year. If you put 29 days for February, the
table is going to consider normal years and leap years with the same
entry.
© SAP AG CA550 2-28

Note that only certain revaluation programs use the information of
the posting variant such as the Inflation revaluation in FI-AA.
2. The second step will be the creation of a time basis and exposure to inflation variant ##
with description ‘’Time base variant group ##’’ for regular monthly exposure to
inflation. Assign your posting variant ## to your time base variant. Then maintain the
following variant intervals:
Implementation Guide for R/3 Customizing (IMG) → Financial Accounting →
Financial Accounting Global Settings → Inflation → Global Settings →
Maintain Time Base and Exposure to Inflation Variants
TBE Year Until mon. Until day Post Until mon. Until day Prev. year
9999 01 31 01 31
9999 02 29 02 29
9999 03 31 03 31
9999 04 30 04 30
9999 05 31 05 31
9999 06 30 06 30
9999 07 31 07 31
9999 08 31 08 31
9999 09 30 09 30
9999 10 31 10 31
9999 11 30 11 30
9999 12 31 12 31
Once you have entered the proposed values press Enter, and after
that set the Posting date indicator on for every month. This will
make the time base and exposure to inflation variant available for
real postings.
Note that only the assignment of a posting variant makes it possible
to set the posting date indicator. Posting date indicator and posting
variant are currently only used by programs of inflation accounting
FI-AA.
Now the Posting date indicator should be switched on for every month.
3. The third step will be the creation of the inflation indexes needed: one general, one
specific and one composite index.
3-1 Create the general inflation index GI## copying it from the inflation index GI00.
Accounting Global Settings → Inflation → Global Settings → Maintain Inflation Indexes
© SAP AG CA550 2-29

Index GI##
Description General inflation index ##

Using the navigation buttons go to the Values level of version 1 and set the definitive indicator
on for every month. Then press enter and save your work.
3-2 Create the specific inflation index SI## copying it from the inflation index SI00.
Index SI##
Description Specific inflation index ##
Using the navigation buttons go to the Values level of version 1 and set the definitive indicator
on for every month. Then press enter and save your work.
3-3 Create the composite inflation index CO## combining indexes GI## and SI##.
Index CO##
Description Composite inflation index group ##
Header Set composite indicator
Level: Composite indexes SI## 0,5000000
GI## 0,5000000
When creating a composite index the total of all factors which

indicate the weight of real indexes should add to 1.
Exeption In the case that you need to use a composite index to

express the difference between a specific and a general index, the
factor for the specific index should be 1 and the factor for the general
index –1.
© SAP AG CA550 2-30

Inflation Accounting in Financial Accounting
Contents:
G/L Account Adjustment
Open A/R & A/P Item Adjustment in Local and
Foreign Currencies
Additional Reporting and Integration with FI-SL
 SAP AG 1999
© SAP AG CA550 3-1

1 Introduction
6 Conclusion
7 Appendix
 SAP AG 1999
© SAP AG CA550 3-2

Inflation Accounting in Financial Accounting: Unit
Objectives
At the conclusion of this unit, you will be

able to:
Configure and perform inflation
adjustment for G/L accounts
Perform inflation adjustment for A/R and
A/P open items in local/foreign currency
Explain additional reporting possibilities
and the integration with FI-SL
 SAP AG 1999
© SAP AG CA550 3-3

Inflation Accounting in Financial Accounting:
Business Scenario
In addition to the monthly closing procedures,

the accounting department needs to carry out
inflation adjustments for G/L accounts and
open A/R and A/P items.
The accounting department requires the use
of general and specific indexes to adjust the
G/L accounts according to legal requirements.
You have to show the accounting department
how to configure and perform inflation
adjustments using the standard programs.
You will also tell them how to interpret the
results of the inflation adjustment reports.
 SAP AG 1999
© SAP AG CA550 3-4

G/L Account Adjustment: Topic Objectives
At the conclusion of this topic, you will be

able to:
Set up the Customizing entries for G/L
account adjustment
Prepare the G/L account master records
that are affected by inflation
Explain the different ways of executing
the inflation program
Carry out the G/L account adjustment
Reset inflation data
 SAP AG 1999
© SAP AG CA550 3-5

Pre-Existing Customizing Entries and Master Data
2873,00
2856,00Chart
Chart of
of Accounts
Accounts
2683,002846,00
2768,00
Company
Company Code Code
2794,002794,00
G/L
2768,00
G/L Accounts
Accounts
2683,00
2695,00
(...)
(...)
2873,00
2683,00
 SAP AG 1999
2683,00
Inflation Accounting includes programs to support inflation valuations for the G/L accounts, open
A/R and A/P items, fixed assets and materials. It is not a new module – it is a group of functions
incorporated to the periodic processing in the existing FI, AM, and MM modules. Therefore, it is
assumed that all the configuration settings needed for the individual applications to be used with this
functionality are already set up in the R/3 System. This includes organizational structures,
assignments, master data, and so on.
In the case of FI, you must also have set up a chart of accounts and a company code, and made the
settings for posting documents in G/L, A/R and A/P.
© SAP AG CA550 3-6

General Control Data per Company Code
2873,00
2856,00 Inflation method
2683,00
Company code 2846,00
FI active?
Time base variant
2768,00 FI
global settings
Reference index
No specific effect?
2794,00 2794,00
Inflation method
Document types
Posting keys
2768,00
Tax codes
Posting method
2683,00
2695,00
AA
MM 2873,00
2683,00
 SAP AG 1999
2683,00
Inflation method – The general control data is defined by assigning an inflation method to the company code.
Before you use the adjustment program, you must activate this inflation method for inflation accounting in FI.
Time base variant (TBE) – Used in the inflation adjustment calculation for all accounts or items where no
specific TBE is defined. If a special TBE is needed for a certain account, maintain it in the account master
record. The TBE contains information about possible posting dates in FI-AA; the posting date determined here
is not used in the G/L adjustment program.
Reference index – Used to calculate the general inflation adjustments. It is also used for accounts or items
where no specific index is defined. No inflation adjustment is calculated for accounts or items if there is no
general index defined in the inflation method.
No specific effect – The inflation adjustment is not split into general effect and specific gain or loss due to
inflation. If you specified an index in the account master record, it is then taken for the adjustment calculation
instead of the general index. The adjustment amount is processed as general effect if the parameter Only
specific adjustment is not set in the G/L account master record. In any case, no split into general effect and
specific gain or loss due to inflation is performed.
Document types – Used for adjusting local or foreign currency amounts. If the document type for local
currency adjustment is not specified, the adjustment program cannot be executed.
Posting keys – Used for the G/L postings within inflation adjustment documents. If the postings keys are not
specified, the adjustment program cannot be executed.
Tax codes – If the adjustment postings involve G/L accounts that require a tax code, the codes specified here
are used. These tax codes can also be used in the adjustment program for open items in local currency (A/R
and A/P) when posting the adjustment documents (see next topic).
Posting method – For provisional runs, you specify here what kind of postings are generated by the G/L
adjustment program. If you enter “1” a provisional run results in two batch input sessions: one for the normal
adjustment postings and one for the reverse postings to be processed before a definitive run is performed. The
definitive run generates postings containing the complete adjustment. At present, this is the only method
supported. If you enter “2” only one batch input session is generated in a provisional run. The adjustment
amounts are stored in a special table and used later in a definitive run to post only the differences to the
provisional values.
© SAP AG CA550 3-7

Inflation Key
2873,00
2856,00 Inflation key
2683,00 2846,00 Monetary account?
G/L account
2768,00
master record
Monetary account?
Adjusting method
2794,00 2794,00
Inflation key
Revaluation index
Adjusting method
TBE variant
2768,00 Revaluation index
2683,00
Post inflation?
2695,00 Only specific adjustment?
2873,00
2683,00
 SAP AG 1999
2683,00
The inflation key is the most important parameter to be set up. Note: the inflation key field must be
active in the field status definitions for G/L accounts (field status group:Account control).
Monetary account – By using this indicator you can divide your accounts into two groups: monetary
accounts and nonmonetary accounts. Typically, adjustments are posted only for nonmonetary
accounts.
Adjustment method – A G/L account can be adjusted by two methods. The balance method adjusts
the period balances. In the single item method, each single item that was posted since the last
account adjustment is adjusted one by one; the balance of the last adjustment is adjusted as a whole.
When using the single item method, verify that the G/L account master record has the „open item
management“ indicator active. The inflation index to be used in the single item method is determined
as follows: first the index of the line item, then the index of the G/L account. If the system does not
find any indexes in either, it uses the index assigned to the company code. This index definition logic
is similar to the adjustment program for open items of A/R and A/P.
Revaluation index (specific index) – The account is adjusted using the values of this inflation index.
If you do not enter an index here, the adjustment is calculated using the general inflation index
maintained for the company code. To maintain a specific index for an account makes sense if the
account is adjusted by this specific index.
© SAP AG CA550 3-8

Inflation Key (Continued)
2873,00
2856,00 Inflation key
2683,00 2846,00 Monetary account?
G/L account
2768,00
master record
Adjusting method
TBE variant
2794,00 2794,00
Inflation key
Revaluation index
Post inflation?
TBE variant
2768,00
2683,00 Only Post inflation?
specific adjustment?
2695,00 Only specific adjustment?
2873,00
2683,00
 SAP AG 1999
2683,00
TBE variant – You can assign a time base and exposure to inflation variant to an account. This entry
overrides the entry on the company code level. This means that the adjustment program uses this
TBE variant instead of the general one when processing this account.
Post inflation adjustment – Typically, adjustment postings are generated for nonmonetary accounts
but not for monetary accounts. This means that in the normal case you set this indicator for all
nonmonetary accounts.
Only specific adjustment – If you set this indicator, the adjustment of this account is not split into
general effect and specific inflation effect, no matter how the general parameter for split is set for the
company code. The whole adjustment amount is processed as specific inflation effect.
© SAP AG CA550 3-9

Inflation Program Execution Possibilities
2873,00
2856,00 According
According to
to group
group category:
category:
2683,002846,00
Monetary
Monetary accounts
accounts
Nonmonetary
Nonmonetary accounts
accounts
2768,00
Selection
Selection of:
of:
2794,00
Company
Company code
2794,00
Chart of
code
accounts
Chart of accounts
According
According to
Provisional
Provisional
to the
the index
index category:
category:
2768,00
Accounts Definitive
Definitive
Accounts
2683,00
2695,00 According
According toto the
the processing
processing mode:
mode:
2873,00
Posting
Posting
Simulation
Simulation
2683,00 Statistical
Statistical
 SAP AG 1999
2683,00
According to group category – You can divide your accounts into two groups, monetary accounts
and nonmonetary accounts. Typically, adjustments are posted only for nonmonetary accounts. By
selecting the proper indicator, the adjustment program can run separately for monetary or for
nonmonetary accounts.
According to the index category – You can run the adjustment program using a provisional or a
definitive index. The two processing types differ in the index values that can be used for the
calculations and in the output of the program. Also, the accounts where the offset postings of the
adjustments are performed might be different (this depends on how the account determination is
maintained for definitive and provisional adjustments).
Use the provisional processing mode if you want to use index values that are not yet definitive.
For posting runs, the program generates two batch input sessions: one normal and one with the
reverse postings.
Use the definitive processing mode if all index values involved have definitive (that is, official)
status. If the program finds only a provisional value for an inflation index while processing an
account, the account cannot be adjusted and is added to the exception list.
According to the processing mode:
Posting – The program adjusts all relevant accounts starting from the first period for which an
account was not yet adjusted up to the final period defined as a program parameter. Then, a batch
input session with all the necessary adjustment postings is created. In this way of processing,
account master records are updated with information about the adjustment execution.
Simulation – The calculation works the same as in posting. The only differences are that no batch
input session is generated and no update of account master records takes place.
Statistical – All accounts that are selected are adjusted from a start period to a final period. (Both
periods are defined as program parameters.) No adjustment postings are performed and no update
of adjustment data is made in the account master records.
© SAP AG CA550 3-10

G/L Account Adjustment: General Index, Example 1
2873,00
2856,00
2683,00
900000 Retained Earnings 980000 General Inflation Effect
2846,00
15,000.00 148.51
2768,00
148.51
2794,002794,00
2768,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
In the example, the Retained Earnings account (900000) is going to be adjusted using a definitive
general inflation index. The inflation adjustment will be posted to the General Inflation Effect
account (980000) and the offsetting account will be the same Retained Earnings account (900000)
The account balance as of 31 January XXXX is:
900000 Retained Earnings MXN 15,000.00
The general inflation index(coefficient) for February XXXX (determined by the TBE) is
1.009901
The account postings for this example (defined in the account determination) are:
900000 Retained Earnings MXN 148.51 credit
980000 General Inflation Effect MXN 148.51 debit
© SAP AG CA550 3-11

Account Determination Used for Example 1
2873,00
2856,00
Chart of accounts INT
2683,002846,00
Account number 900000
2768,00
Accounts for definitive adjustments Accounts for provisional adjustments
2794,00
General infl. 980000 General infl.
2794,00
Specific infl. Specific infl.
2768,00
Offsetting Accounts
2683,00
General infl.
2695,00
Specific infl.
2873,00
Additional account assignments
2683,00
Cost center
 SAP AG 1999
2683,00
The account determination procedure is used to classify accounts according to their treatment in the
inflation adjustment process. In this table, you enter each account that you want to adjust.
The account determination is defined depending on the chart of accounts.
The following data can be maintained for each G/L account:

Accounts for definitive adjustments – These accounts are used as offsetting accounts when posting
the inflation adjustment in a definitive run (see the previous slides for more details on definitive
and provisional adjustments). If the inflation effect is split into general effect and specific gain or
loss, both accounts are used. If the inflation effect is not split, the inflation adjustment is posted to
the account for the general effect, except where the account master record settings require the
adjustment to be processed as specific effect.
Accounts for provisional adjustments – These accounts are used in provisional adjustment runs.
The same rules apply concerning split of inflation effect as with the accounts for definitive
adjustment described above.
Additional account assignments – You can enter a default cost center to be used for adjustment
postings if no cost center is defined in the account master record for inflation.
If you need provisional adjustments postings you define the accounts respectively.
© SAP AG CA550 3-12

G/L Account Adjustment: General Index, Example 2
2873,00
2856,00
920000 Loss Compensation 980000 General Inflation Effect
2683,002846,00
15,000.00 148.51
2768,00
2794,002794,00
2768,00
2683,00 921000 Inflation Effect
of Loss Compensation
2695,00
2873,00
148.51
2683,00
 SAP AG 1999
2683,00
The Loss Compensation account (920000) is going to be adjusted using a definitive general inflation
index. The inflation adjustment will be posted to the General Inflation Effect account (980000) and
the offsetting account will be a different account: Inflation Effect of Loss Compensation (921000).
The account balance as at 31 January XXXX is:
920000 Loss Compensation MXN 15,000.00
The general inflation index (coefficient) for February XXXX (determined by the TBE) is 1.009901.
The account postings for this example (defined in the account determination procedure) are:
921000 Inflation Effect of Loss Compensation MXN 148.51 debit
980000 General Inflation Effect MXN 148.51 credit
© SAP AG CA550 3-13

Account Determination used for Example 2
2873,00
2856,00
2683,002846,00
2768,00
2794,00
2794,00
Specific infl. Specific infl.
2768,00
Offsetting Accounts
2683,00
General infl. 921000
2695,00
Specific infl.
2873,00
Cost center
2683,00
 SAP AG 1999
2683,00
The above Customizing settings cover accounts for general inflation effect postings only.
© SAP AG CA550 3-14

G/L Account Adjustment: Specific Index, Example 3
2873,00
2856,00
920000 Loss Compensation 981000 Specific Inflation Effect
2683,002846,00
1,000.00 98.52
2768,00
2794,002794,00
2768,00
2683,00 921000 Inflation Effect
of Loss Compensation
2695,00
2873,00
98.52
2683,00
 SAP AG 1999
2683,00
The Loss Compensation account (920000) is going to be adjusted using a definitive specific inflation
index. In this example the Only specific effect indicator is active, therefore the only resulting posting
is the specific inflation effect. The inflation adjustment will be posted to the Specific Inflation Effect
account (981000) and the offsetting account will be a different account: Inflation Effect of Loss
Compensation (921000).
920000 Loss Compensation MXN 1,000.00
The specific inflation coefficient for February XXXX (determined by the TBE) is 1.009852.
921000 Inflation Effect of Loss Compensation MXN 98.52 debit
981000 Specific Inflation Effect MXN 98.52 credit
© SAP AG CA550 3-15

Account Determination Used for Example 3
2873,00
2856,00
2683,002846,00
2768,00
2794,00
General infl. General infl.
2794,00
Specific infl. 981000 Specific infl.
2768,00
Offsetting Accounts
2683,00
General infl.
2695,00
Specific infl. 921000
2873,00
Cost center
2683,00
 SAP AG 1999
2683,00
The above Customizing settings cover accounts for specific adjustment postings only.
© SAP AG CA550 3-16

G/L Acc. Adj.: Specific/General Index, Example 4
2873,00
2856,00910000 Transfer of Profits 980000 General Inflation Effect
2683,002846,00
2768,00 10,000
2794,002794,00
100,000
2768,00
2683,00Spec. infl. = 15% 981000 Specific Inflation Effect
2695,00 Gen. infl. = 10%
2873,00
15,000 5,000
2683,00
 SAP AG 1999
2683,00
The Transfer of Profits account (910000) is going to be adjusted using a definitive specific inflation
index. In this example, the Only specific effect indicator is not active, so the adjustment program will
split the inflation effect into two different accounts, one for the general effect and one for the specific
effect. For more information about the calculation procedure used by the adjustment program, see
the next slide. The inflation adjustment will be posted to both the general and the specific inflation
effect accounts (980000 & 981000) and the offsetting account in this case will be the same Transfer
of Profits account (910000).
910000 Transfer of Profits MXN 100,000.00
The general inflation index (coefficient) for this example is 1.100000 (10%).
The specific inflation index (coefficient) for this example is 1.150000 (15%).
910000 Transfer of Profits MXN 15,000 debit
980000 General Inflation Effect MXN 10,000 credit
981000 Specific Inflation Effect MXN 5,000 credit
© SAP AG CA550 3-17

G/L Account Adjustment: Example 4 (Continued)
2873,00
2856,00
Inflation adjustment calculation for this example:
2683,00 Adjustment amount:
2846,00
100,000 × 0.15
General inflation effect: 100,000 × 0.10
= 15,000
= 10,000
2768,00
Specific gain or loss: 15,000 – 10,000 = 5,000
2794,002794,00
Inflation adjustment postings:
2768,00
Transfer of Profits account 15,000
2683,00
General Inflation account 10,000
2695,00
Specific Inflation account 5,000
2873,00
2683,00
 SAP AG 1999
2683,00
© SAP AG CA550 3-18

Account Determination used for Example 4
2873,00
2856,00
2683,002846,00
Accounts for provisional adjustments
2768,00
Accounts for definitive adjustments
2794,00
2794,00
Specific infl. 981000 Specific infl.
2768,00
Offsetting Accounts
2683,00
General infl.
2695,00
Specific infl.
2873,00
Cost center
2683,00
 SAP AG 1999
2683,00
Those are the respective customizing settings for example 4.
© SAP AG CA550 3-19

Adjustment Postings in General Ledger
2873,00
2856,00
2683,00
LC 1 LC 2 LC3
2846,00
2768,00
Normal postings
2794,002794,00
Inflation postings
2768,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
Inflation adjustment postings in the general ledger are updated in the local currency of the company
code only. If additional local currencies are defined in your company code, the inflation adjustments
are translated into those additional currencies, but the amount in those currencies (if they are not
equal to the first local currency) is zero.
© SAP AG CA550 3-20

Reset Inflation Data
2873,00
2856,00 G/L account selection
2683,00 Company code
2846,00
G/L account to
2768,00
New inflation adjustment data
Last adjusted year
2794,00
Last adjusted period
2794,00
Last provisional adjustment
2768,00
Last definitive adjustment
2683,00
Update control
Update transaction figures
2695,00
2873,00
Be careful when using this program, because the system
2683,00
overwrites the old adjustment information of the master
data so that it cannot be recovered.
 SAP AG 1999
2683,00
When you execute the adjustment program in posting mode, the system automatically updates the
G/L accounts with the information about the last adjustments made by the adjustment program. To
ensure that the accounts are adjusted correctly, do not change this information manually.
However, there are some cases where a manual change is needed. The most common situation is the
“Old data takeover” where you create master records for G/L accounts that have already been
adjusted for certain periods of the current fiscal year (the adjustment was done manually or in a
previous system). There might also be situations where, due to system problems, the adjustment data
is not correct.
In these special cases you can use the program Reset Inflation Data, which fills the adjustment
master data fields of the selected G/L accounts with manual entries. This program does not reverse
the adjustments posted during the inflation adjustment run.
Note: be careful when using this program, because the system overwrites the old adjustment
information of the master data so that it cannot be recovered. SAP recommends that you do not use
this program in production systems, since an incorrect execution of the program can lead to an
incorrect inflation effect posting.
© SAP AG CA550 3-21

G/L Account Adjustment: Topic Summary

Set up the Customizing entries for G/L
account adjustment
Prepare the G/L account master records
that are affected by inflation
Explain the different ways of executing
the inflation program
Carry out the G/L account adjustment
Reset inflation data
 SAP AG 1999
© SAP AG CA550 3-22

Foreign Currencies: Topic Objectives

able to:
Identify the purpose of the three reports
for open item adjustments in different
currencies
Execute the reports using variants
Explain the results of the open item
adjustments
 SAP AG 1999
© SAP AG CA550 3-23

Adjustment of Open A/R & A/P Items in Local
Currency: Business Background
2873,00
2856,00 Inflation effect MXN
2683,002846,00
100
2768,00
Invoice 03/01/XX MXN 1,000 Payment 07/01/XX MXN 1,000
2794,002794,00
What about the inflation effect ?
2768,00
2683,00
Solution:
2695,00
1. Arrange with your business partner an agreement
to invoice this additional inflation effect amount.
2873,00
2. Post the inflation invoice.
2683,00
 SAP AG 1999
2683,00
As the inflation effect invoice is treated as a normal invoice, the posting effect will be not only in the
local currency but in the parallel currencies.
It is therefore an invoice like any other customer/vendor invoice, but with the content of the debit or
credit for inflation effect amounts.
© SAP AG CA550 3-24

Currency: Programs
2873,00
2856,00
2683,002846,00
J_1AINFK
J_1AINFK
Additional
Line
2768,00
Line adjustment
items
items open items
2794,002794,00 J_1AINFD
J_1AINFD
2768,00
Adjustments in
local currency and
2683,00
additional parallel
currencies
2695,00
2873,00
The adjustment amounts are updated in both local and parallel
currencies. This may or may not be allowed, depending on the
2683,00
legal requirements of your country.
 SAP AG 1999
2683,00
You use two separate programs to adjust open A/R and A/P items in your local currency – one for
vendors and one for customers.
Each program posts adjustment documents for the open A/R or A/P items that are affected by
inflation. For each open item, the system calculates the inflation effect starting from the last date
when this item was adjusted (or the posting date, if the item is new) up to the key date specified as a
program parameter.
In contrast to the inflation adjustment postings in the general ledger, these adjustments also have
amounts in additional local currencies if these are defined in your company code.
© SAP AG CA550 3-25

Currency: Inflation Index Determination
2873,00
2856,00
Customer 1000000030 Line item display
2683,002846,00
Abaco
San Jose Insurgentes
2768,00 Allocation Doc.no. DT Doc.date Cur Amount

----------------------------------------------------------------------------------
2794,002794,00
1800000000 DR 18.05.99 MXN 111,00
1800000009 DR 18.04.99 MXN 1000,00
2768,00
2683,00
2695,00 1. Line item
2873,00 2. Reconciliation account
2683,00 3. Company code, global data
 SAP AG 1999
2683,00
The system determines which inflation index to use as follows. First, it checks whether you have
entered an index for the open item. If not, it uses the inflation index specified in the inflation master
record of the reconciliation account. If there is no index here, it uses the general index that you have
assigned to the company code.
This procedure is similar to the one used by the G/L account adjustment program when the single
item method is used.
© SAP AG CA550 3-26

Currency: Execution
2873,00
Customer/vendor account to
Selection using search help
Search help ID
2856,00
Search string
Complex search help
2683,00
General selections
to
2846,00
Company code
Open items at key date
Special selection criteria
2768,00
Also items without index
Also items with sp. G/L indic.
2794,00
Adjustment parameters
Valuation key date
2794,00
Posting parameters
2768,00
Post adjustment documents
Posting date
Posting period
2683,00
Document types
Debit posting cust/vend. account
2695,00
Credit posting cust/vend. account
Posting keys
2873,00
Debit posting cust/vend. account
Credit posting cust/vend. account
Taxes on Sales and Purchases
2683,00
Calculate tax for adjust. doc.
Take tax code from open items
2683,00
Parameters for Argentine document numbering
Issuing branch
 SAP AG 1999
Selecting Post adjustment documents causes the program to post the adjustment documents and
update the last adjustment date of each line item. Otherwise, the program only prepares a list of all
calculated adjustment amounts.
Enter the posting date for the adjustment documents; the posting period is optional.
In addition to the general selection criteria, you can also specify the open items that should be
processed as follows:
Also items without index – Typically, the program only processes items that you have entered an
inflation index for. If you also want to process items without an index, set this indicator. The
program uses the inflation index specified in the inflation master record of the corresponding
reconciliation account for the adjustment calculation.
Also items with special GL indicator – Instructs the system to process items with a special general
ledger indicator.
Taxes on sales and purchases – When executing the interest calculation, you can use the tax code of
the original item for the interest charged by selecting Take tax code from open items. If the original
item does not have a tax code, the program uses the tax code specified at company code level. You
can calculate taxes on the adjustment amount by selecting Calculate tax for adjust. doc.
Withholding tax – If the extended withholding tax functionality is active for the company code, the
adjustment documents also receive withholding tax information. The relevant withholding types are
determined in the same way as in the online posting transaction. The withholding tax codes to be
used are determined in the same way as postings of interests on arrears.
Output – The program produces a list of all customer or vendor accounts (sorted by reconciliation
account) with all the open items processed. It also shows the adjustment amount for each item, split
into general and specific inflation effect, and the inflation index used. If adjustment postings are
created, the corresponding document numbers are also shown.
© SAP AG CA550 3-27

Open A/R & A/P Item Adjustment in Foreign
Currency: Programs
2873,00
2856,00
2683,00
SAPF100
2846,00
No
No split
split
2768,00
Or ...
2794,002794,00
2768,00
General
2683,00
Adjustments
J_1AINFW
J_1AINFW 1.
1. Valuation
Valuation 2. in local
2695,00
currency
Split
Specific gain only
gain
2873,00
or
or loss
loss
2683,00
 SAP AG 1999
2683,00
You use the adjustment program for open A/P and A/R items in foreign currency (program
J_1AINFW) to carry out foreign currency valuations and to split the foreign currency valuation into
general inflation effect and specific gain or loss.
The program consists of two steps – the valuation of the open items in foreign currency for the local
currency and the split into general and specific inflation. You can run these steps together or
separately by selecting the processing mode (see next slide).
The valuation amounts in foreign currency are always zero because the adjustments are made in the
local currency.
Note: If you do not need to split your foreign currency adjustment postings into general inflation
effect and specific gain or loss, you do not need to run this program. You can perform your foreign
currency valuations with the standard valuation program SAPF100
© SAP AG CA550 3-28

Open A/R & A/P Item Adjustment in Foreign
Currencies: Execution
2873,00
2856,00General selection
2683,00
Company code
to
2846,00
Account type
Vendor account number to
to
2768,00
Customer account number
Currency key to
2794,00Valuation details
2794,00
Processing mode
2768,00
Valuation key date
Valuation method
2683,00
Posting parameters
2695,00
Post adjustment
Posting date
2873,00
Posting period
2683,00
 SAP AG 1999
2683,00
With this program, you can post the general inflation effect and the specific effect due to exchange
rate differences to different accounts.
In the first step, the system valuates open items in foreign currencies. The valuation is executed only
in the local currency. You must define a suitable valuation method. If you run the program in posting
mode, the valuation difference is noted in the valuated open item and the valuation amount is posted
(via “call transaction”). Additional valuation information is stored to provide data for the second
step.
In the second step, the system splits the valuation from step one into general inflation effect and
specific gain or loss. In order to do so, it calculates the general inflation effect for the open item
(using the general inflation index specified at company code level). The calculation start date is
either the last adjustment date (that is, the last date on which the item was valuated) or the posting
date (where an item has not been previously valuated).
Processing modes are: 1 - executing first and second step integrated,
2 - only step 1.
3 - only step 2.
To be able to calculate the general inflation effect of an item, you maintain the revaluation key in the
receivables/payables reconciliation account master.
© SAP AG CA550 3-29

Inflation Adjustment – Foreign Currencies:
Example
2873,00
2856,00
Step 1: USD–DEM exchange rate: 1.7: valuation difference DEM 200
2683,00
Balance Sheet Adjustments
2846,00
Valuation Gains
2768,00
DEM 200 DEM 200
(USD 0) (USD 0)
2794,002794,00
2768,00
Step 2: Inflation for June: 10%
2683,00
General inflation effect: DEM 150
2695,00
General Inflation Effect Valuation Gains
DEM 150
(USD 0) 2873,00 DEM 150
(USD 0)
2683,00
 SAP AG 1999
2683,00
You post an open item of USD 1,000 in a company code whose local currency is DEM. One month
later, you carry out a valuation. The accounts specified for the foreign currency valuation are the
Balance Sheet Adjustments account and the Valuation Gains account. For the valuation method used,
you set the Always valuate indicator.
Open item: Posting date: 31 May XXXX; USD–DEM exchange rate: 1.5
1,000 USD = 1,500 DEM (local currency)
Valuation: 30 June 1999
Result: The system posts the general inflation effect to the General Inflation account and the
Valuation Gains account. The specific gain or loss due to exchange rate difference is 50 DEM (the
difference between DEM 200 and DEM 150).
© SAP AG CA550 3-30

Foreign Currencies: Topic Summary

Identify the purpose of the three reports
for open item adjustments in different
currencies
Execute the reports using variants
Explain the results of the open item
adjustments
 SAP AG 1999
© SAP AG CA550 3-31

Additional Reporting and Integration with FI-SL:
Topic Objectives

able to:
Carry out comparisons of balance sheets
Explain the integration between inflation
adjustments and FI-SL
 SAP AG 1999
© SAP AG CA550 3-32

Financial Statement Versions
2873,00
2856,00
Old data (unadjusted) Current data (adjusted)
2683,00 INT
INT
2846,00
INT1
INT1
2768,00
2794,002794,00 Without
Without inflation
inflation effect
effect item
item Inflation
Inflation effect
effect item
item 11
2768,00 921000
921000
2683,00
2695,00
2873,00
Without
Without inflation
inflation effect
effect item
item Inflation
Inflation effect
effect item
item 22
2683,00 981000
981000
 SAP AG 1999
2683,00
If you post the inflation effects to separate accounts, you can create two versions of a balance sheet,
one with and one without inflation effect.
One financial statement version will be used for historical balance sheet reports (here, INT) and the
other financial statement version will be used for adjusted balance sheet reports (INT1).
© SAP AG CA550 3-33

Adjustment Balance Sheet Comparison
2873,00
2856,00
Company code 6000 Business area **** Amounts in MXN
2683,002846,00
Comp Bus.
code area
Texts Reporting period
(01.1999-12.1999)
Comparison period
(01.1999-12.1999)
Absolute
difference
Rel.
dif.
Su.
lev.
2768,00
ASSETS
Inflation
----------------
2794,00
adjustment
comparison
2794,00
Current assets
-------------------- using the
company
2768,00 Inventories
-----------------
code index
2683,00
Finished products and merchandise
2695,00
45.896,92 45.000,99 895,93
79200 Finished goods
6000
45.896,92 45.000,99 895,93
Total inventory
2873,00
............................
2683,00
............................
 SAP AG 1999
2683,00
You can also use the balance sheet comparison program (J_1AFRF0). It creates a balance sheet and
profit and loss statement for any given reporting period within a fiscal year, with absolute and
relative comparisons for a comparison period, as in the standard balance sheet profit and loss report
(RFBILA00). Program J_1AFRF0 is not used as of Release 4.6A, since this functionality is
incorporated in the standard balance sheet report.
If you select Inflation adjust. comp. period, the system adjusts the comparison period for inflation.
The adjustment is made using the general index (defined at company code level) and only for the
accounts that you have marked as being affected by inflation. The amounts of the comparison period
are compared with the reporting period.
Example: If the reporting period is January 1999 and the comparison period is January 1998, the
balances are adjusted from January 1998 to January 1999.
© SAP AG CA550 3-34

Integration to FI-SL
2873,00
2856,00
Examples: All document types Only postings on
2683,00
excluding inflation OR non-inflation
document types relevant accounts
2846,00
2768,00
2794,00
FI
FI ledger
ledger 2794,00 Special
Special ledger
ledger
<BKPF>
<BKPF> $BLART
$BLART <>
<> ‘T1’
2768,00
‘T1’
for
for O
ORR
(adjusted
(adjusted data)
data)
2683,00
<BSEG>
<BSEG> $HKONT
$HKONT <>
<> ‘XX*’
‘XX*’
historical
historical data
data
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
Depending on the legal requirements and business practice in your country, you may need to prepare
an unadjusted balance sheet. You can do so customizing a respective balance sheet version with
unadjusted and adjusted accounts and using the standard balance sheet report (RFBILA00).
Due to the legal requirements in some countries, it is difficult to distinguish between the inflation
effect postings and other transactions, since they are all posted to the same G/L-accounts. In this case
you could use a special document type and exclude this type when posting to a special purpose
ledger. This means: You define a special document type in FI. Then you customize a special purpose
ledger and a condition in the ledger selection that does not allow to transfer this document type from
Financial Accounting to that ledger. In Financial Accounting you post adjustments using this
document type.
Example: You post adjustments using document type T1 and define a special purpose ledger, HD,
for an unadjusted balance sheet. You would assign the ledger HD to your company code 6000.
When specifying the ledger selection you could maintain the formula <BKPF> $BLART <> ‘T1’
as a selection condition. This would prevent document type T1 from being posted to ledger HD.
Other legal requirements in some countries demand postings to separate accounts. Depending upon
the further requirements of your company it might be needed to have not only a balance sheet and
other Financial Accounting reporting but other kind of valuation, for example for corporate needs,
which is obtained via a special ledger. Therefore you use other condition in the ledger selection, for
example exclude specific accounts from posting to your special ledger.
© SAP AG CA550 3-35

Additional Reporting and Possible Integration to
FI-SL: Topic Summary

Carry out comparisons of balance sheets
Explain the integration between inflation
adjustments and FI-SL
 SAP AG 1999
© SAP AG CA550 3-36

Inflation accounting in Financial Accounting:
Unit Summary

Configure and perform inflation
adjustment for G/L accounts
Perform inflation adjustment for A/R and
A/P open items in local/foreign currency
Explain additional reporting possibilities
and the integration with FI-SL
 SAP AG 1999
© SAP AG CA550 3-37

Exercises
Unit: Inflation Accounting in Financial Accounting

Topic: G/L Account Adjustment

• Set up the relevant Customizing settings for G/L-account adjustments
• Carry out inflation adjustment of G/L-accounts
• Explain the results of the inflationary postings.
In addition to the monthly closing procedures, the accounting department
needs to carry out inflation adjustments for G/L accounts.
The accounting department requires the use of general and specific
indexes to adjust the G/L accounts according to legal requirements.
You have to show the accounting department how to configure and
perform inflation adjustments using the standard programs. You will also
tell them how to interpret the results of the inflation adjustment reports.
1. Create a new inflation method IN## for the country MX with the following values:
Inflation Method IN##
Description Inflation method ##
In the details screen maintain the following values:
FI Active Yes
TBE Variant ##
Reference Index GI##
Doc. Tp. Loc. Curr. SA
Doc. Tp. For. Curr. SA
Cred. Post. Key 50
Deb. Post. Key 40
Input tax code V0
Output tax code A0
Posting method 1
Leave the remaining parameters in blank.
© SAP AG CA550 3-38

Note that the inflation method must be assigned to the company code
global settings. For this course the company code 6000 uses the
inflation method IN00.
2. Assign the inflation method IN## to your company code CA##.
3. Create a new inflation key NM##-G for the country MX. This inflation key is going to be
used for non-monetary accounts and the general inflation index. Maintain the following
values:
Inflation Key NM##-G
Description Inflation key ## - General Ind.
Adjustment method 1
Post inflation Yes
Revaluation index Leave in blank
You can leave the revaluation index field in blank. If you don't
specify a revaluation index, the system is going to use the inflation
index maintained in the inflation method which is specified for the
company code. The same applies to the TBE variant.
4. Create a new inflation key NM##-S for the country MX. This inflation key is going to
be used for non-monetary accounts and the specific inflation index. Maintain the
following values:
Inflation Key NM##-S
Description Inflation key ## - Specific Ind.
© SAP AG CA550 3-39

Adjustment method 1
Post inflation Yes
Revaluation index SI##
Only specific adjustment Leave in blank
5. Create the following G/L accounts for company code CA## and make sure that you
assign an inflation key to the accounts to be adjusted.
You can reference the existing G/L accounts to create the new ones
(900000, 910000, 920000, 980000, 981000 and 921000).
G/L Account Inflation key

9000## Retained Earnings Group ## NM##-G
9100## Transfer of Profits Group ## NM##-S
9200## Loss Compensation Group ## NM##-G
9800## General Inflation effect Group ##
9810## Specific Inflation effect Group ##
9210## Inflation of Loss Compensation Group ##
If you don't find the Inflation key field, you should activate it using
the field status selection for G/L-accounts in the Account Group
configuration.
6. Specify the following account determination for definitive inflation postings:
You can copy the existing account determination from the G/L
accounts 900000, 910000, 920000, and then replace the target
values with your accounts (9000##, 9100##, 9200##, etc…).
© SAP AG CA550 3-40

(Example 1 in the slides)
9000## Retained Earnings General Inflation effect, same 9800## (General infl. Account)
offsetting account
9100## Transfer of Profits General & specific effect, same 9800## (General infl. Account)
offsetting account 9810## (Specific infl. Account)
9200## Loss Compensation General inflation effect, different 9800## (General infl. Account) 9210##
offsetting account (Offsetting Account -General Infl.)
7 Post the following amounts to the G/L accounts created previously. Make sure that all
the postings are done with a posting date in the previous month.
G/L Account Posting Amount

9000## Retained Earnings Group ## MXN 15,000
9100## Transfer of Profits Group ## MXN 100,000
9200## Loss Compensation Group ## MXN 15,000
The offsetting account for these postings will be 113100.
8. Create a report variant INFL-## for company code CA## in the G/L account
adjustment program J_1AINFG. Include your accounts, the company code Ca##, the
simulation indicator, and execute it for the previous month. Analyze the data from the
output list revaluation details, revaluation history) and in case of errors analyze the
Error list and exceptions. Check the results of calculation.
In this exercise, if you executed the report for the previous month,
you will note that the total revaluation for each account is 0.00, since
the inflation postings will not be considered for that month. This is
determined by the time base and exposure to inflation variant.
Execute again the inflation program for previous month (using the posting indicator).
Then execute again the inflation program but now for the current month in simulation
mode. Analyze the data from the output list and verify the results.
Now you know how to run the G/L account adjustment program using
different possibilities.
© SAP AG CA550 3-41

Topic: Open A/R & A/P Item Adjustment in Local and
Foreign Currencies
After conclusion of this exercise you are able to:
• Identify the purpose of the three reports for open item adjustments in different
currencies
• Execute the reports using variants
• Explain the results of the open item adjustments
needs to carry out inflation adjustments open A/R and A/P items.
In some cases receivables and payables items should be adjusted
periodically executing the corresponding programs.
1. Create a customer master record 100## in company code CA##.
Customer 100##
Company Code CA##
Account Group CUST
Press Enter.
Complete the fields: Name, Search term, City, Postal Code, Country, Language,
Reconciliation account (140000).
Then press Save.
2. Create an invoice for your customer using the following data:
Document and Posting date Any day in the last month
Company Code CA##
Currency MXN
Posting Key 01
Account (your customer) 100##
Then press Enter. If you receive a warning message about the date, press Enter again.
© SAP AG CA550 3-42

Amount 1000
Tax Code A0
Posting Key
50
Account
800200
Then press Enter.
Amount 1000
Save the invoice.
3. Which inflation index is going to be used for this invoice? How does the system
determine this index?
GI##
The inflation index to be used is determined in the following order: First it is checked
if an index is specified for the processed open item. If this is not the case the inflation
index specified in the inflation key of the reconciliation account is used. If there is no
index specified on account level either, the general index defined on company code
level is used.
Depending on your system configuration the field Revaluation Index

(at the line item level) may not appear. If you want to activate this
field in the configuration you have to change the field status group of
the reconciliation account or the field status definition of the posting
key.
4. Verify the account determination used in this exercise (reconciliation account 140000).
© SAP AG CA550 3-43

5. Create a report variant INFL-## for the program J_1AINFD, with the following
parameters:
Customer Account 100##

Company Code
CA##
The last day of the previous month
X
Valuation key date
The last day of this month
Post adjustment documents Leave in blank

Posting date
Document type for debit posting
DA
Document type for credit posting
DA
Debit posting key
04
Credit posting key
14
Execute the report with your variant and analyze the list generated by the program.
Now you know how to run the A/R item adjustment in local currency.
The same procedure applies for the A/P item adjustment. The only
differences are the accounts used (vendors instead of customers) and the
revaluation program executed (J_1AINFK instead of J_1AINFD).
© SAP AG CA550 3-44

Solutions

Topic: G/L Account Adjustment

• Set up the relevant Customizing settings for G/L-account adjustments
• Carry out inflation adjustment of G/L-accounts
• Explain the results of the inflationary postings.
needs to carry out inflation adjustments for G/L accounts.
The accounting department requires the use of general and specific
indexes to adjust the G/L accounts according to legal requirements.
You have to show the accounting department how to configure and
perform inflation adjustments using the standard programs. You will also
tell them how to interpret the results of the inflation adjustment reports.
1. Create a new inflation method IN## for the country MX with the following values:
Accounting Global Settings → Inflation → Global Settings → Maintain Inflation Methods
Inflation Method IN##

Description Inflation method ##
FI Active Yes
TBE Variant ##
Reference Index GI##
Doc. Tp. Loc. Curr. SA
Doc. Tp. For. Curr. SA
Cred. Post. Key 50
Deb. Post. Key 40
Input tax code V0
Output tax code A0
Posting method 1
Leave the remaining parameters in blank
.
© SAP AG CA550 3-45

Note that the inflation method must be assigned to the company code
global settings. For this course the company code 6000 uses the
inflation method IN00.
2. Assign the inflation method IN## to your company code CA##.

Implementation Guide for R/3 Customizing (IMG) → Financial Accounting →
Financial Accounting Global Settings → Company code → Enter Global Parameters
3. Create a new inflation key NM##-G for the country MX. This inflation key is going to
be used for non-monetary accounts and the general inflation index. Maintain the
following values:
Accounting Global Settings → Inflation → Maintain Inflation Adjustment Key (G/L
Accounts)
Inflation Key NM##-G
Description Inflation key ## - General Ind.

Adjustment method 1
Post inflation Yes
Revaluation index Leave in blank
You can leave the revaluation index field in blank. If you don't
specify a revaluation index, the system is going to use the inflation
index maintained in the inflation method which is specified for the
company code. The same applies to the TBE variant.
4. Create a new inflation key NM##-S for the country MX. This inflation key is going to
be used for non-monetary accounts and the specific inflation index. Maintain the
following values:
Accounting Global Settings → Inflation → Maintain Inflation Adjustment Key (G/L
Accounts)
© SAP AG CA550 3-46

Inflation Key NM##-S
Description Inflation key ## - Specific Ind.

Adjustment method 1
Post inflation Yes
Revaluation index SI##
Only specific adjustment Leave in blank
5. Create the following G/L accounts for company code CA## and make sure that you
assign an inflation key to the accounts to be adjusted.
SAP Easy Access/standard menu → Accounting → Financial Accounting → General
Ledger → Master records → Individual processing → Centrally (with reference)
You can reference the existing G/L accounts to create the new ones
(900000, 910000, 920000, 980000, 981000 and 921000).
G/L Account Inflation key

9000## Retained Earnings Group ## NM##-G
9100## Transfer of Profits Group ## NM##-S
9200## Loss Compensation Group ## NM##-G
9800## General Inflation effect Group ##
9810## Specific Inflation effect Group ##
9210## Inflation of Loss Compensation Group ##
If you don't find the Inflation key field, you should activate it using
the field status selection for G/L-accounts in the Account Group
configuration.
© SAP AG CA550 3-47

6. Specify the following account determination for definitive inflation postings:
Accounting Global Settings → Inflation → Account Determination for Inflation Adjustment
You can copy the existing account determination from the G/L
accounts 900000, 910000, 920000, and then replace the target
values with your accounts (9000##, 9100##, 9200##, etc…).

9000## Retained Earnings General Inflation effect, same 9800## (General infl. Account)
offsetting account
9100## Transfer of Profits General & specific effect, same 9800## (General infl. Account)
offsetting account 9810## (Specific infl. Account)
9200## Loss Compensation General inflation effect, different 9800## (General infl. Account) 9210##
offsetting account (Offsetting Account -General Infl.)
7. Post the following amounts to the G/L accounts created previously. Make sure that all
the postings are done with a posting date in the previous month.
SAP R/3 System → Accounting → Financial Accounting → General Ledger → Document
entry → G/L account posting (company code 6000)
G/L Account Posting Amount
9000## Retained Earnings Group ## MXN 15,000
9100## Transfer of Profits Group ## MXN 100,000
9200## Loss Compensation Group ## MXN 15,000
The offsetting account for these postings will be 113100.
8. Create a report variant INFL-## for company code CA## in the G/L account
adjustment program J_1AINFG. Include your accounts, the company code CA##, the
simulation indicator, and execute it for the previous month. Analyze the data from the
output list (revaluation details, revaluation history) and in case of errors analyze the
Error list and exceptions. Check the results of calculation.
SAP R/3 System → Accounting → Financial Accounting → General Ledger → Periodic
processing → Closing → Valuate → Inflation adjustment of G/L accounts
© SAP AG CA550 3-48

In this excersice, if you executed the report for the previous month,
you will note that the total revaluation for each account is 0.00, since
the inflation postings will not be considered for that month. This is
determined by the time base and exposure to inflation variant.
Execute again the inflation program for previous month (using the posting indicator). Then
execute again the inflation program but now for the current month in simulation mode.
Analyze the data from the output list and verify the results.
Now you know how to run the G/L account adjustment program using
different possibilities.
© SAP AG CA550 3-49

Unit: Inflation accounting in Financial Accounting
Topic: Open A/R & A/P Item Adjustment in Local and
Foreign Currencies
After conclusion of this exercise you are able to:
• Identify the purpose of the three reports for open item adjustments in
different currencies
• Execute the reports using variants
• Explain the results of the open item adjustments
needs to carry out inflation adjustments open A/R and A/P items.
In some cases receivables and payables items should be adjusted
periodically executing the corresponding programs.
1. Create a customer master record 100## in company code CA##.

SAP Easy access/Standard menu → Accounting → Financial accounting → Accounts
Receivable → Master records → Create
Customer 100##
Company Code
CA##
Account Group
CUST
Press Enter.
Complete the fields: Name, Search term, City, Postal Code, Country, Language,
Reconciliation account (140000).
Then press Save.
© SAP AG CA550 3-50

2. Create an invoice for your customer using the following data:
SAP Easy Access/standard menu → Accounting → Financial accounting →
Accounts Receivable → Document entry → Invoice
Document and Posting date Any day in the last month

Company Code
CA##
Currency
MXN
Posting Key
01
Account (your customer)
100##
Then press Enter. If you receive a warning message about the date, press Enter again.
Amount 1000
Tax Code A0
Posting Key
50
Account
800200
Then press Enter.
Amount 1000
Save the invoice.
3. Which inflation index is going to be used for this invoice? How does the system
determine this index?
GI##
The inflation index to be used is determined in the following order: First it is checked if an
index is specified for the processed open item. If this is not the case the inflation index
specified in the inflation key of the reconciliation account is used. If there is no index
specified on account level either, the general index defined on company code level is used.
Depending on your system configuration the field Revaluation Index

(at the line item level) may not appear. If you want to activate this
field in the configuration you have to change the field status group of
the reconciliation account or the field status definition of the posting
key.
© SAP AG CA550 3-51

4. Verify the account determination used in this exercise (reconciliation account 140000).
Accounting Global Settings → Inflation → Account Determination for Inflation Adjustment
5. Create a report variant INFL-## for the program J_1AINFD, with the following
parameters:
SAP Easy Access/standard menu → Accounting → Financial accounting →
Accounts Receivable → Periodic processing → Closing → Valuate → Inflation
adjustment of open receivables in local currency
Customer Account 100##

Company Code
CA##
The last day of the previous month
X
Valuation key date
Post adjustment documents Leave in blank

Posting date
Document type for debit posting
DA
Document type for credit posting
DA
Debit posting key
04
Credit posting key
14
Execute the report with your variant and analyze the list generated by the program.
Now you know how to run the A/R item adjustment in local currency.
The same procedure applies for the A/P item adjustment. The only
differences are the accounts used (vendors instead of customers) and the
revaluation program executed (J_1AINFK instead of J_1AINFD).
© SAP AG CA550 3-52

Inflation Accounting in Asset Accounting
Contents:
Overview of FI-AA customizing
Customizing inflation
Process for a sample asset
Special areas
 SAP AG 1999
© SAP AG CA550 4-1

1 Introduction
6 Conclusion
7 Appendix
 SAP AG 1999
© SAP AG CA550 4-2

Inflation Accounting in Asset Accounting:
Unit Objectives

able to:
Carry out customizing for inflation accounting
in Asset Accounting
Maintain the respective asset classes and
master
Create the inflation accounting adjustments in
Asset Accounting
 SAP AG 1999
© SAP AG CA550 4-3

Business Scenario
You are responsible in the project team for the

implementation of inflation accounting in
Asset Accounting.
You carry out periodic closing in Asset
Accounting including inflation adjustment and
depreciation.
 SAP AG 1999
© SAP AG CA550 4-4

Overview of Customizing FI-AA: Topic Objectives

able to:
Explain the general parameters of
customizing in Asset Accounting as a
precondition to carry out inflation
accounting for assets.
Understand the relationship between
asset accounting as such, and revaluation
as part of it.
 SAP AG 1999
© SAP AG CA550 4-5

Asset Accounting
Asset Accounting:
managing and supervising
fixed assets that represent a
single commodity in the balance sheet.
Land and
Low value similar rights
asset
Building
Machines
Software
 SAP AG 1999
Asset Accounting is a subledger of assets containing objects of a company that are not integrated as
part of sold products. Assets transfer their values over time using depreciation to those products used
in the business activities of the company in the long term.
Some transactions processed in this subledger are transferred in parallel to Financial Accounting and
affect defined G/L accounts depending on the business process involved.
Asset Accounting is the subledger to which different periodic processes apply, such as depreciation
and revaluation. Inflation accounting is one of these periodic (revaluation) processes.
© SAP AG CA550 4-6

Chart of Depreciation
2873,00
2856,00 Collection of depreciation
2683,00 Chart of
2846,00
depreciation
areas for different types of
valuation and account
determination
2768,00
Depreciation
area 01
Book
deprec.
2794,00 Depreciation
2794,00
area 02
Tax
deprec.
Country specific
2768,00
Depreciation Special
area 03 reserves
2683,00
Depreciation Cost-acc. Company code assigned to
area 20 deprec. only one chart of
2695,00
Depreciation
area 30
Group
deprec.
depreciation
2873,00
2683,00
 SAP AG 1999
2683,00
Different depreciation areas for defined legal or business purposes are composed in a chart of
depreciation and that chart contains all definitions relevant to process assets in a specific country.
To use those country-specific definitions for a company code, the latter should be assigned to that
chart of depreciation.
The respective chart of depreciation contains separate areas for each of those a special processing,
posting or reporting, is legally or by business purposes required.
© SAP AG CA550 4-7

Depreciation Areas
2873,00 Client
2856,00 Valuation rules for assets for a given purpose
2683,00
MX Chart of Dep.
2846,00
Depreciation areas
(such as book or tax depreciation, or depreciation
for cost accounting)
2768,00
01 Book dep. Book dep./US Chart of Dep. Depreciation area 01 is
the main depreciation
2794,00
10 Revaluation Neg ordinary dep. X
area.
2794,00
... Post APC/dep. X
2768,00
... Containing
APC/depreciation and
2683,00 posted to G/L
2695,00 Different currency
2873,00
Book dep./US Chart of Dep.
Company code 001 values must be shown
Currency USD in separate depreciation
2683,00 LVA amount 5000 areas.
2683,00
...
 SAP AG 1999
Each depreciation area is the collection of rules defining how different transactions for given legal
purpose (tax, fiscal or group) or business need should be treated.
For example, depreciation area 01 is used as the book (main) depreciation area, containing all rules
to generate a trade balance. Other areas are derived from this and values adjusted independently of
specific requirements.
Each depreciation area contains definitions as to how depreciation is posted to it, which currency is
managed, and so on.
Depreciation areas used for the handling of revaluation purposes, or as summary for revaluated and
historical values,are maintained accordingly.
Similar to Financial Accounting, the handling of parallel currency is possible. For example, you can
set two additional currencies to the company code’s local currency. In Asset Accounting, this is done
by creating respective parallel areas for each additional currency type. These areas are managed in
analogy to the original area and the indicator is set for them to not be posted to Financial
Accounting.
© SAP AG CA550 4-8

Depreciation Areas: Customizing
2873,00
2856,00 Chart of depreciation: 1MX
2683,00
Define
Define posting
posting to
2846,00
general
general ledger
ledger
to
Depr.area: 01 Book depreciation 03 Revaluation
2768,00
Real dep.area
2794,002794,00
Posting in G/L 1 Post assets in General Ledger realtime
2768,00
Management Acquisition and production costs ---
Management
of Positive net book values
of values
values
2683,00
Negative net book values ----
Entries
2695,00
Entries for
for derived
depreciation
derived
depreciation area
Name of depreciation area
2873,00
area 00 ...................................
00 ...................................
2683,00 00
00
...................................
...................................
 SAP AG 1999
2683,00
Sample for depreciation area that is configured to post in real-time to the general ledger.
As predefinition for the chart of depreciation and the respective depreciation area, it should be
defined how Asset Accounting transactions are to be reflected in Financial Accounting:
Should the processes in Asset Accounting be a subledger posted to the general ledger or are they
only for reporting purposes in Asset Accounting? This predefines the posting logic to Financials:
realtime, periodically or none.
Is the depreciation area only used for reporting purposes? Is it a mirror of another depreciation
area or a combination of more than one depreciation area ?
Is a posting to G/L accounts required? If yes, set up the posting obligation using customizing for
the company code assigned to that chart of depreciation.
Depreciation area 01 is the book depreciation area. It is mandatory a real posting area.
© SAP AG CA550 4-9

Asset Classes: Assign G/L Accounts
2873,00
2856,00
2683,00
Account
2846,00
determination
Account
2768,00
selection
Ch. of Accts.
2794,002794,00
Ch. of Accts.
Default accounts
expense
2768,00
retirement
...
Account interval
2683,00
2695,00
Select APC Accounts Account
determination
2873,00
2683,00
 SAP AG 1999
2683,00
Enter your chart of accounts and the chart of depreciation.
Choose the navigation level account selection. Select all G/L accounts that are APC balance sheet
accounts (APC: acquisition and production costs).
Choose the navigation level account determinations. The system gives you account
determinations that are identical to the chosen G/L APC accounts.
Add default accounts for the account determination:

⌧the corresponding value adjustment account
⌧accounts for expense of ordinary depreciation, asset retirement, loss/profit on disposal/sale of

fixed assets
In a later step you can change these accounts for each account determination.
© SAP AG CA550 4-10

Screen Layout of Depreciation Areas
2873,00
2856,00 Asset
Screen layout rule 1000 Depr. at main asset no. level
2683,00
Screen selection Maint. level Reference
Fork lift
2846,00 Req. Opt. Supp Disp Asset Main no. Sub. no.
class
Copy
2768,00 1 x (x) x x x
2794,002794,00
2
....
31
x
(x) x x
x x
2768,00
Asset class
Vehicles
Depr. area 03
2683,00
2695,00
:
Asset master/Rev. area 03
Screen layout
1000 2873,00 1 Depreciation key ?
2683,00 2 Useful life

......
?
 SAP AG 1999
2683,00 31 Revaluation key
The screen layout controls which fields and field groups:

Are displayed in the asset master record and asset depreciation areas
Appear as optional or required entry fields.
This allows you to reduce the number of master data fields to those that are specifically needed for
the asset class and to ensure that the required information is entered.
For the purposes of Inflation Accounting, maintain the field group 31(Revaluation key) as an
optional (or obligatory) entry.
© SAP AG CA550 4-11

Depreciation
2873,00
2856,00
2683,00 Reasons for depreciation:
2846,00 Years
§§
§§
§§
2768,00
2794,002794,00
2768,00
Ordinary
depreciation
2683,00
Special
depreciation
Unplanned
2695,00 depreciation
2873,00
2683,00 Determine depreciation areas
Assign G/L accounts
 SAP AG 1999
2683,00 Define unit-of-production depreciation
In each depreciation area, you can specify the type of depreciation and the transaction types you
want to manage. Therefore, you can manage different types of depreciation in parallel in one asset.
The system supports the following direct types of depreciation:
- Ordinary depreciation
- Special depreciation
- Unplanned depreciation
Ordinary depreciation is the planned reduction in asset value due to normal wear and tear.
Special depreciation represents depreciation that is solely based on tax regulations. This form of
depreciation usually allows for depreciating a percentage of the asset value. This percentage may be
staggered within a tax concession period, without taking the actual wear and tear on the asset into
consideration.
Unplanned depreciation is concerned with unusual circumstances, such as damage to the asset, that
leads to a permanent reduction in its value.
The unit-of-production depreciation allows you to take fluctuations in activity into account for the
depreciation calculation. You link the amount of the period depreciation directly to the output
quantity. For example, use a depreciation key that is dependent on the number of units.
© SAP AG CA550 4-12

Depreciation Keys and Calculation Methods
2873,00
Base method Declining-balance method Maximum amount method
2856,00
Depreciation type
Calculation method
Declining-balance
multiplication factor
Depreciation only until
a certain amount
2683,00
End of depreciation
2846,00
Upper and lower limits
for depreciation
percentage rates
2768,00
2794,002794,00 Multi-level methods Period control method
2768,00
Validity period
Base value
Period control for
Acquisitions
2683,00
Depreciation Retirements
2695,00
percentage rate Transfers
Post-acquisitions
Acq. follow. years
2873,00
2683,00
Depreciation key
 SAP AG 1999
2683,00
The depreciation key contains all the information that the system requires to calculate depreciation. It
represents a combination of calculation rules, used for depreciation types that are calculated
automatically.
Values and parameter, which are used by the system to calculate the depreciation amounts are
defined via calculation methods, they replace the internal calculation keys of the depreciation keys.
You assign calculation methods (base methods, declining-balance methods, multi-level methods, and
period control methods) to a depreciation key.
During release upgrade from Release 4.5 to 4.6, old tables are automatically migrated into the new
tables. To use the new depreciation keys instead of the old ones, you must activate their status.
Advantage of the calculation methods: country-specific requirements are available as chart of
depreciation specific methods, the quantity of internal calculation keys is optimized and you are able
to assign depreciation keys as default values for a specific company code or chart of depreciation.
For Inflation Accounting purposes:
Period control method: Set the indicator for Acquisitions in the following year to 06 (at the start
of the year).
Multi-level method: We recommend that you set the Base value for calculation to 01 (acquisition
and production costs) or 03 (replacement value).
© SAP AG CA550 4-13

Calculating Depreciation
2873,00
2856,00
Transaction: acquisition
Master record: book depreciation area Asset value date: Feb, 1st YYYY
2683,002846,00
Depreciation terms Asset value display
APC 10,000
2768,00
Depreciation key LINR Ord. depr. – 1,000
Straight-line, from rem. life to book value zero NBV 9,000
2794,00
Useful life
2794,00
10 years Calculation
methods
2768,00
2683,00 Display depreciation calculation
2695,00 Base value

Percentage rate
10,000
10%
2873,00 Depreciation periods 12/12
2683,00 Amount 1,000
 SAP AG 1999
2683,00
In the example above, the system calculates the annual depreciation from the depreciation key and
the useful life, both of which are stored in the asset master record.
The system calculates the depreciation start date according to the definition of the capitalization date
(depreciation start date) and the period method.
The asset explorer and the old asset value display show the posted values and the depreciation for
every transaction and each depreciation area. The planned values contain the values and the different
value adjustments for each area.
Note: Changing the Customizing of the depreciation keys does not automatically lead to a correction
of depreciation values that have already been calculated for individual assets. For that to occur, you
have to recalculate the depreciation explicitly.
However, if you change the depreciation settings in an asset, the system automatically recalculates
the values accordingly.
© SAP AG CA550 4-14

Transaction Type
2873,00
2856,00
Asset transaction types
2683,00
characteristic of specific business process
2846,00 Transaction type to be entered for
2768,00 each transaction that affects assets
2794,002794,00
Each transaction type assigned to a
transaction type group
2768,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
The transaction type defines which account of an account determination procedure a posting is made
to.
It determines:
Debit vs. credit transaction, handling of capitalization, deactivation, document type for postings
and posting to projects
Gain vs. loss, posting of revenues, handling of same year acquisitions, transaction type used for
offset postings.
You group transaction types in transaction type groups. These groups determine, for example, where
a transaction appears in the asset history sheet.
© SAP AG CA550 4-15

Transaction Types/Transaction Type Groups
2873,00 Transaction types

2856,00
100 110 210 200 34n 8nn
2683,00
Acquisition - Acquisition Retirement - Retirement - Transfer - Revaluation
purchase in-house
... sale scrapping asset under
2846,00
production construction
2768,00type groups
Transaction
2794,00 10 Acquisition 2n Retirement 3n Transfer ...8n Revaluation
2794,00
2768,00 Asset history sheet
2683,00
Retirement list
2695,00 Starting
balance
Acquis.
...
Retmt.
...
Transfer
...
Closing
balance
2873,00
210 Retmt.
Retmt. Sale
200 Retmt.
Retmt. Scrapping
201 Retmt.
Retmt. Act of God
2683,00
 SAP AG 1999
2683,00
You assign all transaction types to transaction type groups.
You must assign revaluation transaction types to groups 81 or 82.
© SAP AG CA550 4-16

Depreciation and Revaluation
2873,00 D FI
2856,00 Ordinary E
P
2683,00
depreciation Accounts
R
2846,00 E
C
2768,00
Special
depreciation I FI-
A
2794,00
AA
T
2794,00
manually I Individual assets
2768,00
planned
deprecia-
O
N
2683,00
tion
P
2695,00 R
O
C
O
2873,00
Cost center Order
Periodic
revaluation G
R
2683,00
Cost element
Interest
10% A
Index
2683,00
 SAP AG 1999
M
Every asset transaction in the R/3 System FI-AA component immediately causes a change of the
forecast depreciation. However, it does not immediately cause an update of the depreciation and
value adjustment accounts for the balance sheet and profit and loss statements. The planned
depreciation is posted to the general ledger when you run the periodic depreciation posting run. This
posting run uses a batch input session to post the planned depreciation for each posting level for each
individual asset as a lump sum amount.
Calculation and scheduling of depreciation, interest and revaluation are controlled automatically by
keys in the system, or you can control them manually using a special posting transaction. In both
cases, planned depreciation from Asset Accounting must be periodically posted to the corresponding
asset and expense accounts of the general ledger. You carry out this posting using a batch input
session, up from Release 4.5 also via direct input to FI. In addition to the various depreciation types,
this session also posts interest and revaluation.
When the system posts depreciation, collective documents are created for every G/L account. It does
not create separate documents for each asset.
© SAP AG CA550 4-17

Posting Depreciation to the General Ledger
2873,00 Company code 6000
2856,00
2683,00
Depreciation
Depreciation
area
area Depreciation area 03 Revaluation
2846,00 Period and method
2768,00 Monthly posting (for example)
2794,002794,00
...................................
2768,00 Other posting settings
2683,00 Post interest
Post
Post
2695,00
revaluation
revaluation
Post revaluation
2873,00 ...............
2683,00
 SAP AG 1999
2683,00
To post the inflation adjustments to the general ledger, select Post revaluation in the respective
depreciation area.
Implementation Guide → Financial Accounting → Asset Accounting → Integration with the
General Ledger → Post Depreciation to the General Ledger → Specify Intervals and Posting
Rules.
© SAP AG CA550 4-18

Overview of Customizing FI-AA: Topic Summary

customizing in Asset Accounting as a
precondition to carry out inflation
accounting for assets.
Understand the relationship between
asset accounting as such, and revaluation
as part of it.
 SAP AG 1999
© SAP AG CA550 4-19

Customizing inflation: Topic Objectives

able to:
Understand the basic concept of inflation
handling in FI-AA
Carry out basic customizing in Asset
Accounting for inflation
Maintain respective assets and asset
classes
Explain areas of customizing for inflation
purposes in Asset Accounting
 SAP AG 1999
© SAP AG CA550 4-20

Customizing Inflation: Major Requirements
2873,00
2856,00 Revaluation intervals
2683,002846,00
More than once, flexible time spans
Indexing
2768,00 Inflation index values published for

different periods
2794,002794,00
per quarter, per month, per week
Provisional and definitive adjustment
2768,00 calculation
2683,00 Flexible input according to country-

specific requirements
2695,00 Calculation of revaluation
2873,00
2683,00
 SAP AG 1999
2683,00
You can adjust your assets for inflation at various intervals, depending on your country’s legal
requirements.
© SAP AG CA550 4-21

Revaluation Without Inflation Accounting
2873,00
2856,00
2683,002846,00
Re
User One
2768,00
va
n
exit time
lu
io
at
2794,00
at
io
2794,00 ul
n
lc
in
Ca
2768,00
ter
va
Usage of index 2683,00
l
2695,00
2873,00 Not
imple-
2683,00 mented
 SAP AG 1999
2683,00
Up to Release 3.0F, there is only a user exit to execute manual revaluations. With this exit
(ARVL0001), you program your own revaluation rules. You assign this SAP enhancement project to
a newly defined user modification project (transaction CMOD). This method does not support the
use of indexes or time intervals.
© SAP AG CA550 4-22

Inflation Accounting in Asset Accounting
2873,00
2856,00
Protocol
output Execution
Automat.
2683,00
log Multiple
by
2846,00 program times
Re
2768,00
Generate
Variable
va
postings User
n
base defined
lu
io
2794,00 values
at
at
2794,00
io
ul
Customiz-
n
2768,00 lc
in
Simulate Ca able
t er
2683,00
va
2695,00
l
Usage of index
2873,00
Index per Flexible Locking
Simple/
2683,00
Composite
time base input index
indexes
 SAP AG 1999
2683,00
As of Release 4.0, you use the standard Inflation Accounting solution.
You handle inflation adjustments in a separate depreciation area. You define time limitations, base
depreciation area for the calculation of revaluation, and so on in FI-AA Customizing.
© SAP AG CA550 4-23

Customizing Inflation FI-AA
2873,00
FI-AA inflation specific
tioonn
e ppr
r eecciiaati aass R
Reevvaal
e
tt ooff dd nn aarree
2856,00 rr o luuaattiioo
h
haa a t
t i
i o nn kkeey
C
C reecciia PPeerriiood y
DDeeppr d ccoonn
2683,002846,00
a n
ttiioon
m
m
reess
eeaassuur
m
onn
iinnaattiio
E
Exxcclluu
A
ddeedd t
Asssseet
trraannssa
ttrrooll m
accttiioon
meetthho
odd
n ttyyppe
r m
2768,00
a l
l u
u a t
ddeet e
e r t c
c l ess
Reevva
R ouunntt rreevvaal laasss
luuaattiioo s ddeeffaauulltt
AAcccco nn kkeey
2
y
eess
nn ttyypp
2794,00
c
saac
TTrraanns
t
t i
ioo
2768,00 FI-AA specific
00 2683,00 Time
Time base
base variant
variant
2695,00 Inflation
Inflation index
index
Posting
Posting variant
variant
2873,00 Inflation
Inflation method
method
2683,00
Basic
s of i
nflati
2683,00
on
 SAP AG 1999
As with Asset Accounting, you maintain depreciation areas, transaction types, and account
determination procedures. You must mark the depreciation areas as being specifically for revaluation
purposes.
The most important parameter is the revaluation key, which determines how the adjustments are
calculated.
Of the basic Inflation Accounting settings, the FI-AA inflation solution uses the inflation method, the
time base variant, the posting variant, and the inflation index.
© SAP AG CA550 4-24

Chart of Depreciation
2873,00
2856,00 Book depreciation area -
2683,00 Chart of
2846,00
depreciation
historical values
Revaluation area -
2768,00
Depreciation Book
area 01 deprec. keep revaluation values separately
2794,00 Sum area - if required, contains

Depreciation
Revaluation
area 03
2794,00
Depreciation Book depr.
totals of book depreciation and
revaluation values
2768,00
area 04 + revaluation
2683,00
area 32 Group curr. Parallel areas -
In case of parallel currencies, per
2695,00
area 33 Hard curr. real posted to FI depreciation area
and per parallel currency respective
2873,00
Depreciation Revaluation
area 34 Group curr.
parallel depreciation area needed
2683,00
Depreciation Revaluation
area 35 Hard curr.
 SAP AG 1999
2683,00
For the purposes of revaluation, you define special depreciation areas. For example:
A revaluation area for the inflation adjustments: when you adjust your assets for inflation (based
on, for example, the acquisition value as per the book depreciation area), the adjustment values are
posted here and also to Financial Accounting. This area does not contain acquisition and
production costs and is maintained as a direct posting area to Financial Accounting.
If you need to report the asset acquisition costs adjusted for inflation, you create another
depreciation area. This area calculates the adjusted values using those in the book area and the
revaluation area.
For each parallel currency that you use, create a copy of each depreciation area that posts to FI.
Customize the parallel currency areas in the same way as the original depreciation area, with the
exception that you must mark them as not to be posted to Financial Accounting.
© SAP AG CA550 4-25

Depreciation Areas: Real Depreciation Areas
2873,00
2683,00
Define
Define posting
posting to
2846,00
general
general ledger
ledger
to
Depr.area: 01 Book depreciation 03 Revaluation
2768,00
Real dep.area
2794,002794,00
Posting in G/L 1: Post assets to general ledger in real-time
2768,00
Management Acquisition and production costs ---
Management
of Positive net book values
of values
values
2683,00
Negative net book values ----
Entries
2695,00
Entries for
for derived
depreciation
derived
depreciation area
2873,00
area 00 ...................................
00 ...................................
2683,00 00
00
...................................
...................................
 SAP AG 1999
2683,00
The above slide shows two sample depreciation areas that are configured to post to the general
ledger in real-time.
Depreciation area 01 is the book depreciation area. It posts to the general ledger in real-time by
default and cannot be changed. You configure all revaluation areas as shown in the example.
© SAP AG CA550 4-26

Depreciation Areas: Derived Areas
2873,00
2683,00
Define
Define posting
posting to
2846,00
general
general ledger
ledger
to
Depr.area : 04 Book depreciation + Revaluation
2768,00
Real dep.area
2794,002794,00
Posting in G/L
Acquisition and production costs

No values are posted in General Ledger
Management
Management
of
of values
values 2768,00 Positive net book values
2683,00
Negative net book values
2695,00 Name of depreciation area Area sign Proportion
2873,00
Entries
Entries for
for derived
derived
depreciation
depreciation area
area 01 Book depreciation + 1
2683,00 03
00
Revaluation
...................................
+ 1
 SAP AG 1999
2683,00 00 ...................................
The above slide shows a sample derived depreciation area.

The values in this area are derived from depreciation areas 01 (book depreciation) and 03
(revaluation).
No values are posted from this area to the general ledger.
© SAP AG CA550 4-27

Parallel Currency Areas
2873,00
2683,00
Define
Define posting
posting to
2846,00
general
general ledger
ledger
to
Depr. area : 32 Book depreciation in group currency
2768,00
Real dep. area
2794,00
Posting to G/L No values posted to the General Ledger
2794,00 Acquisition and production costs
2768,00
Management
Management Positive net book values
of
of values
values
2683,00
Negative net book values ---
Entries 2695,00
Entries for
for derived
Difference
2873,00
derived 00 ................................... from original
depreciation
depreciation area
area 00 ................................... area 01
2683,00
00 ...................................
00 ...................................
 SAP AG 1999
2683,00
For each parallel currency that you use, create a copy of each depreciation area that posts to FI.
Customize the parallel currency areas in the same way as the original depreciation area, with the
exception that you must mark them as not to be posted to Financial Accounting.
Customize parallel currency areas as follows:
Enter the currency and currency type as defined in Financial Accounting.
The depreciation area must read the depreciation settings and acquisition values from the original
book depreciation area.
© SAP AG CA550 4-28

Customizing of Areas for Revaluation
2873,00
2856,00 Areas
Areas with
with APC
of
APC revaluation
revaluation and
of accumulated
and revaluation
revaluation
accumulated depreciation
2683,00
depreciation
2846,00
Chart
Chart of
of depreciation
depreciation
2768,00
Depreciation
Depreciation area
area
2794,00
Chart
Chart of
of accounts
accounts Revaluation
Revaluation measure
measure
2794,00
2768,00
Account 2683,00
Account determination
determination
2695,00 Transaction
Transaction types
types
2873,00
2683,00
 SAP AG 1999
2683,00
Select the indicators for APC revaluation and depreciation revaluation.
You need one revaluation measure per revaluation area.
Create special transaction types for revaluation.
Enter the accounts for inflation adjustments in the account determination procedures.
© SAP AG CA550 4-29

Areas relevant for revaluation
2873,00
2856,00
Revaluation
Revaluation Revaluation
Revaluation of
of Revaluation
Revaluation of
of
2683,00
01
area
area
2846,00
APC
APC depr.
depr.
03 2768,00
2794,00
04
2794,00
2768,00
.........................
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
For each revaluation area, select the indicators for APC revaluation and/or revaluation of
accumulated depreciation.
© SAP AG CA550 4-30

Revaluation Measures
2873,00
2856,00 11 Revaluation
Revaluation measure
measure 01
2683,002846,00 Revaluation date: 12/31/XXXX
2768,00
2794,002794,00
Revaluation area: 03
2768,00Base area : 01
2683,00
2695,00 Also updated in: XX
2873,00
2683,00
 SAP AG 1999
2683,00
Create one revaluation measure per revaluation area.
Set the base area to 01 (book depreciation area).
The revaluation measure determines how the system calculates gains and losses when an asset is
retired.
© SAP AG CA550 4-31

Account Determination
2873,00
2856,00
Chart of accounts
2683,002846,00
2768,00
Area 03 (revaluation) Revaluation
Revaluation APC
APC
2794,002794,00
Offsetting
Offsetting account
account revaluation
revaluation APC
APC
2768,00
2683,00
2695,00
2873,00
Area 03 (revaluation) Revaluation
Revaluation accumulated
accumulated ordinary
ordinary depr.
depr.
2683,00 Offsetting
Offsetting account
account rev.
rev. accumulated
accumulated ord.
ord. depr.
depr.
 SAP AG 1999
2683,00
In every revaluation area, enter the following accounts for inflation adjustments in the account
determination procedures:
Revaluation of acquisition and production costs
Revaluation of accumulated depreciation
For each of these accounts, enter an offsetting account as well.
© SAP AG CA550 4-32

Transaction Types for Inflation Accounting
2873,00
2856,00
Transaction type Debit/Credit Trans. type group Company code data
2683,00
850
851
2846,00
debit
debit
82
81
Debit, revaluation current year’s acquisit.
Debit, revaluation previous year’s acquisit.
855
2768,00 credit 82 Credit, revaluation current year’s acquisit.
2794,00
856 credit 81 Credit, revaluation previous year’s acquisit.
2794,00
870 debit 82 Debit, adjustm. transfer/retirement curr. year
2768,00
872 credit 82 Credit, adjustm. transfer/retirement curr. year
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
Create transaction types in transaction type groups 81 and 82 only.
In Release 4.0 only, when you create a transaction type for revaluation of the previous year’s
acquisitions, its number should directly follow on from the transaction type for the revaluation of the
current year's acquisitions. For this reason, the transaction type code must consists only of numbers.
© SAP AG CA550 4-33

Limit Transaction Types to Depreciation Areas
2873,00
2856,00
Chart of depreciation
2683,00 2846,00
Transaction type selection
2768,00 Depreciation area
2794,00 2794,00
2768,00
2683,00
10 Display for selection
2695,00 11 Display for selection
2873,00
2683,00 XX Display for selection
 SAP AG 1999
2683,00
Customize the transaction types for revaluation so that they are restricted to the revaluation areas and
the revaluation areas in parallel currencies.
© SAP AG CA550 4-34

General Customizing Inflation
2873,00
2856,00 Time base variant
2683,002846,00
Posting variant
2768,00
Inflation method
Inflation index
2794,002794,00
2768,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
The system calculates inflation adjustments using two dates: the original date (for example, the
posting/capitalization date of the respective transaction or the last inflation adjustment date of the
object) and the final date, for which the adjustment should be carried out.
These two dates are used in time base and exposure to inflation and the rule to get from a given
original date the final date - is the time base and exposure to inflation variant (referred to as TBE).
In Inflation Accounting FI-AA, you also use the TBE for period control methods.
The posting variant used in Inflation Accounting FI-AA determines the possible execution date for
the revaluation program. It also determines which dates in the TBE variant you can select the posting
indicator for.
You customize the inflation method at company code level.
© SAP AG CA550 4-35

Time Base Variants and Posting Variants
Time base variant

Rule used to convert the dates given in an application
(original dates) to the dates used in the index
calculation (final dates).
Posting variant
Defines the possible posting dates for adjustment
postings.
 SAP AG 1999
You define the posting dates for FI-AA in the posting variant.
At present, no other applications use the posting variant, except the MM Inflation Accounting part of
the country-specific functionality for Chile (available as of Release 4.6B, see enclosure to this
course).
© SAP AG CA550 4-36

Time Base Variant/Posting Variant (Continued)
2873,00 Quarterly posting

2856,00
2683,00
Time
Time base
2846,00
base
variant
variant
Original date
03/17/XX
Time base
03/31/XX
Post Exposure to inflation
03/31/XX
2768,00 05/24/XX 05/31/XX 05/31/XX
2794,002794,00
06/01/XX 06/30/XX 06/30/XX
2768,00
Posting variant
2683
Values
2695,00 Post. year Post. month Post. date
2873,00
XXXX 03 31
268,00
XXXX 06 30
 SAP AG 1999
2683,00
XXXX 09 30
Time base and exposure to inflation is responsible for calculation.

The posting variant that is assigned to the TBE variant determines which dates in the TBE variant
you can select the posting indicator for.
The example shows two documents, posted on 17 March and 24 June.
For first line item the original date is translated using the time base and exposure to inflation
variant to a final date, 3/31/XX. This date’s Post indicator is selected, so the system is able to
carry out the revaluation and make the appropriate postings.
For second item, the original date is translated to a final date, 05/31/XX. The program cannot be
executed because the date is missing from the posting variant. The next time you run the program,
at the end of June, the program takes the May entry into account when calculating the inflation
adjustments, even though the Post indicator has not been selected.
© SAP AG CA550 4-37

Inflation Method
2873,00
2683,00
2768,00AA
FI-AA active ?
global settings AuC TA takeover
2794,00
Revaluation depreciation
Revaluation transaction type
2794,00
Inflation method
Posting variant
2768,00
Revaluation start date
2683,00
2695,00
FI
MM 2873,00
2683,00
 SAP AG 1999
2683,00
You customize the inflation method for FI-AA inflation at company code level.
To activate the inflation functions for Asset Accounting, set the FI-AA active indicator.
The parameters AuC TA takeover and revaluation depreciation are optional. This means the
following:
AuC TA takeover – Allows the asset under construction transfer adjustment for line item
settlement.
Revaluation depreciation – The depreciation of the revaluation is kept separately from the
revaluation of the depreciation.
The transaction types are used only for revaluation purposes.
Here, the posting variant used in Inflation Accounting FI-AA determines the possible execution date
for the revaluation program.
You maintain the revaluation start date as the last revaluation date. If it is not set, the system checks
the old asset data takeover date of Asset Accounting and the last revaluation date of each asset
master. For example, if the program is to be run for the first time on 01/31/1999, you set the
revaluation start date to 12/31/1998.
© SAP AG CA550 4-38

Inflation Method: Revaluation Depreciation
2873,00
2856,00
If this indicator is set, the revaluation of the current
year’s depreciation is stored separately.
2683,002846,00
2768,00
Values for revaluation of the depreciation and the
depreciation of revaluation are posted to different
2794,00
accounts.
2794,00
2768,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
The feature to post revaluation of accumulated depreciation and the depreciation of revaluation on
separate accounts is legally required in some countries, such as Mexico.
© SAP AG CA550 4-39

FI-AA-Specific Inflation Customizing
2873,00
2856,00 Period control methods
2683,002846,00
2768,00
Revaluation keys
2794,002794,00
2768,00
2683,00
Revaluation
Revaluation areas
areas
2695,00 Excluded from revaluation

transaction types
2873,00
2683,00
 SAP AG 1999
2683,00
Period control method contains time bases and exposure to inflation variants for different types of
transactions (acquisitions, retirements, transfers and acquisitions in following years). It also
determines whether a transaction is covered by the program, depending on the execution date. The
period control method is assigned to a revaluation key.
The most important parameter when calculating the inflation adjustments is the revaluation key.
You also have to make additional settings for the revaluation areas.
You can exclude individual transaction types from revaluation, for example, for manual revaluation
postings.
© SAP AG CA550 4-40

Period Control Method: Transaction Type Groups
2873,00 Period
Period control
control method
T B E
2856,00
2683,002846,00
Acquisition
Acquisition Retirement
Retirement Transfer
Transfer
Acquisition
Acquisition
following
following year
2768,00
year
2794,00 10 - 19
2794,00
20
25
30
31
273168,00
35
37
26
29
32 40
2683,00
33
38
34
2695,00
90 81
52 - 74 36 91 82
38
2873,00
92 83
80 39
2683,00
Transaction type groups
 SAP AG 1999
2683,00
The inflation program assigns a time base and exposure variant to the asset transactions according to
the transaction type group.
To manage those different time bases for different types of transactions, the period control method
contains four time bases and exposure to inflation variants.
Every transaction type is assigned to one of the four TBE variants, depending on which transaction
type group they belong to.
© SAP AG CA550 4-41

Example: Transfers
2873,00
2856,00 Business case: Transfer
Transfer posted
posted 03/04/XXXX.
03/04/XXXX. Revaluation
Revaluation on
on 03/31/XXXX?
03/31/XXXX?
2683,002846,00
TBE-variant
TBE-variant 01
01 Shift to 03/31/XXXX
2768,00
2794,00 TBE-variant
TBE-variant 02
2794,00
02 Shift to 02/28/XXXX
2768,00
2683,00
Period
Period control
control Aquisition
Aquisition Retirement
Retirement Transfer
Transfer Foll.acqu.
Foll.acqu.
2695,00
A1 01 01 01 01 NO
A2
2873,00 01 01 02 01 YES
2683,00
 SAP AG 1999
2683,00
The example shows how the inflation program handles a transfer transaction where two period
control methods are defined.
With control method A1, the program ignores the transaction. With method A2, the transaction is
processed: you can have the system handle transaction types from different transaction type groups
differently.
© SAP AG CA550 4-42

Revaluation Areas
2873,00
2856,00
ChDep Ar. Ar. Type Target ar. No zero
2683,00
1MX
2846,00
Area 03 Area 01 1 (Book reval. area)
1MX
2768,00 Area 04 Area 01 2 (Book sum area)
2794,00
1MX
2794,00
Area XX Area CC 1 (Book reval. area) YY
2768,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
In the first column, enter the revaluation area.
In the second column, enter the the book depreciation area.
In the Type column, enter:
1 (Book revaluation area)
Use this for revaluation areas (real areas).
2 (Book sum area)
Use this for derived revaluation areas.
The system ignores any other entries.
In the Target ar column, enter a revaluation area that you want to post any differences between
automatic adjustments and manual postings to.
If you select No zero, the system does not post to the target area if the manual posting is zero.
© SAP AG CA550 4-43

Revaluation Key
2873,00 Index
Index
2856,00
2683,002846,00
CoCode Rev.Key Description Base Index Method Time B RvbaseAPC Rvbase Dep.
2768,00
6000 0001 Rev.0001 4 GI00 RE RE 03 04
2794,00
6000 0002 Rev.0002 4 SI00 TR TR 03 04
2794,00
2768,00
2683,00
2695,00 Time
Time
base
base
2873,00
Base
Base
Base
Base Period
Period values
values
area control
2683,00
area control
 SAP AG 1999
2683,00
The revaluation key controls base area for calculation, the index for the revaluation program, period
control method, time base and exposure to inflation variant and base values for revaluation of APC
and depreciation. It is assigned to the asset revaluation areas.
Base area is the area from where the value for the revaluation is derived. For instance, this could be
the sum area (containing both book depreciation and revaluation values) or the book depreciation
area.
The inflation index contains the inflation rates.
Period control method contains the TBEs for the transactions.
The TBE variant in the revaluation key is applied to the index.
The base values determines on which basis the APC and accumulated depreciation are revaluated. In
the example, the base value for APC is the acquisition value (01) and the base value for accumulated
depreciation is the accumulated ordinary depreciation (01).
© SAP AG CA550 4-44

Asset Class/Asset Master
2873,00
2856,00
Asset
Asset class
2683,00
class
2846,00
Proposal
Chart
Chart of
of depreciation
depreciation
Revaluation
2768,00Depreciation
Depreciation area
area key
2794,002794,00
2768,00
Object
specific
2683,00
Asset
Asset master
master
definition
2695,00 Depreciation
Depreciation area
area
2873,00
2683,00
 SAP AG 1999
2683,00
You can enter a number of default revaluation keys in each asset class, with different defaults for
each combination of chart of depreciation and depreciation area.
The asset master contains a revaluation key, an inflation index, and the last revaluation date of
manual/automatic revaluation. The inflation index and last revaluation date are updated via the
revaluation program.
Business case: If you need to exclude assets from revaluation, maintain the assets with a revaluation
key whose index contains zero values.
© SAP AG CA550 4-45

Transaction Type Handling
2873,00
2856,00 Sample business process:
2683,00
Revaluation of transaction types
excluded from revaluation
2846,00
A manual transaction type is used
and manual revaluation is posted.
2768,00 It is not desired to have those
2794,00
revaluations adjusted in the
current fiscal period.
2794,00
2768,00 2768,00
Ignore transactions made with
2683,00
manual transaction types in
current revaluation period
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
For additional settings for revaluation transaction types, in Customizing for Financial Accounting,
choose Asset Accounting → Special Valuation → Revaluation of Fixed Assets → Revaluation for the
Balance Sheet → Inflation → Maintain Additional Settings for Inflation Transaction Types.
On this screen, there are two checkboxes. The most important is Excl. TT (Exclude transaction type),
which makes the revaluation program ignore transactions of this type.
© SAP AG CA550 4-46

Customizing inflation: Topic Summary

Understand the basic concept of inflation
handling in FI-AA
Carry out basic customizing in Asset
Accounting for inflation
Maintain respective assets and asset
classes
Explain areas of customizing for inflation
purposes in Asset Accounting
 SAP AG 1999
© SAP AG CA550 4-47

Process for a Sample Asset: Topic Objective

able to:
Customize asset masters
Adjust your assets for inflation and
update the general ledger
 SAP AG 1999
© SAP AG CA550 4-48

Automatic Revaluation
2873,00
1.2856,00
Revaluation
2683,00 2846,00
Calculates
Calculates revaluation
revaluation
2768,00
(transaction-based)
(transaction-based)
2794,00 2794,00
Batch
Batch input:
updates
input:
updates asset
asset values
values
2768,00
2683,00
2. Depreciation
2695,00
2873,00
2683,00
FI:
FI: G/L
G/L account
account posting
posting
 SAP AG 1999
2683,00
There are two steps in the revaluation process: the revaluation program and the depreciation
program. The revaluation program generates a batch input session with the adjustment values. The
batch input session posts the transactions in the asset subledger and updates the asset masters. The
depreciation program then posts the depreciation and revaluation amounts to the general ledger.
You must run the depreciation program one last time before year-end closing to ensure that the
general ledger is up to date.
For revaluation, you use either program J_1AA001, which is included in the periodic processing
menu in asset accounting, or program J_1AAP01, which can process assets in multiple processes in
parallel. The latter is useful when working with large volumes of data. As well as running parallel
processes, it can also run on different application servers.
© SAP AG CA550 4-49

Select Options of the Revaluation Programs
2873,00
2856,00 J_1AA001
J_1AA001 J_1AAP01
J_1AAP01
2683,002846,00
•Simulation
• Number of transactions
2768,00 (per batch input session)
2794,002794,00
• Log:
2768,00
• Extended output
2683,00 • Standard output
2695,00 • Errors only
2873,00 • Select asset number ranges
2683,00
 SAP AG 1999
2683,00
All processed runs are logged in table J_1APROLOG. You can initialize this table before production
startup (report J_1AALG1).
© SAP AG CA550 4-50

Manual Revaluation
2873,00
2856,00
Sample data: - Asset value date : 07/15/98
- Acquisition value: 1,000
2683,002846,00
- Revaluation APC: 150
2768,00
Manual revaluation
APC
2794,00
01 APC area
2794,00
1,000
10 Revaluation area 150
2768,00
Revaluation program Asset
01 APC 1,000
Index
2683,00
Revaluation date:
10%
07/31/1998
10 Revaluation 150 (100)
2695,00
Calculated Revaluation APC 100 11 Adjustment (50)
2873,00
Adjustment
a) Without special customizing: No adjust-
2683,00
ment by the revaluation program
b) Target area defined (11): 50 ⌫area 11
 SAP AG 1999
2683,00
For some business processes, for example, revaluation adjustments and APC adjustments, you need
to revaluate assets manually.
Without special customizing, manually revaluated amounts are not adjusted. If you need to post the
difference between manual and automatic revaluation separately, you need to define a target area.
Check the Customizing recommendations given for the revaluation areas and the exclusion of
transaction types.
© SAP AG CA550 4-51

Process for a Sample Asset
2873,00 Asset
Asset class,
class, depreciation
depreciation areas,
areas,
2856,00
Create
Create asset
asset depreciation
depreciation and
and revaluation
revaluation logic
logic
2683,00
Post
Post acquisition
acquisition
2846,00
Display
Display values
values
APC
APC value
value == 1,000
APC
APC value
1,000
value == 1,000,
1,000, depreciation/revaluation
depreciation/revaluation == 00
2768,00
Create
Create variants
variants of
of
2794,00
J_1AA001/J_1AAP01/RABUCH00
J_1AA001/J_1AAP01/RABUCH00
2794,00 Revaluate
Revaluate asset
asset Index
Index 10%
10% ,, Revaluation
Revaluation APC
APC == 100
100
2768,00Create
Create posting/revaluation
posting/revaluation values
values Revaluation
Revaluation APC
APC == 100
100
2683,00
Execute
Execute depreciation
depreciation Straight
Straight line
line 10
10 years
2695,00
years
Update asset master Update

Update G/L
G/L values
values
revaluation data
2873,00
2683,00 Update G/L accounts
APC, depreciation,
 SAP AG 1999
2683,00 revaluation
This slide shows the typical business processes, such as creating an asset or posting an acquisition,
and periodic processes such as depreciation and revaluation program run.
© SAP AG CA550 4-52

Process for a sample asset: Topic Summary

Customize asset masters
Adjust your assets for inflation and
update the general ledger
 SAP AG 1999
© SAP AG CA550 4-53

Special Areas: Topic Objectives

able to:
Handle special areas, such as
Old data takeover
Assets under construction
Investment measures
 SAP AG 1999
© SAP AG CA550 4-54

Old Data Takeover
2873,00
2856,00
Revaluation program needs:
2683,00
Line items of all adjustment posting within the current year
2846,00
2768,00
2794,002794,00
Transaction
Transaction
AB01
AB01 or
or ABAW
ABAW
2768,00
2683,00
2695,00
Data takeover with last posting date
2873,00
of previous fiscal period recommended
2683,00
 SAP AG 1999
2683,00
It is highly recommended that you migrate legacy data after year-end closing and not within the
course of a year.
If you have to migrate during the course of a year, post all the transactions from the current year
manually.
© SAP AG CA550 4-55

Assets Under Construction
2873,00 Settlement
2856,00 Settlement
2683,00
2846,00 Asset
Asset
AuC
AuC
2768,00
2794,00
2794,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
Assets under construction (AuC) are revaluated in the same way as other assets. Revaluation can be
carried out by the program or manually.
To exclude a specific asset, you assign a revaluation key that does not trigger revaluation.
The system allows you to settle revaluation values of AuCs.
To transfer line item information, set the AuC Customizing parameter in the inflation method.
Investment measures are settled to assets under construction. Afterwards the asset is revaluated and
later settled as described above.
© SAP AG CA550 4-56

Special areas: Topic Summary

Handle special areas, such as
Old data takeover
Assets under construction
Investment measures
 SAP AG 1999
© SAP AG CA550 4-57

Summary

Carry out Customizing for inflation
accounting in Asset Accounting
Maintain asset classes and asset masters
Execute the inflation accounting program
in Asset Accounting
 SAP AG 1999
© SAP AG CA550 4-58

Exercises
Unit: Inflation Accounting in Asset Accounting

Topic: Customizing Inflation Accounting

Apply the concept of customizing of asset accounting to inflation
accounting
Carry out basics of customizing for asset accounting in inflation
Maintain respective master data
For periodic closing in asset accounting with usage of inflation the
customizing is one of the preconditions. Customizing activities should be
carried out during the implementation project and ongoing during the
usage of the system.
For all exercises in the unit Asset Accounting you work with your
own company code CA##. All processes are carried out in that
company code. This technique is used because of locking logic for
assets and programs within one company code.
1. Define two period control methods:
1-1 A regular one, named RE##, with TBE-variant ## for all transactions. All
transaction dates are shifted to the end of the period.
1-2 A second one, named TR##, with TBE-variant TR, which permits adjustments
moved one month from the origin month of the transaction.
2. Create two revaluation keys:
2-1 For regular monthly adjustments - RK##, with following settings:

Entry field Content
Description Regular period control group ##
Base area 04
Index GI##
Method RE##
Time Base ##
Rvbase APC 03
Rvbase Dep. 04
2-2 For moved one month adjustments - TR##, please copy regular monthly
adjustment revaluation key RK## and adapt Method to TR## and Time base to
TR.
© SAP AG CA550 4-59

3. Create two assets in your company code CA##:
3-1 First, new acquired asset, Machine New 1 group ##, with copy to existing asset
2000 of company code 6000. The depreciation key in areas 01 and 03 should be
LINK with useful life of 5 years. Please maintain for the revaluation area 03 the
revaluation data: revaluation key RK##.
Write down asset number:_______________________________________
3-2 Second, old acquisition (transaction AS91), Machine Old group ## with copy to
existing asset 2006 of company code 6000. Enter 01/01/1998 in the field
capitalization date. The depreciation key in areas 01 and 03 should be LINK with
a useful life of 10 years. Please maintain for the revaluation area 03 the
revaluation data: revaluation key RK## and last revaluation date 12/31/1998. For
the takeover values enter 100.000 as APC in area 01 and 10.000 as ordinary
depreciation. For area 03 enter 20.000 for the revaluation, 2000 for ordinary
depreciation and 500 in the field Rev. O. Dep.
Note: the manual input of last revaluation date might effect

revaluation calculation. The change of the revaluation date might
effect a doublicated calculation or an exclusion from calculation.
First revaluation date should be entered in the inflation method of

company code, if the old data takeover was done during the course
of fiscal year. If there is no entry in the field, the revaluation
program determines the revaluation start from the old data takeover
date or from revaluation date of the asset.
Now you know and have checked all outstanding customizing and
master data entries for the revaluation run in FI-AA.
© SAP AG CA550 4-60

Topic: Process for a Sample Asset

Use the periodic process of revaluation and depreciation for the
purposes of inflation
Create FI-AA update via inflation accounting program and
subsequently postings via depreciation program
Asset accounting department will carry out inflation adjustments together
with depreciation as monthly closing process
Please carry out a sample process for one asset, consisting of: at one hand a real-time,
every day transaction (acquisition) and on the other hand the periodic processes simulation
and execution of the revaluation program, batch input of revaluation run and simulation
and execution of the depreciation program for that specific asset.
1. Please post an acquisition with automatic offsetting entry to Machine New 1 group ##
(asset from exercise 3-1) with following entry data: posting date = asset value date: 30-
01-XX, acquisition value 100.000.
Display current net book values of the asset. Write down:

Area 01:
Acquisition value: ___________________
Depreciation value: ___________________
Area 03:
Revaluation value: ___________________
Revaluation ord.dep.: ___________________
Transactions posted(areas 01, 03): ___________________
© SAP AG CA550 4-61

2. Execution of the inflation adjustment program
2-1 Carry out revaluation run in simulation mode saving your variant GR## selecting
on the selection screen :
Company code: CA##

Asset main number: Asset No. you created
Fiscal year: Current year
Asset value date: 02/28/1999
Test run: Set
Extended output: Set
2-2 Now carry out real run in forground changing variant GR## from above with
following changed parameters:
Test run: Not set

Session name: G##__02/1999
2-3 Afterwards carry out batch input of your session G##__02/1999 with the
execution option: Display errors only.
2-4 Now check the asset values:

Area 01:
Area 03:
© SAP AG CA550 4-62

3. After finishing those steps you execute the depreciation program for the whole
company code CA##.
Productive mode:
Company code CA##
Fiscal year current year
Posting period first 01 (January) then 02 (February)
Planned posting run select
List assets select
Test run first select / then deselect
Direct FI posting select
The program is executed in background.
The job will be displayed and passed to the spool so you can check it the result in the
output controller.
3-1 Check how much depreciation and revaluation was posted for your asset

Area 01:
Area 03:
Transactions posted (areas 01, 03): ___________________
The revaluation program updates the values in Asset Accounting, the

depreciation program the values in Financial Accounting, G/L-postings
are carried out.
In case of using parallel currencies you must carry out the depreciation
run with direct FI posting.
You understood the recommended logic of periodic processing related to
the Inflation Accounting process in Asset Accounting:
Execution of revaluation program ->
Processing batch input session ->
Execution of depreciation program ->
Processing of batch input session or Direct FI posting
© SAP AG CA550 4-63

Solutions

Topic: Customizing inflation accounting

Apply the concept of customizing of asset accounting to inflation
accounting
Carry out basics of customizing for asset accounting in inflation
Maintain respective master data
For periodic closing in asset accounting with usage of inflation the
customizing is one of the preconditions. Customizing activities should be
carried out during the implementation project and ongoing during the
usage of the system.
For all exercises in the unit Asset Accounting you work with your
own company code CA##. All processes are carried out in that
company code. This technique is used because of locking logic for
assets and programs within one company code.
1. Define two period control methods:

Implementation Guide for R/3 Customizing (IMG) → Financial Accounting → Asset
Accounting → Special Valuation → Revaluation of Fixed Assets → Revaluation for the
Balance Sheet → Inflation → Maintain period control for inflation transactions
1-1 A regular one, named RE##, with TBE-variant ## for all transactions. All
transaction dates are shifted to the end of the period.
1-2 A second one, named TR##, with TBE-variant TR, which permits adjustments
moved one month from the origin month of the transaction.
2. Create two revaluation keys:
Implementation Guide for R/3 Customizing (IMG) → Financial Accounting → Asset
Accounting → Special valuation → Revaluation of fixed assets → Revaluation for the
Balance Sheet → Inflation → Define revaluation key
2-1 For regular monthly adjustments - RK##, with following settings:
Entry field Content
Description Regular period control group ##
Base area 04
Index GI##
Method RE##
Time Base ##
Rvbase APC 03
Rvbase Dep. 04
© SAP AG CA550 4-64

2-2 For moved one month adjustments - TR##, please copy regular monthly
adjustment revaluation key RK## and adapt Method to TR## and Time base to
TR.
3. Create two assets in your company code CA##:
SAP Easy Access/standard menu → Accounting → Financial Accounting → Fixed Assets

→ Asset → Create → Asset
3-1 First, new acquired asset, Machine New 1 group ##, with copy to existing asset
2000 of company code 6000. The depreciation key in areas 01 and 03 should be
LINK with useful life of 5 years. Please maintain for the revaluation area 03 the
revaluation data: revaluation key RK##.
3-2 Second, old acquisition (transaction AS91), Machine Old group ## with copy to
existing asset 2006 of company code 6000. Enter 01/01/1998 in the field
capitalization date. The depreciation key in areas 01 and 03 should be LINK with
a useful life of 10 years. Please maintain for the revaluation area 03 the
revaluation data: revaluation key RK## and last revaluation date 12/31/1998. For
the takeover values enter 100.000 as APC in area 01 and 10.000 as ordinary
depreciation. For area 03 enter 20.000 for the revaluation, 2000 for ordinary
depreciation and 500 in the field Rev. O. Dep.
Note: the manual input of last revaluation date might effect

revaluation calculation. The change of the revaluation date might
effect a doublicated calculation or an exclusion from calculation.
First revaluation date should be entered in the inflation method of

company code, if the old data takeover was done during the course
of fiscal year. If there is no entry in the field, the revaluation
program determines the revaluation start from the old data takeover
date or from revaluation date of the asset.
Now you know and have checked all outstanding customizing and
master data entries for the revaluation run in FI-AA.
© SAP AG CA550 4-65

Topic: Process for a Sample Asset

Use the periodic process of revaluation and depreciation for the
purposes of inflation
Create FI-AA update via inflation accounting program and
subsequently postings via depreciation program
Asset accounting department will carry out inflation adjustments together
with depreciation as monthly closing process
Please carry out a sample process for one asset, consisting of: at one hand a real-time,
every day transaction (acquisition) and on the other hand the periodic processes simulation
and execution of the revaluation program, batch input of revaluation run and simulation
and execution of the depreciation program for that specific asset.
1. Please post an acquisition with automatic offsetting entry to Machine New 1 group ##
(asset from exercise 3-1) with following entry data: posting date = asset value date: 30-
01-XX, acquisition value 100.000.
SAP Easy Access/standard menu → Accounting → Financial Accounting → Fixed
Assets → Postings → Acquisition → External acquisition → Acquis. W/autom.
Offsetting entry
Area 01:
Area 03:
Assets → Asset → Display → Asset Explorer or Asset then select planned and posted
values
© SAP AG CA550 4-66

2. Execution of the inflation adjustment program
2-1 Carry out revaluation run in simulation mode saving your variant GR## selecting
on the selection screen :
Company code: CA##

Asset main number: Asset No. you created
Fiscal year: Current year
Asset value date: 02/28/1999
Test run: Set

Assets → Periodic processing → Revaluation for the balance sheet → Post inflation
2-2 Now carry out real run in forground changing variant GR## from above with
following changed parameters:
Test run: Not set

Session name: G##__02/1999

Assets → Periodic processing → Revaluation for the balance sheet → Post inflation
2-3 Afterwards carry out batch input of your session G##__02/1999 with the
execution option: Display errors only.
SAP Easy Access/standard menu → System → Services → Batch Input → Sessions, now
select your session’s name and execute.
2-4 Now check the asset values:

→ Asset → Display → Asset Explorer or Asset then select planned and posted values
Area 01:
Area 03:
© SAP AG CA550 4-67

3. After finishing those steps you execute the depreciation program for the whole
company code CA##.

Assets → Periodic processing → Depreciation run → Execute
Productive mode:
Company code CA##
Fiscal year current year
Posting period first 01 (January) then 02 (February)
Planned posting run select
List assets select
Direct FI posting select
Test run first select / then deselect
The program is executed in background.
The job will be displayed and passed to the spool so you can check it the result in the
output controller.
SAP Easy Access/standard menu → System → Services → Output controller
3-1 Check how much depreciation and revaluation was posted for your asset

→ Asset → Display → Asset Explorer or Asset then select planned and posted values

Area 01:
Area 03:
Transactions posted (areas 01, 03): ___________________
© SAP AG CA550 4-68

The revaluation program updates the values in Asset Accounting, the
depreciation program the values in Financial Accounting, G/L-postings
are carried out.
In case of using parallel currencies you must carry out the depreciation
run with direct FI posting.
You understood the recommended logic of periodic processing related to
the Inflation Accounting process in Asset Accounting:
Execution of revaluation program ->
Processing batch input session ->
Execution of depreciation program ->
Processing batch input session or Direct FI posting
© SAP AG CA550 4-69

Inflation Accounting in Materials Management
Contents:
Overview
Market price determination
Inventory index adjustment
Goods issue revaluation
Inflation and Material Ledger
 SAP AG 1999
© SAP AG CA550 5-1

1 Introduction
6 Conclusion
7 Appendix
 SAP AG 1999
© SAP AG CA550 5-2

Inflation Accounting in Materials Management:
MXNt Objectives

able to:
Explain the methods available for inflation
accounting of materials
Give an overview about those methods
Explain which customizing is needed for
inflation in Materials Management.
 SAP AG 1999
© SAP AG CA550 5-3

Business Scenario
You are responsible in the project team for the

implementation of valuation methods or
inflation accounting in Materials Management.
You carry out periodic processes for
valuation, including inflation adjustment, in
Materials Management.
 SAP AG 1999
© SAP AG CA550 5-4

Overview: Topic Objectives

able to:
Identify the available methods
customizing as a precondition to carry
out inflation accounting for Materials
Management.
 SAP AG 1999
© SAP AG CA550 5-5

Place of Inflation Accounting in Material Valuation
2873,00
2856,00
30
Stock material A MO TU WE TH FR SA SU
2683,00
2846,00
Daily business
transactions
Periodic closing
2768,00
2794,00
2794,00
Initial stock
LIFO or
2768,00
FIFO or
Purchase order
2683,00
Goods receipt for PO Lowest-value method or
2695,00
Invoice receipt for PO Replacement-cost procedure
2873,00
Goods issue to .....
Market
Market price
price determination
determination
2683,00 Inflation
Inflation index
index adjustment
adjustment
 SAP AG 1999
2683,00 Goods
Goods issue
issue revaluation
revaluation
Besides different periodic valuation methods, such as LIFO(with or without layer), FIFO, lowest-
value method for some countries apply the replacement cost revaluation to build up inflation
adjustment postings.
Replacement cost procedure comprise two general steps: replacement price/cost definition and stock
revaluation.
Market price determination is defining the replacement cost price based on market prices such as
invoice, order, info record prices and adjusting the stock subsequently. Inflation index adjustment is
using inflation index to define the replacement cost price and updating the stock subsequently.
Goods issue revaluation is adjusting the material movements of previous month which were not
considered within the replacement cost determination.
© SAP AG CA550 5-6

Material - Inflation Data as Part of Accounting Data
2873,00 Valuation
Valuation level
level
Valuation area
2856,00
2683,002846,00
Company code Plant
2768,00 11 22
2794,00
Material A:
2794,00
Accounting
Price control ...
Price 4 MXN/PC
Quantity 300 PC
Price control ...
Price 5 MXN/PC
Quantity 200 PC
data
2768,00 Total 1,200 MXN Total 1,000 MXN
2683,00
Accounting2695,00 Replacement cost Replacement cost
2873,00
data: price 6 MXN/PC price 5 MXN/PC
2683,00
Inflation
data Rev.date 30.04.XX Rev.date 31.12.XY
 SAP AG 1999
2683,00
Valuation is made on different level: plant or company code.
Inflation data is maintained in the accounting view of the material master as other valuation relevant
parameters.
© SAP AG CA550 5-7

Material - Inflation Data as Part of Accounting Data
2873,00 Valuation class Inventory

Inventory account
account
2856,00Price control
Standard/moving
Standard/moving average
average price
price
2683,002846,00
Price unit
2768,00
Standard/moving average price
Total stock
Data for actual period,
previous period and
2794,00
Total value
2794,00
previous year
2768,00
Future
Future price:
price: valid
valid from
from ...
...
Previous
Previous price; last price change
price; last price change
2683,00 LIFO/FIFO-relevant,
LIFO/FIFO-relevant, LIFO
LIFO -- Pool
Pool
2695,00
Tax/Commercial
Tax/Commercial valuation
valuation prices
prices 1,
1, 2,
2, 33
2873,00
Periodic
Devaluation
Devaluation indicator
indicator valuation
Inflation
2683,00
Inflation data:
data: Control
Control data:
data: Inf.class,
Inf.class, reval.method...
reval.method...
2683,00
Current
Current period: Price unit, replacement cost
period: Price unit, replacement cost price...
price...
Previous
Previous period:
period: Price
Price unit,
unit, replacement
replacement cost
cost price...
price...
 SAP AG 1999
Material master contains different prices and control parameters. You define them depending on the
further processing.
© SAP AG CA550 5-8

Material Master: Relevant Price Definitions
2873,00
Accounting 1 ⌫standard or moving average price
2856,00
2683,00
Accounting 2 ⌫inflation data
2846,00
2768,00 Current period Previous period
2794,00
Price unit
2794,00
Repl. cost price 124.00
1
122.14
2768,00
Original currency (only used when not = local currency)
Reval.date
Proc. date MP
2683,00 Revaluation date set by market price determination program
Processing date set by market price determination program
2695,00
Pr.date IR-CP/p
Pr.date IR-CP/d
Processing date inflation index adjustment (provisional)
Processing date inflation index adjustment (definitive)
Price control 2873,00 V/S - from Accounting 1
2683,00
Mov.avg. price
Standard price
XXX.YY - from Accounting 1
XXX.YY - from Accounting 1
 SAP AG 1999
2683,00
From inflation processes in the material master the replacement cost price and the revaluation and
processing dates are updated.
Replacement cost price is given in local currency.
Original currency is the foreign currency key, which is updated when the replacement cost price is
taken from a document with foreign currency.
© SAP AG CA550 5-9

Inflation Accounting MM
2873,00 Customizing
2856,00Financial accounting Materials management
2683,00 General settings

2846,00
Specific settings
2768,00
2794,002794,00
Material Master setup
2768,00 Reporting
2683,00
2695,00
Market Price Determination
Inflation Index Adjustment
2873,00
Goods Issue Revaluation
2683,00
 SAP AG 1999
2683,00
Inflation accounting in Materials management is based on respective customizing and material
master set-up.
© SAP AG CA550 5-10

Overview
2873,00
Level of setup:
2856,00
2683,00
Customizing ⌫Financials ⌫
Global settings:
2846,00
1. Country // 2.
2. Company
Company code
code Inflation method
2768,00
3. Chart of accounts Account determination
2794,00
Inflation
Inflation
index
index
2794,00
Customizing ⌫MM ⌫Valuation:
TBE
TBE
2768,00
3. Valuation area Material inflation class ++
specific
specific
2683,00
4. Chart of accounts/Valuation area Account determination
customizing
customizing
2695,00
2873,00
Master data maintenance:
5. Material Material inflation class
2683,00
 SAP AG 1999
2683,00
© SAP AG CA550 5-11

Customizing FI: Inflation method
2873,00
2683,00
MM active?
2768,00 MM
Post replacement cost
Fiscal index
global settings
2794,00
Del.cost.M.Pr.
Del.cost.fisc.
2794,00 Indexing method
2768,00
Inflation method Time base variant fiscal index
Man.pr. change
2683,00 Currency type

Valuation Level
2695,00
FI 2873,00
AA 2683,00
 SAP AG 1999
2683,00
You set the parameter MM active. This activates the usage of inflation accounting in Materials
Management.
Post replacement cost indicates that a real price change is posted during the replacement cost
valuation.
The parameter Delivery cost market price revaluation determines how delivery costs are taken into
account in the market price determination, for example include them if you posted them in an
invoice.
Fiscal index, delivery costs in fiscal revaluation and time base for fiscal index are used for the
Argentinian Warehouse stock report (J_1AMLBS) only. Fiscal index is a relevant inflation index,
delivery costs are included analogically to the inclusion in the market price determination and TBE is
the valid time base for the fiscal index used.
Manual price change indicates that a manual replacement cost price change in possible and this leads
to the prioiritize this price change before any other replacement cost prices.
Currency type used in replacement cost valuation for conversions of materials posted in foreign
currency.
The valuation level is defined once for each revaluation method. For replacement cost valuation it is
set to the plant or company code.
Indexing method defines whether a price-based or quantity-based inflation index adjustment is
carried out.
© SAP AG CA550 5-12

Customizing FI: Inflation Method
2873,00
2856,00
Delivery cost handling in market price determination/
2683,00
inflation index adjustment
2846,00
0: Do not include delivery cost in the price
2768,00
1: Include delivery cost if included in invoice
2794,00 2: Include delivery cost if planned
2794,00
3: Like option 2, include also in contracts and info records
2768,00
2683,00
Indexing method in inflation index adjustment
2695,00
0: Price-based indexing
2873,00
1: Stock-based indexing
2: Stock-based indexing with goods issue revaluation
2683,00
 SAP AG 1999
2683,00
You decide how delivery costs are handled in the replacement cost procedure.
For inflation index adjustment you define an indexing method. You decide how is revaluated based
on prices or stock values.
© SAP AG CA550 5-13

FI Customizing: Account Determination
2873,00
2856,00
Account 300 000 Raw material
2683,00 2846,00
Definitive run Preliminary run
2768,00
General effect 300001 General effect 300001
2794,00 2794,00
Specific effect 300003 Specific effect 300003
2768,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
Inflation effect in Materials Management is posted as specific inflation effect.
© SAP AG CA550 5-14

General MM Customizing Preconditions
2873,00
Preconditions:
2856,00
Definition of valuation level: Plant or company code
2683,00
Assignments: Plant to company code
2846,00
2768,00
2794,00
Valuation and account
2794,00
assignment:
Valuation control, areas, classes
Number ranges,
2768,00
2683,00
2695,00
Actual Costing/Material Ledger
(on demand)
2873,00
2683,00
 SAP AG 1999
2683,00
Before any specific inflation customizing in Materials Management the general MM customizing
was already maintained.
You had selected the valuation level either plant or company code. The valuation area was created.
Accounts for account determinations/transaction types are assigned.
Depending upon your demand for parallel currencies or valuations in MM and actual costing
requirements Material Ledger was configured.
© SAP AG CA550 5-15

Customizing: MM Inflation
Global definitions
2873,00
Local definitions
2856,00
2683,00
Material inflation classes
2846,00 Material Master
2768,00
Valuation
area
Inflation class Description Org.level: Accounting 2
2794,002794,00 1 First
Accounting 1
2768,00 2 Second
Inflation data
2683,00
... ...........
Material inflation class
2695,00 Revaluation method
2873,00
Revaluation method Inflation index Inflation index
TBE variant
TBE variant
2683,00 Price tolerance %
Price tolerance
 SAP AG 1999
2683,00
You maintain the customizing for inflation in MM.
The material inflation class is the main important parameter and consists of parameters as the
revaluation method defining which type of replacement cost determination is carried out: index or
different kind of market price determination, latest, highest or lowest, price tolerance valid for the
determination, valid inflation index and TBE .
You carry out the definition of the material inflation class and all other parameters in customizing.
Then you add the respective material inflation class or specific inflation parameters besides the
inflation class in the material master.
You maintain all material master in a company code which is active for inflation with a material
inflation class.
Order of processing for the inflation reports: If you define additionally to the material inflation class
other parameters (inflation index for example) in the material master those are taken first. If you only
maintain a material inflation class in the material master then the other parameter are selected from
the global definition (customizing).
© SAP AG CA550 5-16

Revaluation Method
2873,00 Market Price Inflation index
2856,00 Determination
J_1ARCVM
adjustment
J_1AMCIP
2683,002846,00
Material 1:
_ _
2768,00
Reval. Method
0
2794,002794,00
2768,00
Material 2:
( )
2683,00
Reval. Method
1, 2 or 3
2695,00
_
Material 3: 2873,00
2683,00
Reval. Method
Method
2683,00
4
 SAP AG 1999
Depending upon the selected revaluation method and the defined price changes one or both
replacement cost programs are executed.
Usage of revaluation method 0 excludes material from revaluation.
In case of revaluation method 1, 2 or 3 Market Price determination program searches for latest,
highest or lowest price. In case that the market price determination does not find any price those
material could be adjusted by the inflation index adjustment.
Revaluation method 4 is used for inflation index program exclusively.
© SAP AG CA550 5-17

Price Tolerance Percentage
2873,00
2856,00
2683,002846,00
Market price
determination
2768,00
2794,002794,00
Revaluation
2768,00 Lowest Latest Highest
method:
2683,00
2695,00
2873,00
Lower limit: Price of material master - Price * percentage
2683,00
2683,00
Upper limit: Price of material master + Price * percentage
 SAP AG 1999
Price tolerance is used in market price determination. It is checked if market prices detected by the
program based on different revaluation methods (lowest-latest-highest) are within the upper and
lower limit calculated, applying the percentage to the price of the material master.
Prices exceeding the interval are considered to be wrong and are rejected.
Percentage is taken from the local definition of the material master, in case that there is no
percentage given, the latter is taken from the global definition in the material inflation class.
© SAP AG CA550 5-18

General Steps
2873,00
1.2856,00
2683,00
Determine replacement cost price by scanning market prices
2846,00
2. 2768,00
Determine replacement cost price using an inflation index
2794,00
2794,00
3. 2768,00
2683,00
Revaluate goods issues
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
There are two processes for replacement cost price definition:
The market price determination is a method of replacement cost scanning market prices.
Inflation index adjustment, as legally required in some countries, determines the replacement cost
price using given inflation indexes.
Based on your legal or business requirements you decide whether to execute replacement cost
revaluation with market prices or inflation indexes or both. You revaluate goods issues of previous
month upon demand after one or both of the replacement cost determination programs.
As general observation you post all invoices, credit memos through logistics invoice verification to
have them included in inflation processes.
© SAP AG CA550 5-19

Overview: Topic summary

Give an overview about those methods
Explain which customizing is needed for
inflation in Materials Management.
 SAP AG 1999
© SAP AG CA550 5-20

Market price determination: Topic Objectives

able to:
Create the market price determination
periodically
Explain the origin of market prices
Set up respective customizing
Interpret the results and accounting
effects
 SAP AG 1999
© SAP AG CA550 5-21

Market Price Determination
2873,00
1.2856,00
2683,00
2846,00
2. 2768,00
2794,00
2794,00
3. 2768,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
Replacement cost price using market price determination searches the market price by material for a
given period in purchase orders, invoices, contracts and info records and includes any manual price
set in the material master. If no market price can be determined, an adjustment by index is necessary.
© SAP AG CA550 5-22

Aims of Market Price Determination
2873,00
2856,00
Making use of the market price principle
(similar to lowest value principle in balance sheet valuation)
2683,002846,00
Determining the lowest, latest, highest market price per material
2768,00
Determining the stock value taking the market price into account
2794,00
Revaluate material stocks
2794,00
2768,00
Revaluating materials
2683,00
Redetermining stock value after revaluation
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
When determining latest price as the revaluation method for market price determination, the
following dates are used:
For invoice – the relevant posting dates in documents are used
In purchase orders – the purchasing document date
In contracts – the start or end of the validity period
In purchasing info records – the date of price determination
Lowest, latest or highest prices are used depending on the revaluation method set in the material
inflation class or material master.
© SAP AG CA550 5-23

Periodicity
2873,00
2856,00 Replacement
Replacement cost
cost Revaluation
Revaluation of
of
2683,002846,00
price
price determination
for
determination
for period
period M-1
M-1
goods
goods issues
issues of
period
period M-1
M-1
of
2768,00
2794,00 Period M-1
2794,00
Period M
2768,00
2683,00
2695,00 Stock
2873,00
Stock
revaluation
revaluation
for
for period
period M-1
2683,00
M-1
 SAP AG 1999
2683,00
For revaluation the previous period is used exclusively.
The last processing date of the previous period is set as exposure date and posting date for the
revaluation when you execute the program in update mode.
At present the current period is not used by the program.
Two processes of market price determination are carried out subsequently: define replacement cost
price for period M-1 and then revaluate stock.
© SAP AG CA550 5-24

Settings for Market Price Determination
2873,00
2856,00
Market
Market price
price
valuation
valuation level
level
2683,002846,00
Standard customizing General Inflation setup
2768,00
Document types
Number ranges
Inflation method
2794,002794,00
2768,00 Market
Market price
price determination
determination
2683,00
2695,00
2873,00
2683,00 Special material
master setup
 SAP AG 1999
2683,00
Market price valuation level is either plant or company code.
To carry out market price determination, you need document types and respective number ranges
from standard Material Management.
You customize correctly Financial Accounting (General → Inflation data) and Material
Management.
You maintain the respective material master with the material inflation class.
© SAP AG CA550 5-25

Inflation Method for Market Price Determination
2873,00
2683,00
MM active
Fiscal index
2768,00 MM
global settings Del.cost.M.Pr.
Del.cost.fisc.
2794,00 2794,00
Indexing method ( )
Time base variant fiscal index
2768,00
Man.pr. change
Inflation method Currency type
2683,00 Valuation Level
2695,00
FI
2873,00
AA
2683,00
 SAP AG 1999
2683,00
MM active activates the usage of inflation accounting in Materials Management.
You select Post replacement cost. This indicates that a real price change is posted during the
replacement cost valuation.
You select Delivery costs in market price determination used. Market price determination can be
carried out before inflation index adjustment, therefore the delivery costs are scanned depending on
respective setup for market price determination.
Manual price change indicates that a manual replacement cost price change in the view Accounting 2
of the material master, Inflation data, is allowed.
The currency type defines the currency type to be used to convert items in foreign currency within
the time frame of market price determination (lower and upper limit of report execution).
The valuation level is defined once for each inflation method. For replacement cost valuation, it is set
to the plant or company code in the respective valuation area level.
© SAP AG CA550 5-26

Inflation Method: Include delivery costs
2873,00
2856,00
Delivery cost handling in market price determination
2683,00 0: Do not include delivery cost in the price
2846,00
1: Include delivery cost if included in invoice
2768,00
2: Include delivery cost if planned
2794,00
3: Like option 2, include also in contracts and info records
2794,00
2768,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
You decide the option that is adequate for your requirements.
Take care that delivery costs that come in a separate invoice are only considered if this new invoice
is posted with reference to the original invoice. This is done by filling the reference field of the new
invoice with the original document number. Changes to the reference number are not considered.
Option 3 is performance critically.
© SAP AG CA550 5-27

Global definitions
2873,00
Local definitions
2856,00
2683,00
2768,00
Valuation
area
2794,002794,00 1 First
Accounting 1
2768,00 2 Second
Inflation data
2683,00
... ...........
2873,00
TBE variant
TBE variant
Price tolerance
 SAP AG 1999
2683,00
Material inflation classes are combinations of inflation parameters as criteria for the revaluation
process.
They could be entered as the default setup for a group of materials in a global definition .
You can predefine the parameters TBE variant, inflation index or price tolerance in the material
inflation class.
Material inflation class is defined as a mandatory field for each material master. It transmits the
global definitions of customizing to the respective material master. During the revaluation programs,
the class of material master is interpreted to get the TBE variant, inflation index and price tolerances,
if these fields are not maintained in the material master with other values. If there are specified
individual values in the material master those are taken for processing.
All parameters can be entered individually in the respective material master (Logistics → Materials
Management → Material Master → Material change Org.level: Accounting 2, then select Inflation
data). This would be a local definition for master data leading to specific handling for the material in
question differently from other material with same material inflation class but without individual
values.
© SAP AG CA550 5-28

Revaluation Method
J_1ARCVM
adjustment
J_1AMCIP
2683,002846,00
Material 1:
_ _
2768,00
Reval. Method
0
2794,002794,00
2768,00
Material 2:
( )
2683,00
Reval. Method
1, 2 or 3
2695,00
_
Material 3:2873,00
2683,00
Reval. Method
2683,00
4
 SAP AG 1999
For market price determination, relevant material has material inflation class with revaluation
method 1, 2 or 3.
If the value 0 is defined, no market price is determined.
Material maintained via global definition in customizing of the material inflation class or in the local
definition of the material master with revaluation method 4 could be adjusted via inflation index in
case that the market price determination had not detected a valid price.
© SAP AG CA550 5-29

Market Price Determination Program
2873,00
2856,00
Execution (report J_1ARCVM)
2683,00 From 4.5B in menu
2846,00
In 4.0 :
2768,00 Use Transaction SA38 (System -> Services -> Reporting)
2794,00
Use Transaction J1AX
2794,00
Mode: test / Update:
2768,00
update executed in backround, job called J_1ARCVM
2683,00
Price change is executed if update parameter is set
Log: 2695,00 in test / update run
Protocol:
2873,00 Log table J_1AIMMLOG
2683,00
 SAP AG 1999
2683,00
Please pay special attention when selecting materials for revaluation. It is possible to limit the
selection to plant, material ranges.
© SAP AG CA550 5-30

Market Price Determination Program (continued)
2873,00
2856,00
Report J_1ARCVM Selection parameters:
2683,00 Adjusting previous period only
2846,00
Selection for company code, valuation area, valuation type
2768,00
or material
Update or test mode
2794,002794,00
Log data of test run output
2768,00
2683,00
Results in update mode:
2695,00
Update material master fields
2873,00
Posting price changes to FI directly, when stock available
2683,00
 SAP AG 1999
2683,00
Please pay special attention when selecting materials for revaluation. It is possible to limit the
selection to plant, material ranges.
© SAP AG CA550 5-31

Foreign currencies
2873,00
2856,00 Customizing:
Inflation method with exchange rate type, sample: M
2683,002846,00
Selection parameter: Exchange rate comparison
2768,00A: no comparison, documents in foreign currency with original
2794,002794,00
B:
exchange rate (default)
comparison with average rate at upper limit of date range in
2768,00 selection screen

C:
2683,00
comparison between value (depending on revaluation
2695,00
method: lowest, highest, latest) of bank selling, bank buying
or average rate leading to a respective price according to
2873,00
upper limit of date range in selection screen
2683,00
 SAP AG 1999
2683,00
You decide the exchange rate strategy for market prices that is adequate for your requirements.
You have following possibilities on the selection screen:
A: If you select strategy A, no comparison is made, the foreign currency amounts for market
prices in invoices or similar are taken as they are in the original document.
B: Comparison strategy B means the average rate at the upper limit of the date range leads to an
amount of lower or higher prices (depending on the selected revaluation method: highest,
latest or lowest), so the respective calculated amount is taken instead of the original amount.
C: In strategy C, the original amount with exchange rate relevance is compared with the
minimum or maximum (depending on the revaluation method of the material: highest, latest
or lowest) of bank selling or buying rate or average rate. The respective highest or lowest
vaue is taken instead of the original amount.
© SAP AG CA550 5-32

Market Price Analysis
2873,00
2856,00 Sources
Sources for
for
2683,002846,00
the
the market
market price
price
analysis
analysis
2768,00
2794,00
Planned/unplanned
2794,00
Planned/unplanned
delivery
delivery costs
costs in
in invoice
invoice
Analysis
Analysis of
purchasing
of
documents
purchasing documents
2768,00 (POs,
(POs, info
info records,contracts)
records,contracts)
2683,00
2695,00
2873,00 Replacement
Replacement cost
cost price
price
2683,00
 SAP AG 1999
2683,00
Market prices can be determined by analyzing:
Invoices
Purchase orders
Info records (for materials without split valuation only)
Contracts
Manual changes of replacement cost price
The selection of the price source to be searched for is done using selection parameter in the market
price determination program.
© SAP AG CA550 5-33

Postings for Market Price Determination
2873,00 Post price differences
2856,00
2683,002846,00
2768,00 31.XX.AA 01.XY.AA
2794,00
(Last day of previous period) (First day of current period)
2794,00
VALUATION VALUATION
2768,00
2683,00
Inventory account (300000) Specific adjustm. account (300003)
2695,00
31.01.97 100 100 31.01.97
2873,00
100 01.02.97 * 100 01.02.97*
2683,00
2683,00
*this posting can be avoided by setting T169P-PRAVT
 SAP AG 1999
If there is any stock on hand, the system changes the material price.
Depending on how you customize the system, it posts the price changes either on the last day in the
previous period and the first day in the previous period or on demand only in the previous period.
You can make the settings in Customizing for Materials Management by choosing Valuation and
Account Assignment -> Configure Price Change in Previous Period/Previous Year.
© SAP AG CA550 5-34

Log File Layout
2873,00 Market Price Valuation Inflation Index Adjustment
2856,00
2683,00
Update
Log file
2846,00
or
Log test run
2768,00
2794,002794,00
2768,00
Table: J_1AIMMLOG
2683,00
Revaluation process: 1, 2, 3,
Revaluation methods: 0, 1, 2, 3,
3, 44
3, 44
2695,00
Valuation mode: mode: 0,
0, 1,
1, 22
2873,00
Prices, Dates
Document
Document types, types, where
where market
market price found
2683,00
..................
 SAP AG 1999
2683,00
The log file contains the information as which revaluation processes generated a specific document
with named number.
Revaluation processes are: 1 – market price determination, 2 – inflation index adjustment, 3 –
manual revaluation, 4 – goods issue revaluation.
They are used in the log file revaluation methods as: 0 – no revaluation, 1 – market price revaluation
with lowest price, 2 – same, with highest price, 3 – same, with latest price, 4 – inflation index
revaluation only.
Valuation modes are defined as: 0 – no revaluation, 1 – price change, 2 – material ledger revaluation.
The following document types apply, where market price found, for market price determination only:
PO – purchase order, CO – contract, IR – info record, IV – invoice receipt, GR – goods receipt and
M – manual price change.
© SAP AG CA550 5-35

Market Price Determination: Topic Summary
Create the market price determination

periodically
Explain the origin of market prices
Interpret the results and accounting
effects
 SAP AG 1999
© SAP AG CA550 5-36

Inflation Index Adjustment: Topic objectives

able to:
Create the inflation index adjustment
periodically
Use the respective customizing
Interpret the results in Financial
Accounting and Materials Management
 SAP AG 1999
© SAP AG CA550 5-37

2873,00
1.2856,00
2683,00
2846,00
2. 2768,00
2794,00
2794,00
3. 2768,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
Inflation index adjustment is one of two replacement cost determination programs available to adjust
inventory (the other is market price determination).
Both of those methods are carrying out two processes: determination of a relevant price and
revaluation of stock.
© SAP AG CA550 5-38

Periodicity
2873,00
2856,00 Replacement
Replacement cost
cost Revaluation
Revaluation of
of
2683,002846,00
price
price determination
for
determination
for period
period M-1
M-1
goods
goods issues
issues of
period
period M-1
M-1
of
2768,00
2794,00 Period M-1
2794,00
Period M
2768,00
2683,00
2695,00 Stock
2873,00
Stock
revaluation
revaluation
for
for period
period M-1
2683,00
M-1
 SAP AG 1999
2683,00
For revaluation the previous period is used exclusively.
The last processing date of the previous period is set by the inflation index program as exposure date
and posting date for the revaluation when you execute the program in update mode.
At present the current period is not used by the program.
Inflation index adjustment consist of two processes as shown: definition of replacement cost price
via indices and stock revaluation.
© SAP AG CA550 5-39

Inflation Method for Inflation Index Adjustment
2873,00
2683,00
Company code 2846,00 MM active
2768,00 MM
global settings Fiscal index
Del.cost.M.Pr. ( )
2794,00 2794,00
Del.cost.fisc.
Indexing method
2768,00
Time base variant fiscal index
Inflation method Man.pr. change
2683,00
Currency type
Valuation Level
2695,00
FI 2873,00
AA 2683,00
 SAP AG 1999
2683,00
MM active – activates the usage of inflation accounting in Materials Management.
You select Post replacement cost. This indicates that a real price change is posted during the
replacement cost valuation.
Market price determination can be carried out before inflation index adjustment, therefore the
delivery costs are scanned depending on respective setup for market price determination.
Manual price change indicates that a manual replacement cost price change in the view Accounting 2
of the material master, Inflation data, is allowed.
The valuation level is defined once for each inflation method. For replacement cost valuation, it is
set to the plant or the company code level.
Currency is the exchange rate type used by the market price determination, if it runs before inflation
index adjustment.
Indexing method defines whether a price-based or quantity-based inflation index adjustment is
carried out.
© SAP AG CA550 5-40

Inflation Method: Indexing Method
2873,00
2856,00
Two methods of indexing:
2683,00
2846,00
2768,00
Price-based
Price-based versus Stock-based
Stock-based
2794,00
2794,00 With Without
2768,00
2683,00
goods issue revaluation
0 1
2695,002
2873,00
II nn dd ee xx ii nn gg m
m ee tt hh oo dd
2683,00
 SAP AG 1999
2683,00
The inflation index revaluation contains two different approaches: price-based indexing and stock-
based indexing.
The price-based indexing(indexing method 0) is based on the replacement cost price. This method
uses the valuation prices and calculates the inflation effect applying the index. This amount is added
to the actual valuation price and a price change is carried out.
The stock-based indexing is calculating new prices taking stock values.
If you select stock-based indexing with goods issue revaluation (indexing method 2), the goods issue
revaluation process is called from the inflation index adjustment program directly.
The parameter indexing method is exclusively used for inflation index adjustment.
© SAP AG CA550 5-41

Global definitions
2873,00
Local definitions
2856,00
2683,00
2768,00
Valuation
area
2794,002794,00 1 First
Accounting 1
2768,00 2 Second
Inflation data
2683,00
... ...........
2873,00
TBE variant
TBE variant
Price tolerance
 SAP AG 1999
2683,00
Material inflation classes are combinations of inflation parameters as criteria for the revaluation
process.
They could be entered as the default setup for a group of materials as a global definition.
The important parameters for market price determination are material inflation class, revaluation
method and price tolerance.
The revaluation method defines the lowest, highest or latest price as the criterion to define the
market price.
The price tolerance provides the lower and upper price limit of the search.
The material inflation class is a mandatory field for each material master. It transmits the global
definitions of customizing to the respective material master. During the revaluation programs, the
class of material master is interpreted to get the TBE variant, inflation index and price tolerances, if
these fields are not maintained in the material master with other values.
Parameters can be entered individually in the respective material master (Logistics → Materials
Management → Material Master → Material change Org.level: Accounting 2, then select Inflation
data). This would be a local definition for master data leading to specific handling for the material in
question differently from other material with the same material inflation class but without individual
values.
© SAP AG CA550 5-42

Revaluation Method
J_1ARCVM
adjustment
J_1AMCIP
2683,002846,00
Material 1:
_ _
2768,00
Reval. Method
0
2794,002794,00
2768,00
Material 2:
( )
2683,00
Reval. Method
1, 2 or 3
2695,00
_
Material 3:2873,00
2683,00
Reval. Method
2683,00
4
 SAP AG 1999
Method 4 is used exclusively for the inflation index method.

If you need lowest, highest or latest price revaluation applied first, you carry out first market price
determination and then run inflation index revaluation. In this case you set revaluation method 1, 2
or 3.
You exclude a material from revaluation using option 0 as the revaluation method.
© SAP AG CA550 5-43

Postings for Inflation Index Adjustment
2856,00
2683,002846,00
2768,00 31.XX.AA 01.XY.AA
2794,00
2794,00
VALUATION VALUATION
2768,00
2683,00
2695,00
31.01.97 100 100 31.01.97
2873,00
100 01.02.97 * 100 01.02.97*
2683,00
2683,00
*this posting can be avoided by setting T169P-PRAVT
 SAP AG 1999
previous period and the first day in the previous period or on demand only in the previous period (as
for materials adjusted on a market price basis). You can make the settings in Customizing for
Materials Management by choosing Valuation and Account Assignment -> Configure Price Change
in Previous Period/Previous Year.
You customize the inflation adjustment account as the account which carry definitive or provisional
specific profit/loss inflation effect.
© SAP AG CA550 5-44

Inflation Index Adjustment program
2873,00
2856,00
Execution (report J_1AMCIP):
2683,00 From 4.5B in menu
2846,00
In 4.0 :
2768,00 Use Transaction SA38 (System ⌫Services ⌫Reporting)
2794,00
Use Transaction J1AZ
2794,00
For materials with revaluation method 1, 2 or 3: Market Price
2768,00
Determination executed first
2683,00
Two processing modes:
2695,00
Provisional run: Index values might still have status “provisional”
2873,00
Definitive run: All used index values must have status “definitive”
Log file update for further analysis
2683,00
 SAP AG 1999
2683,00
© SAP AG CA550 5-45

Inflation Index Adjustment program (continued)
2873,00
2856,00
Report J_1AMCIP Selection parameters:
2683,00 Adjusting previous period only
2846,00
Selection for company code, valuation area, valuation type or material
2768,00
Update or test mode
2794,00
Provisional or definitive run
2794,00
Log data of test run output
2768,00
2683,00
Results in update mode:
2695,00
Update material master fields whether provisional or definitive
2873,00
Posting price changes to FI directly, when stock available
2683,00
 SAP AG 1999
2683,00
The program determines the revaluation method, time base and exposure to inflation and inflation
index and checks all relevant customizing.
How the inflation index is processed depends mainly on the revaluation method: 1, 2, or 3 –
conditional method (with market price determination in advance) or 4 – unconditional method.
© SAP AG CA550 5-46

Log File Layout
2873,00 Market Price Valuation Inflation Index Adjustment
2856,00
2683,00
Update
Log file
2846,00
or
Log test run
2768,00
2794,002794,00
2768,00
Table: J_1AIMMLOG
Revaluation 2683,00
Revaluation process: 1, 2, 3, 4
Revaluation methods:
methods: 0, 0, 1,
1, 2,
2, 3,
3, 44
2695,00
Valuation mode: mode: 0,
0, 1,
1, 2
2873,00
Prices, Dates
Document types, where market price found
2683,00
..................
 SAP AG 1999
2683,00
The log file contains the information as which revaluation processes generated a specific document
with named number.
Revaluation processes are: 1 – market price determination, 2 – inflation index adjustment, 3 –
manual revaluation, 4 – goods issue revaluation.
They are used in the log file revaluation methods as: 0 – no revaluation, 1 – market price revaluation
with lowest price, 2 – same, with highest price, 3 – same, with latest price, 4 – inflation index
revaluation only.
Valuation modes are defined as: 0 – no revaluation, 1 – price change, 2 – material ledger revaluation.
The following document types apply, where market price found, for market price determination only:
PO – purchase order, CO – contract, IR – info record, IV – invoice receipt, GR – goods receipt and
M – manual price change.
© SAP AG CA550 5-47

Inflation Index Adjustment: Topic Summary

Create the inflation index adjustment
periodically
Interpret the results in Financial
Accounting and Materials Management
 SAP AG 1999
© SAP AG CA550 5-48

Goods Issue Revaluation: Topic Objectives

able to:
Explain the necessary customizing for
Carry out good issue revaluation
Describe the purpose of this revaluation,
and the report and accounting effects
generated
 SAP AG 1999
© SAP AG CA550 5-49

Goods Issue Revaluation
2873,00
1.2856,00
2683,00
2846,00
2. 2768,00
2794,00
2794,00
3. 2768,00
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
You already know the two processes for replacement cost price definition:
The market price determination is a method of replacement cost scanning market prices.
Inflation index adjustment, as legally required in some countries, determines the replacement cost
price using given inflation indexes.
Once the period closing has run, replacement cost determination calculates a valid price for all
materials within selected range at the end of the previous period. After this the revaluation of the
goods issues for all materials formerly revaluated by either market price or by inflation index can
take place. The goods issue revaluation adjusts the stock values that have been calculated at goods
issue time (time “t”) within the considered period by:
GI amount(t) = quantity * price(t)
In the way, that the price calculated via replacement cost valuation at period end (t1) is taken into
account for the GI revaluation, e.g.
GI amount(t1) = quantity * price(t1)
Hence, the resulting difference between those two goods issue amounts, in detail
Difference = quantity * ( price(t) - price(t1) )
has to be posted for each goods issue in the relevant period.
© SAP AG CA550 5-50

Aim of Goods Issue Revaluation
2873,00
2856,00 A - Inventory 01.XX.XXXX
2683,00
minus
2846,00
B - Goods issues 01.-31.XX.XXXX
New price:
market price det.
2768,00
Movement
Movement types
types inflation index adj.
2794,00
equal
2794,00
C - Inventory balance 31.XX.XXXX + Adjustment amounts
2768,00
Reason : Closing balance of inventory C remaining after good issues
2683,00
adjusted by inflation 31.XX.XXXX.
2695,00
Now: Goods issues B in the past should be adjusted by inflation.
2873,00
2683,00
That’s why ⌫Goods issue revaluation
 SAP AG 1999
2683,00
All inventory at closing moment is adjusted based on values on the inventory accounts.
Respectively, goods issues of the previous month are not adjusted by inflation. If there is a need to
adjust them accordingly, you run the goods issue revaluation program.
© SAP AG CA550 5-51

Periodicity
2873,00
2856,00 Replacement
Replacement cost
cost Revaluation
Revaluation of
of
2683,002846,00
price
price determination
for
determination
for period
period M-1
M-1
goods
goods issues
issues of
period
period M-1
M-1
of
2768,00
2794,00 Period M-1
2794,00
Period M
2768,00
2683,00
2695,00 Stock
2873,00
Stock
revaluation
revaluation
for
for period
period M-1
2683,00
M-1
 SAP AG 1999
2683,00
For revaluation the previous period is used exclusively. Posting date is last date of previous period.
The last processing date of the previous period is set by the inflation index program as exposure date
and posting date for the revaluation when you execute the program in update mode.
Same as for inflation index adjustment and market price determination.
© SAP AG CA550 5-52

Basic Settings
2873,00 Inflation method MM

2856,00
2683,00
Company code
global settings
2846,00 MM active
2768,00
Inflation method
Post repl. cost
2794,00 2794,00
2768,00
FI
2683,00
Material
Material master
master 2695,00
AA
Inflation
Inflation class 2873,00
2683,00
class
Value
Value update
 SAP AG 1999
update
2683,00
You authorize the user to work for a selected company code (authorization checks are performed).
In the inflation method assigned to the company code, you select:
MM active (activates inflation accounting for Materials Management)
Post repl. cost (Post replacement costs – otherwise, the system does not make any postings)
You can specify which material types are to be covered in Customizing for Logistics – General, by
choosing Material Master -> Basic Settings -> Material Types -> Define Attributes of Material
Types. In the material type you want, select Value updating.
© SAP AG CA550 5-53

Inflation MM: Further Customizing Settings
2873,00
2856,00
Movement types for goods issue revaluation
2683,00 2846,00
Specify which goods issues movements types should be
considered for goods issue revaluation process
2768,00
2794,00
Account determination for goods issue
2794,00
revaluation program:
2768,00
2683,00
Internal processing key WGI:
Inventory account as appropriate account for transfers between
plants
2695,00
2873,00
Internal processing key WGR:
Inventory account as appropriate account for goods receipt
revaluation
2683,00
 SAP AG 1999
2683,00
Based on the customizing carried out for market price determination and inflation index revaluation,
only two additional steps of customizing are needed for goods issue revaluation.
You mark movement types relevant for goods issue revaluation and you maintain the account
determination for revaluation postings of goods issue or receipt revaluation. It is recommended to
select only the relevant goods issue movement types.
A special technique is applied to transfers because they have to be considered from two sides(plants).
The entry in the accounting document resulting from a general transfer posting is:
Material-inventory account (plant-1) /
Material-inventory account (plant-2)
The correction posting to an existing transfer-GI is posted to the inflation offsetting account which is
defined in processing key WGI for the issuing plant and the processing key WGR (wrong valuated
goods receipts) for the receiving plant.
The inflation account will be determined via the inflation adjustment information of the original
inventory account of issuing and receiving plants. This four different accounts are used for the
posting.
© SAP AG CA550 5-54

Customizing accounts
2873,00
2856,00
Goods issue revaluation leads to following posting:
2683,00
Document type WA (example)
2846,00 Specific inflation adjustment
2768,00
Adjustment account
to inventory account A account to inventory account A
300003
2794,00
300001
2794,00
2768,00
100 100
2683,00
2695,00
2873,00
2683,00
MM:
MM: key
key WGI
WGI FI:
FI: specific
specific adjustment
adjustment account
account
 SAP AG 1999
2683,00
The document type is the selected from the origin document.
The accounts are adjusted with the following logic:
Adjustment account to inventory account A is the account posted to in parallel to the inventory
account. It contains the increase/decrease in inventory due to inflation effect within the previous
month for the respective adjusted goods issues.
Specific adjustment account for the respective inventory account of material A contains the
inflation effect. It is the adjusted portion of inventory dispatched from stock in the previous month.
The program posts direct to Financial Accounting and generates documents in Materials
Management, Financial Accounting and other applications.
© SAP AG CA550 5-55

Goods Issue Revaluation Program
2873,00
2856,00
Execution (program J_1AMGIP)
2683,00
From 4.5A in menu
2846,00
In 4.0:
System ⌫Services ⌫Reporting
2768,00 Use Transaction SA38 / J1A3
2794,00
Executable
2794,00
only for the previous period
2768,00
For materials with revaluation method
2683,00
1, 2 or 3 – Market price determination
2695,00
4 – Inflation index adjustment
Two processing modes: simulation / update
2873,00
Only definitive index used
2683,00
 SAP AG 1999
2683,00
You carry out the goods issue revaluation program out only after one of the two replacement cost
determination programs.
For goods issue revaluation only definitive inflation adjustment calculation is supported.
The goods issue revaluation report issues a list with all materials revaluated (update) or to be
revaluated (simulation) thereby giving information such as GI amount, the price applied to revaluate,
the quantity, and last not least the adjustments that have been posted (update) or would be posted
(simulation) with the corresponding references to the concerned or created documents. If posting
takes place, the revaluated goods issues are marked as revaluated to prevent more than one posting
for the same material in the considered period.
© SAP AG CA550 5-56

Goods Issue Revaluation: Topic Summary

Explain the necessary customizing for
Carry out good issue revaluation
Describe the purpose of this revaluation,
and the report and accounting effects
generated
 SAP AG 1999
© SAP AG CA550 5-57

Inflation and Material Ledger: Topic Objectives

able to:
Explain the impact of inflation on Material
Ledger
Give an overview about the functionality
available using the Material Ledger with
inflation accounting
 SAP AG 1999
You could not expect informations about customizing and detailed functionalities of Material
Ledger, this is basis knowledge you acquire in the courses CA535 (4.0/4.5) or AC530 (4.6).
The impact of inflation accounting postings on Material Ledger will be explained as similar to other
price or exchange rate differences at current stage.
© SAP AG CA550 5-58

Possibilities of Material Ledger
2873,00
2856,00Material Master Material Ledger
2683,002846,00 Currency
Currency 22 //
Valuation
Currency
Currency 11 Valuation 22
2768,00
Currency
Currency 11 //
Valuation1
Valuation1 Currency
Currency 33 //
2794,002794,00
Valuation
Valuation 33
2768,00
Alternative valuations based on different methods of price control:
2683,00
Standard price (for example, as result of standard cost estimate)
Moving average price
2695,00
Activation of planned prices for material valuation
Material valuation in up to three currencies
2873,00
Material valuation in independent valuation views (multiple valuation)
Actual costing: Prices as base value for price determination of inventory for
2683,00
standard price material
 SAP AG 1999
2683,00
Material Ledger is a subledger for materials, which are identified with a material number in
conjunction with the valuation area and, in the case of a split valuation, the valuation type.
By using material ledger, material valuation can be made in up to three currencies, which are defined
with historical exchange rates to posting date of respective transaction, or in three valuations.
This component is important if:
You want to carry out Actual Costing for material.
You need to report your material stock in multiple currencies.
You are active as a corporate group in several countries and need multiple currencies / valuations.
A precondition for the use of the material ledger is the usage of Logistics Invoice Verification. This
is the same precondition as for inflation accounting in Material Management itself.
© SAP AG CA550 5-59

Material Master Data
2873,00
2856,00
2683,00 Material master
2846,00
Material ledger master
2768,00
Indicator Material Ledger active
Valuation data in local currency
Price determination (Settlement control)
2794,002794,00
Price control On demand: valuation data in two
additional currencies
2768,00
Moving average / Standard price
(periodic unit price/ prelim. val. price) Total of quantities/values for
Price unit
2683,00 price determination
(Settlement of variances to periodic
2695,00
Total stock unit price)
2873,00
Total value
2683,00
 SAP AG 1999
2683,00
You maintain customizing for Material Ledger separately (activation of valuation areas, assignment
of currency types to Material Ledger type,...). Material Ledger has to be prepaired via a productive
start-up program.
Proposal values of customizing could be changed in each individual material master.
Depending upon those settings Material Ledger data is filled.
© SAP AG CA550 5-60

Sample 1: Material Stock in Multiple Currencies
2873,00
2856,00
Material master
Hard currency Group currency
2683,00
(local currency)
2846,00
2768,00
Total stock: 100 PC Total stock: 100 PC Total stock: 100 PC
Total value: 1,500 MXN Total value: 1,000 USD Total value: 750 EUR
2794,00
Price: 15 MXN/PC Price: 10 USD/PC Price: 7.50 EUR/PC
2794,00
2768,00
Receipt quantity: 100 PC Receipt quantity: 100 PC Receipt quantity: 100 PC
Receipt value: 1,500 MXN Receipt value: 1,200 USD Receipt value: 600 EUR
2683,00
2695,00
Total stock:
Total value:
200 PC
3,000 MXN
Total stock:
Total value:
200 PC
2,200 USD
Total stock:
Total value:
200 PC
1,350 EUR
Price:
2873,00
15 MXN/PC Price: 11 USD/PC Price: 6.75 EUR/PC
2683,00
 SAP AG 1999
2683,00
In the sample, besides the local currency of the company code (MXN) the hard currency of the
respective country (USD) and the group currency (EUR) are used. These currencies are assigned in
Customizing for material ledger type to the valuation area.
During creation of the accounting view of a material in a valuation area, where material ledger is
active, the Material Ledger master data is supplied with the material price in local currency.
This price is recalculated to the other defined currencies with the current exchange rates:
100 USD = 150 MXN
100 EUR = 200 MXN
In the above sample, the initial entry of goods is posted with unchanged foreign currency exchange
rates.
At the moment of goods receipt, the current foreign currency exchange rates are:
100 USD = 125 MXN
100 EUR = 250 MXN
The receipt value of 1,500 MXN is posted to the inventory account with those current foreign
currency exchange rates accordingly.
© SAP AG CA550 5-61

Types of Price determination (Settlement)
2873,00
2856,00
2683,002846,00
Transaction-based Single-level / Multi-level (4.5)
2768,00
2794,00
Postings and price adjustments
2794,00
for price control “V” and “S” as
without Material Ledger
Material with price control “S”
Actual costing and determination
2768,00
Multiple currencies/valuations
of periodic unit price
for closed period
2683,00 Multiple currencies/valuations
2695,00
2873,00
Settlement control 2 Settlement control 3
2683,00
 SAP AG 1999
2683,00
In transaction-based settlement, the moving average price is calculated after each transaction, the
same as standard Materials management but now with the advantage of having multiple
currencies/valuations. You can use this functionality if you need valuation prices updated every time
but do not need actual costing. If you use standard price for some materials, moving average price
information is also stored .
Materials are always valuated with standard price when using single-level settlement. Periodic
MXNt price is calculated for the closed period and could be used to reevaluate inventory of the last
period. This option is recommended if material should be maintained with valuation price constant
for a period, and if multi-level actual costing is desired later based on single-level settlement. The
price control indicator “S” ensures that the standard price is shown, with the moving average price
also shown as information. The price control indicator “V” is not possible as a valuation price for the
current period. A periodic MXNt price is stored after revaluation for the closed period.
© SAP AG CA550 5-62

Sample 2: Actual costing (single-/multi-level)
2873,00
Single-level
4.5 Multi-level
2856,00
2683,00
Level 3 Level 3
2846,00 Finished
Finished
Good
Finished
Finished
Good
2768,00
Good Good
2794,002794,00
Level 2 Level 2
2768,00
Semi-
Semi- Semi-
Semi-
Finished
Finished Finished
Finished
2683,00 Good
Good Good
Good
Level 12695,00 Level 1
2873,00 Raw
Raw
2683,00
Raw
Raw Material
Material
Material
Material
 SAP AG 1999
2683,00
The Material Ledger focuses on individual materials and their procurement processes. The
procurement process of a material is not restricted to external procurement but also refers to internal
procurement (production, cross company transfer,…).
The above mentioned method is one of both options in Material Ledger. Options are: transactional
closing and single-/multilevel closing. Transactional closing covers same processes as standard MM
but provides the possibility of additional currencies. Single-/multilevel closing covers the need to
determine prices of standard price material settling price and exchange rate differences to respective
material.
The term single-level always refers to a single material and its procurement process; that means that
all values and quantities that arise during a procurement for said material are stored “single-level”. In
the above example, three single levels are displayed: one for external procurement and two for
internal production. In Release 4.0, the Material Ledger only knows Single-Level Calculations. A
relation between the individual level is not available; this function is realized in Release 4.5.
As of Release 4.5, the Material Ledger can determine relations between single-levels and create a
multi-level model. This model can be looked at as some kind of an actual bill of material: the system
knows what materials were used for the production of which goods. In this multi-level szenario,
price differences can be rolled up from raw materials to finished materials.
This roll-up of price differences applies to all variances which ocured in the internal and external
procurement process. Inflation accounting postings of Material Management which were posted via
the two processes of the replacement price procedure (inflation index and market price
determination) are posted as normal price differences and as such could be rolled up to the finished
product.
© SAP AG CA550 5-63

Processes of Actual costing (single-/multilevel)
2873,00
2856,00
2683,00
Three Steps in Actual Costing
2846,00
1 2768,00 Preliminary Valuation and
Recording of Differences
2794,00
2794,00
2 2768,00
Price determination:
Calculation of Periodic Unit Price
2683,00
2695,00 Period End Closing:
3 2873,00
Revaluation of materials
with Periodic Unit Price
2683,00
 SAP AG 1999
2683,00
© SAP AG CA550 5-64

Process of Actual costing (Step 1)
2873,00
12856,00 Preliminary Valuation and
Recording of Differences
2683,002846,00
Category
Category Quantity
Quantity PrelimVal
PrelimVal PriceDif
PriceDif Price
Price
2768,00
Beginning
Beginning inventory
inventory 20 2,000 100
Receipts
Receipts 100 10,000 1,000 110
2794,002794,00
Document 1 50 5,000 100
2768,00
Document 2 50 5,000 1,000 120
Other
2683,00
Other inward/outward
inward/outward mov
mov
2695,00
Cumulative inventory 120 12,000 1,000 108,33
Consumption
Consumption 2873,00
Ending 2683,00
Ending inventory
inventory 120 12,000 1,000 100
 SAP AG 1999
2683,00
For a standard material all deviations from the standard price are recorded as differences: price
differences, exchange rate differences and also within the price differences the inflation accounting
postings.
For each transaction, the Material Ledger creates a new document.
In the second category all goods receipts of that period are recorded.
In the example of the document 1, 50 pieces of the material were received valuated with the
preliminary valuation price. As the actual price and the preliminary price are the same (100 MXN),
no price differences occure.
The document 2 shows that with the second goods receipt - again 50 pieces - price differences
between the actual and the preliminary value occurred (1,000 MXN). In this case, the price
differences are caused by an actual price which is higher than the preliminary valuation price (120
MXN vs 100 MXN).
© SAP AG CA550 5-65

2873,00
22856,00 Price determination:
Calculation of Periodic Unit Price
2683,002846,00
Periodic Unit Price = 17,000MXN + 3,400MXN
170pc
= 120MXN/PC
2768,00
Cumulated Inventory at Prel. Valuation Price + Cumulated Price Differences
2794,00
Cumulated Inventory
2794,00
2768,00
Prel.Val.Price: 100 MXN
Category
Category Quantity
Quantity PrelimVal
PrelimVal PriceDif
PriceDif Price
Price
2683,00
Beginning
Beginning inventory
Receipts
Receipts
inventory 20
100
2,000
10,000 1,000
100
110
2695,00
Other
Other inward/outward
inward/outward mov
Cumulative
Cumulativeinventory
inventory
mov 50
170
5,000
17,000
2,400
3,400
148
120
2873,00
Consumption
Consumption 30 3,000 600 120
Ending
Ending inventory
inventory 140 14,000 2,800 120
2683,00
 SAP AG 1999
2683,00
The periodic unit price is determined at the end of each period during the so called settlement
(Price determination named as of Release 4.6). It reflects the actual costs for a material for the
closed period.
To determine the periodic unit price, the system uses the cumulated quantities (all goods receipts
plus the beginning inventory) and the cumulated differences (differences between the planned price
and the actual price for all goods receipts and beginning inventory).
During price determination (settlement), no postings are carried out.
Price determination(settlement) must be allowed respectively.
© SAP AG CA550 5-66

2873,00
32856,00 Period End Closing:
Revaluation of materials with Periodic Unit Price
2683,002846,00
ing
Closries
Period 1 Period 2
2768,00
Ent
2794,002794,00
2768,00
Price
Price Control
Control
2683,00
2695,00 During
During Period
Period After Closing Entries
2873,00
Preliminary
Preliminary Valuation
Valuation Price
Price Periodic Unit Price
2683,00
 SAP AG 1999
2683,00
During the period, materials are always valuated with the standard price when using single-
level/multi-level material price determination (settlement). The periodic unit price is determined for
the closed period (here period 1) and this price is used to update the V-price field in the Material
Master.
At the time of Period End Closing Entries, you can revaluated the material with this price and carry
out postings on inventory or not. If you carry out revaluation, the system changes the price control
for the material for the closed period from S to V (from preliminary calculation price to periodic
unit price). The price control of the current, the open period remains S.
Precondition: Closing is permitted in Material Ledger and Material Management is closed for the
period.
© SAP AG CA550 5-67

Closing Entries with Revaluation
2873,00
2856,00
Material
2683,00
Standard
Standard Price:
Price: 100$
2846,00
100$ Periodic
Periodic Unit
Beginning inventory (BI): 20pc /100$
Initial stock entry (IS): 50pc /148$
Unit Price:
Price: 120$
120$ Period
Period End
Invoice Receipt (IR):
Consumption (CO):
End Stock:
Stock: 140pc
140pc
100pc /120$
30pc /100$
2768,00
Goods Receipt (GR): 100pc /120$ Closing Entries (CE): 2,800$
2794,002794,00
Material
Material Stock
Stock
3,000 CO
GR
GR // IR
IR 12,000
IR Clearing
Clearing
12,000 GR
Accounts
Accounts Payable
Payable
12,000 IR
2768,00
BI 2,000
IS 5,000
2683,00
GR 10,000
CE 2,800
Stock 2695,00
Stock (Contra
(Contra Account)
Account) Price
Price Difference
Difference Material
Material Consumption
Consumption
2873,00
7,400 BI/IS IS 2,400
GR 2,000
2,800 CE CO 3,000
2683,00
 SAP AG 1999
2683,00
During the process of revaluation, the system makes the following postings:
the stock account is debited
the price difference account is credited with the same amount
Note that only a part of the price differences are posted to the material stock. The rest remains on the
price difference account.
© SAP AG CA550 5-68

Closing Entries without Revaluation
2873,00
2856,00
Material
2683,00
Standard
Standard Price:
Price: 100$
2846,00
100$ Periodic
Periodic Unit
Beginning inventory (BI): 20pc /100$
Initial stock entry (IS): 50pc /148$
Unit Price:
Price: 120$
120$ Period
Period End
Invoice Receipt (IR):
Consumption (CO):
End Stock:
Stock: 140pc
140pc
100pc /120$
30pc /100$
2768,00
Goods Receipt (GR): 100pc /120$ Closing Entries (CE): 2,800$
2794,002794,00
Material
Material Stock
Stock
3,000 CO
GR
GR // IR
IR 12,000
IR Clearing
Clearing
12,000 GR
Accounts
Accounts Payable
Payable
11,000 IR
BI 2,000
GR 10,000 2768,00
IS 5,000
2683,00
Stock 2695,00
Stock (Contra
(Contra Account)
Account) Price
Price Difference
Difference Material
Material Consumption
Consumption
2873,00
7,400 IS GR 2,000
IS 2,400
2,800 CE CO 3,000
2683,00 Contra
Contra Account
Account (LKW)
CE 2,800
(LKW)
 SAP AG 1999
2683,00
If you decide not to revaluate your materials with the actual price, the amount which would have
been posted to the material stock account is posted to another price difference account with the
posting key LKW. It is up to you which account you chose for this posting.
© SAP AG CA550 5-69

Inflation and Material Ledger
2873,00
2856,00 Material Ledger
2683,00
Active
2846,00
2768,00
Inactive Price control
S, V Price determination
Price
control S
2794,002794,00 2
2768,00
3
2683,00
2695,00 Revaluation No revaluation
2873,00
Price change
Debit / Credit G/L-account
2683,00 to material posting
 SAP AG 1999
2683,00
If you work with Materials Management but not Material Ledger/Actual Costing, the system carries
out a price change. Therefore, the standard transaction for price change (Logistics -> Materials
Management -> Valuation -> Valuation -> Price Determination -> Change Price) is used by the
replacement cost determination programs.
If you use Material Ledger/Actual Costing in conjunction with transaction-based material price
determination (a price is defined in Material Ledger/Actual Costing in multiple currencies and/or
valuations transaction based, used for standard and moving average price controlled material) the
price change is posted, called from the replacement cost determination program. Material Ledger
price of material is changed.
If you use Material Ledger/Actual Costing in conjunction with periodic, single or multilevel price
determination (the calculation of the periodic unit price for the closed period is only done for
standard price material), no price change is carried out on the standard price of material but the
periodic unit price is getting the settled price changes. Alternatively a debit/credit material document
or a G/L-posting between non-inventory accounts is carried out.
© SAP AG CA550 5-70

Material Ledger usage: Summary
Material Ledger stores additional data for

material valuation.
Material Ledger permits updates of valuation
data in multiple currency/valuations.
Inflation accounting MM delivers to Material
Ledger:
adjusted values on legal base or
market price determinated values
Depending on the settlement control price
changes are stored in inventory, Periodic Unit
Price or remain on price difference accounts.
 SAP AG 1999
© SAP AG CA550 5-71

MXNt Summary

Carry out methods of inflation accounting
of inventory
 SAP AG 1999
© SAP AG CA550 5-72

Exercises
Unit: Inflation Accounting in Material Management

Topic: Overview

Explain the general parameters of customizing as precondition to carry
out inflation accounting in Material Management
Project implementation: Customizing to be undertaken in the area of
revaluation
1. Please make the following general steps to prepare inflation adjustment MM.
1-1 For activation of inflation in MM first change the inflation method IN## created
on the first day, with following input:
MM active Yes
Post repl.cost Yes
Manual price change Yes
Del.cost in M.Pr. 0
Indexing method 1 (stock-based indexing)
Currency type M
Valuation level 1
1-2 Now you create three own material master with reference to existing material
master in plant 6000: T-110 , T-111 and T-112 in company code CA##/plant
CA##, storage location 0001. Assign a price of 200 MXN to all material.
Write down the numbers of those material used later in the exercises:
Material 1 group ##
_______________________________________________________________
Material 2 group ##
_______________________________________________________________
Material 3 group ##
_______________________________________________________________
© SAP AG CA550 5-73

1-3 Please check your material, view accounting 2 for company code CA##/plant
CA## storage location 0001 and add the material inflation classes :
Material 1__________group ##inflation class 0000 no revaluation

Material 2__________group ## inflation class 0001 market price highest
Material 3__________group ## inflation class 0002 inflation index
Please remember that the inflation data of the material master is part
of view Accounting 2.
1-4 Now post inventory to the stock of all three material on first day of previous
period (which should be open for MM-postings) 2000 pieces for plant: CA##,
storage location 0001, movement type 501.
© SAP AG CA550 5-74

Unit: Inflation accounting in Material Management
Topic: Market price determination
At the conclusion of this exercise you will be able to:

Explain the origin of market price determination
Set-up the respective customizing
Interpret the results and accounting effects
You are responsible to carry out periodically market price determination
as part of periodic processing in Material Management.
1. First You post now a purchase order for material 1, 2 and 3 of exercise 1-2. Please be
sure that the posting date is first day of previous month. Quantity: 100 pieces, price 210
MXN per piece, vendor is 1090, plant CA## storage location 0001.
And then post a purchase order for material 1, 2 and 3 of exercise 1-2 for the first day
of current month with quantity : 100 pieces, price 215 MXN per piece, vendor 1090,
plant CA## storage location 0001.
2. You create a report variant GR## for the market price determination program and enter
following values on the selection screen:
Material Material 2
Company code CA##
Price sources From purchase order
Dates from First day of previous period to last day of
previous period
Control data : update mode No
Control data : log data of test run Yes
3. You execute the report now in test run with your variant.
4. Now you close the previous posting period and run the program for market price
determination in productive mode.
© SAP AG CA550 5-75

Material Material 2
Company code CA##
Dates from First day of (new) previous period to last day
of (new) previous period
Control data : update mode Yes
Write down the changes effected in the material master
Material __________ Current period Previous period

Standard price
Replacement cost pr.
Material___________
Standard price
© SAP AG CA550 5-76

Topic: Inventory index adjustment

Create periodically the index inventory adjustment
Interpret the results in Financials and Material Management
You understood the scenario and the underlying customizing for that
method which you are carrying out as part of periodic valuation processes
in material management.
1. Now you will adjust the material master via the inflation index.
1-1 Please post a goods issue of 100 pieces for the day 20th of previous month,
Movement type 201 plant CA## storage location 0001 to cost center CA##.
1-2 Please check the stock of all material and write down the actual price (view
Accounting1) and replacement cost prices for current and previous periods:

Standard price
Material___________
Standard price
Material __________
Standard price
1-3 You create a report variant GR## for the inflation index adjustment program and
enter following values on the selection screen:
© SAP AG CA550 5-77

Valuation period Previous period
Company code CA##
Material Material 1 and 3
Provisional run yes
Database update no
Log data of test run yes
1-4 You execute the variant of the inflation index program in test and update mode
(be carefully using your own variant changing only the update mode) and check
the results.
1-5 Write down the changes effected in the material master

Standard price
Material___________
Standard price
© SAP AG CA550 5-78

Topic: Goods issue revaluation

Explain the necessary customizing for that program
Carry out goods issue revaluation
Describe the purpose of goods issue revaluation, the respective report
and accounting effects generated
Periodic processing in material management. Revaluation of relevant
goods issues of previous month after inflation index revaluation.
1. You create a report variant GR## for the goods issue revaluation program and enter
Valuation period Previous period

Company code CA##
Material Material 1 – 2 - 3
Database update No
2. You execute the variant of the goods issue revaluation program in test and update mode
(changing the selection screen of your variant) and check the results.

Standard price
Material___________
Standard price
© SAP AG CA550 5-79

______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
_____________________________________________________________
You have reached the goal to adjust material with two different methods
of replacement cost determination and goods issue revaluation.
© SAP AG CA550 5-80

Solutions

Topic: Overview

Explain the general parameters of customizing as precondition to carry
out inflation accounting in Material Management
Project implementation: Customizing to be undertaken in the area of
revaluation
1. Please make the following general steps to prepare inflation adjustment MM.
1-1 For activation of inflation in MM first change the inflation method IN## created
on the first day, with following input:
MM active Yes
Post repl.cost Yes
Manual price change Yes
Del.cost in M.Pr. 0
Indexing method 1 (stock-based indexing)
Currency type M
Valuation level 1

Accounting Global Settings → Inflation → Global Settings → Maintain Inflation Methods
1-2 Now you create in your plant three own material master with reference to the
existing material master of plant 6000: T-110 , T-111 and T-112 in company
code CA##/plant CA##, storage location 0001. Assign a price of 200 MXN to all
material
SAP EasyAccess/standard menu → Logistics → Material Management → Material
master → Create (General) → Immediately
© SAP AG CA550 5-81

Write down the numbers of those material used later in the exercises:
Material 1 group ##
____________________________________________________________
Material 2 group ##
_______________________________________________________________
Material 3 group ##
_______________________________________________________________
1-3 Please check your material, view accounting 2 for company code CA##/plant
CA## storage location 0001 and add the material inflation classes :
Material 1__________group ##inflation class 0000 no revaluation
Material 2__________group ##inflation class 0001 market price highest
Material 3__________group ##inflation class 0002 inflation index
SAP EasyAccess/standard menu -> Logistics → Material Management → Material

master -> Material -> Change (General) -> Immediately
Please remember that the inflation data of the material master is part
of view Accounting 2.
1-4 Now post inventory to the stock of all three material on first day of previous
period (which should be open for MM-postings) 2000 pieces for plant: CA##,
storage location 0001, movement type 501.
SAP EasyAccess/standard menu → Logistics → Material Management → Inventory

Management → Goods movement → Goods receipt → Other
© SAP AG CA550 5-82

Topic: Market price determination

Explain the origin of market price determination
Set-up the respective customizing
Interpret the results and accounting effects
You are responsible to carry out periodically market price determination
as part of periodic processing in Material Management.
1. You post now a purchase order for material 1, 2 and 3 of exercise 1-2. Please be sure
that the posting date is first day of the previous month. Quantity : 100 Pieces, price 210
MXN per piece, vendor is 1090, plant CA## storage location 0001. And
then post a purchase order for material 1, 2 and 3 of exercise 1-2 for the first day of
current month with quantity: 100 pieces, price 215 MXN per piece, vendor 1090, plant
CA## storage location 0001.
SAP EasyAccess/standard menu → Logistics → Material Management →
Purchasing → Purchase order → Create → Vendor/Supplying Plant Known
2. You create a report variant GR## for the market price determination program and enter
SAP EasyAccess/standard menu → Logistics → Material Management → Valuation
→ Valuation → Balance Sheet Valuation → Replacement Cost Valuation → Market
Price Determination
Material Material 2
Company code CA##
Control data : update mode No
3. You execute the report now in test run with your variant.
Price Determination
© SAP AG CA550 5-83

4. Now you close the previous posting period and run the program for market price
determination in productive mode.
Master → Other → Close Period
Price Determination
Material Material 2
Company code CA##
Control data : update mode Yes

Standard price
Material___________
Standard price
© SAP AG CA550 5-84

Topic: Inventory index adjustment

Create periodically the index inventory adjustment
Interpret the results in Financials and Material Management
You understood the scenario and the underlying customizing for that
method which you are carrying out as part of periodic valuation processes
in material management.
1. Now you will adjust the material master via the inflation index.
1-1 Please post a goods issue of 100 pieces for the day 20th of previous month,
Movement type 201 plant CA## storage location 0001 to cost center CA##.
SAP EasyAccess/standard menu → Logistics → Material Management →
Inventory Management → Goods Movement → Goods issue
1-2 Please check the stock of all material and write down the moving
average/standard price and replacement cost prices for current and previous
periods:

Standard price
Material___________
Standard price
Material __________
Standard price

master → Material → Display → Display Current
© SAP AG CA550 5-85

1-4 You create a report variant GR## for the inflation index adjustment program and
→ Valuation → Balance Sheet Valuation → Replacement Cost Valuation →
Valuation period 1999 08

Company code CA##
Material Material 1 and 3
Provisional run yes
Database update no
Log data of test run yes
1-5 You execute the variant of the inflation index program in test and update mode
(be carefully using your own variant changing only the update mode) and check
the results.
→ Valuation → Balance Sheet Valuation → Replacement Cost Valuation →

Standard price
Material___________
Standard price
© SAP AG CA550 5-86

Topic: Goods issue revaluation

Explain the necessary customizing for that program
Carry out goods issue revaluation
Describe the purpose of goods issue revaluation, the respective report
and accounting effects generated
Periodic processing in material management. Revaluation of relevant
goods issues of previous month after inflation index revaluation.
1. You create a report variant GR## for the goods issue revaluation program and
2. SAP EasyAccess/standard menu → Logistics → Material Management →
Valuation → Valuation → Balance Sheet Valuation → Replacement Cost
Valuation → Reval. Goods Movements
Valuation period 1999 08

Company code CA##
Material Material 1 – 2 - 3
Database update No
3. You execute the variant of the goods issue revaluation program in test and
update mode (changing the selction screen of your variant) and check the
results.
→ Valuation → Balance Sheet Valuation → Replacement Cost Valuation → Reval.
Goods Movements
© SAP AG CA550 5-87

Standard price
Material___________
Standard price
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
______________________
You have reached the goal to adjust material with two different methods
of replacement cost determination and goods issue revaluation.
© SAP AG CA550 5-88

Conclusion
1 Introduction
5 Inflation Accounting in Material Management
6 Conclusion
7 Appendix
 SAP AG 1999
© SAP AG CA550 6-1

Course Objectives
z Understand the concepts of inflation accounting

realized in R/3
z Explain the mechanism of inflation in financials,
asset accounting and inventory management
z Carry out customizing of inflation accounting
z Create inflation accounting report variants and

respective postings
 SAP AG 1999
© SAP AG CA550 6-2

Recommended Follow-up Activities
z Check your business processes together with the inflation

scenarios
z Go through the exercises using IDES data
or your own data
z Read on-line documentation
z Read IMG documentation
z Read release notes
z Check in SAP Net notes regarding corrections
 SAP AG 1999
© SAP AG CA550 6-3

Appendix
Contents
Chile: MM Inflation Accounting
 SAP AG 1999
© SAP AG CA550 7-1

Chile: MM Inflation Accounting – Requirements
and Solution
2873,00 Raw material
2856,00
2683,002846,00
Purchase order
Imported Valuation type Domestic
2768,00 or
2794,00 invoice
2794,00
+ goods receipt
Acquisition time:
2768,00 Previous year
2683,00 Current year 1st half
2695,00 Exchange Current year 2nd half
Annual 2873,00 rate

difference
revaluation 2683,00
 SAP AG 1999
2683,00 Latest price Inflation index Highest price
In Chile, the legal requirements for adjusting raw materials for inflation and the SAP solution are as
follows:
Raw materials are to be revaluated on an annual basis. You have to run the revaluation program
monthly because the system determines the prices from purchasing documents.
There are different regulations as to how to revaluate raw materials, depending on (a) whether they
are domestic or imported and (b) when they were acquired (see below). For these purposes, you
have to define two valuation types, one for domestic materials and one for imported materials.
The system covers goods issues for each relevant purchasing document (purchase orders or
invoices).
The regulations for adjusting domestic materials depend on if you made the last purchase in:
The second half of the current year, in which case you take the highest price
The first half of the current year, in which case you take the highest price and adjust it using the
inflation index
Previous years, in which case you adjust the price using the inflation index
The regulations for adjusting imported materials depend on if you made the last purchase in:
The second half of the current year, in which case you adjust the price according to the
difference in the exchange rate between the current period and the original period.
The first half of the current year, in which case you take the latest price and adjust it using the
exchange rate difference
Previous years, you take the latest price
The exchange rate difference is calculated using the document date.
© SAP AG CA550 7-2

Chile: MM Inflation Accounting – Customizing
2873,00 err ccre

en
2856,00 miz
ing
tteri
al m ast
le ctiio
n s
2683,00
to Se
Cus M a
a S
2846,00
2768,00 Exchange rate
strategy D
2794,00
Inflation method
2794,00
Valuation types:
2768,00
TBE variant 1 Domestic s
et tiing
nt s
2683,00
TBE variant 2 Imported
C u rre
2695,00
Posting variant Check:
2873,00
Inflation class
Revaluation
methods 2 or 3
Posting periods
2683,00
 SAP AG 1999
2683,00
In Chile, you customize the inflation method as follows. Select MM active and Post repl. cost (Post
replacement cost); leave the Indexing method field blank (price-based indexing); and we recommend
that you set the valuation level to 1.
You create separate material inflation classes for domestic and imported materials respectively. In
the class for the domestic materials, you set the revaluation method to Highest price; in the class for
imported materials, you set it to Latest price. You can also set the revaluation method in a material
master record.
You run the market price determination and inflation programs for the previous posting period (the
previous posting periods in Financial Accounting and Materials Management must still be open).
Run the market price determination program first, setting the exchange rate strategy to D (document
date).
See next slide for details of the TBE variants and posting variants required.
For more information, see the SAP Library documentation for Chile (Cross-Application Components
-> Country-Specific Documentation -> Americas -> Chile).
© SAP AG CA550 7-3

Chile: MM Inflation Accounting – TBE/Posting Variant
2873,00 Time base variant 1
2856,00
Material 1, valuation type: Domestic
TBE Until Until Post Until Until Prev.
2683,00
month day month day year
9999
2846,00
5 31 11 30 X
2768,00
9999 6 30 5 31
Posting variant
2794,00
9999 11 30 5 31
2794,00
9999 12 31 X 11 30 Post. year Post. period Post. date
2768,00
Time base variant 2 9999 6 30
2683,00
TBE Until Until Post Until Until Prev.
9999 5 2695,00
month day
31
month day
12 31
Year
X
9999 12 31
9999 6 30
2873,00 6 30
9999 11
2683,00
30 6 30
9999 12 31
 SAP AG 1999
2683,00
X 12 31
Material 1, valuation type: Imported
You create a TBE variant that allows annual postings for domestic materials, selecting Post for the
last day of the year. You also create a posting variant with all the posting days required and assign it
to the TBE variant. Because the exchange rates and inflation indexes used by the replacement cost
program are normally shifted one month, but this is not the case for imported materials in Chile, so
you define a second TBE variant, to which you assign the same posting variant as above. In this TBE
variant, however, the dates in each row of the table must be identical, but again, you only select Post
for the last day of the year.
© SAP AG CA550 7-4

Chile: MM Inflation Accounting – Process Flow
2873,00 :
2856,00 l poi
nt of
view
2683,002846,00
F ro m
th e
Monthly process
t ec hni
ca
2768,00
2794,002794,00
2768,00Determine replacement cost price by scanning market prices
2683,00
2695,00
2873,00
2683,00
 SAP AG 1999
2683,00
When you run the market price determination program, it searches for the market prices for a given
material (latest for imported material and highest for domestic material) within a given period. It
searches purchase orders, invoices, contracts, info records, and any manual prices that you have
entered in the material master. For domestic materials, you then apply inflation indexes using
inflation index adjustment.
You run first market price determination and then inflation index adjustment at the end of every
posting period for the previous period, for technical purposes. Only at the end of the fiscal year are
the revaluation prices updated in the material master, and postings carried out in Financial
Accounting.
Assuming that the fiscal year runs from 1 January to 31 December, the procedure is as follows:
At the end of January you run the replacement cost programs. Domestic materials are revaluated
using November’s inflation index (see TBE variant 1), so the inflation calculated equals zero.
Imported materials are revaluated using December’s exchange rate (TBE variant 2). The exchange
rate difference is zero. The system marks all materials as having been revaluated.
You repeat the process each month from February to May.
At the end of June you run the replacement cost programs as usual. All materials that the system
finds a market price for are flagged. When you run the inflation index adjustment program, the
system applies the index from November to May. After that the inflation index program resets the
flags in the material master records, so that they can be revaluated again in six months’ time.
Again, you repeat January’s process from July through November.
At end of December you run the market price determination program, which updates the relevant
prices in material master, and then the inflation index adjustment program, which adjusts all
unrevaluated materials.
© SAP AG CA550 7-5

Chile: MM Inflation Accounting – Postings
2856,00
2683,002846,00
2768,00 31.XX.AA 01.XY.AA
2794,00
2794,00
VALUATION VALUATION
2768,00
2683,00
2695,00
31.01.97 100 100 31.01.97
2873,00
100 01.02.97 * 100 01.02.97*
2683,00
2683,00
*This posting can be avoided by setting T169P-PRAVT
 SAP AG 1999
previous period and the first day in the previous period or on demand only in the previous period.
You can make the settings in Customizing for Materials Management by choosing Valuation and
Account Assignment -> Configure Price Change in Previous Period/Previous Year.
© SAP AG CA550 7-6

CA550 - Inflation Accounting

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CA550 Inflation Accounting

Copyright 2000 SAP AG. All rights reserved.

All rights reserved.

In-depth knowledge of revaluation processes, fixed assets

2 Basics of Inflation Accounting

3 Inflation Accounting in Financial Accounting

4 Inflation Accounting in Asset Accounting

5 Inflation Accounting in Materials Management

© SAP AG CA550 1-1

2 Basics of Inflation Accounting

3 Inflation Accounting in Financial Accounting

4 Inflation Accounting in Asset Accounting

5 Inflation Accounting in Materials Management

© SAP AG CA550 1-2

At the conclusion of this unit,

State the goals and objectives of the course

© SAP AG CA550 1-3

You are part of the project team responsible for the

© SAP AG CA550 1-4

© SAP AG CA550 1-5

This slide shows typical business processes used in this course.

© SAP AG CA550 1-6

You are now able to:

© SAP AG CA550 1-7

© SAP AG CA550 2-1

2 Basics of Inflation Accounting

3 Inflation Accounting in Financial Accounting

4 Inflation Accounting in Asset Accounting

5 Inflation Accounting in Materials Management

© SAP AG CA550 2-2

At the conclusion of this unit,

List the basic parameters for customizing

© SAP AG CA550 2-3

You are part of the project team responsible for

© SAP AG CA550 2-4

© SAP AG CA550 2-5

© SAP AG CA550 2-6

2873,00 Index header: - Real/composite

2856,00 - Maintenance method

© SAP AG CA550 2-7

2695,00 Period ends: 02/28/XX

2683,00Needed: previous date 01/31/XX

© SAP AG CA550 2-8

2768,00 Used for calculation

© SAP AG CA550 2-9

2873,00 G/L account Asset class/master

© SAP AG CA550 2-10

2873,00 Calculated Calculated

© SAP AG CA550 2-11

2873,00 Calculated Calculated

The above slide shows an example of an accumulated index.

© SAP AG CA550 2-12

© SAP AG CA550 2-13

© SAP AG CA550 2-14

2695,00 Index published for 03/XX:

2873,00 Exposure: 03/31/XX

© SAP AG CA550 2-15

2768,00 05/24/XX 05/31/XX 05/31/XX

2695,00 03/17/XX 03/17/XX 03/17/XX

2683,0012/31/XX 12/31/XX 12/31/XX

© SAP AG CA550 2-16

2768,00 05/24/XX 06/30/XX 06/30/XX

2695,00 Original date Time base Exposure to inflation

2683,0005/24/XX 06/30/XX 05/31/XX