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SAP ASSET DEPRECIATION

Author – Gobi Suppiah

Email – gobiki@gmail.com

Revision History
# Date Description By
1 March 3,2021 Initial Creation Gobi Suppiah
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Contents

1. Scope ....................................................................................................................................................... 3
2. Asset Depreciation .................................................................................................................................. 3
a) Key Factors for Asset Depreciation .................................................................................................... 3
b) Depreciation Key ................................................................................................................................ 3
c) Calculation Method ............................................................................................................................ 3
3. Changing Depreciation Key of Existing asset .......................................................................................... 5
4. Depreciation Simulation .......................................................................................................................... 5
5. Understanding Depreciation Calculation ................................................................................................ 6
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Asset Depreciation
1. Scope
• This document explains the concept of asset depreciation, key factors and how SAP system
calculates the depreciation amount
• No configuration steps are included

2.Asset Depreciation
a) Key Factors for Asset Depreciation
• Depreciation Key
• Acquisition Date
• Depreciation Start Date
• Useful Life
• Remaining Life

b) Depreciation Key
• Among the key factors of asset depreciation, depreciation key is most important
• Depreciation key indicates if asset is to be depreciated per day or period, method
• Calculation method is assigned to the depreciation key

c) Calculation Method
• Base Method
o It determines the following
▪ Depreciation Type – If it is ordinary or special depreciation
▪ Depreciation method – How the depreciation percentage to be calculated
▪ Treatment of asset after its is useful life
o Depreciation Percentage – If the depreciation percentage is based on useful life (which
would be in most cases) then percentage is calculated by formula = 1 / useful life
▪ Useful life: 4 years
▪ Acquisition Amount: 100
▪ Percentage = 1/4 = .25 or 25%
▪ Dep Amt per Year = .25 * 100 = $25 each year
• Declining Balance Method
o It determines the following
▪ Declining Multiplication factor
▪ The multiplication factor is used in determining the depreciation percentage
rate. The system multiplies the depreciation percentage rate resulting from the
total useful life by this factor
▪ In most cases this would be 000
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• Period Control Method

o This determines what period control should system consider for Acquisition, addition
Transfer, retirement

• Multilevel Method
o This is most important as it determines what value should be used for the depreciation
calculation. Acquisition value or NBV
o If it is acquisition value, then system will calculate depreciation based on the acquisition
value
▪ If asset is transferred within or out of company code, the depreciation amount
calculation is based on the acquisition value
o If it is Net book value, then system will calculate depreciation based on the net book
value.
▪ If asset is transferred within or out of company code, the depreciation amount
calculation is based on the net book value
• Class
o Straight line, Declining balance method or other depreciation

Depreciation Key
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Assignment of Calculation Procedure

3. Changing Depreciation Key of Existing asset

• Depreciation key can be changed for the existing asset
• Once the asset is updated with new dep key run the program AFAR for system to recalculate the
depreciation

4. Depreciation Simulation
• Without updating the master data, system allows to simulate depreciation calculation by
changing useful life, Dep key and remaining life

• Use transaction AW01N, then click and change the value in parameter tab
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• Display Dep key will display information of the

depreciation key and its attributes

5.Understanding Depreciation Calculation

• In AW01N, In Planned value tab double click on depreciation value, the system will then display
how the depreciation is calculated
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