Asset Accounting Overview. Purpose. The Asset Accounting (FI-AA) component is used for managing and supervising fixed assets with the SAP System. In Financial Accounting, it serves as a subsidiary ledger to the General Ledger, providing detailed information on transactions involving fixed assets.
What is sap asset accounting?
Explain Asset Accounting (FI-AA)?
The Asset Accounting (FI-AA) sub module in SAP manages a company’s fixed assets, right from acquisition to retirement/scrapping. All accounting transactions relating to depreciation, insurance, etc., of assets are taken care of through this module, and all the accounting information from this module flows to FI-GL on a real-time basis.
You will be able to directly post (the goods receipt (GR), invoice receipt (IR), or any withdrawal from a warehouse to a fixed asset) from MM or PP to FI-AA. The integration with FI-AR helps in direct posting of sales to the customer account. Similarly, integration with FI-AP helps in posting an asset directly to FI-AA and the relevant vendor account in cases where the purchase is not routed through the MM module. You may capitalize the maintenance activities to an asset using settlements through the PM module. FI-AA and
FI-GL has real-time integration where all the transactions such as asset acquisition, retirement, transfer, etc., are recorded simultaneously in both the modules. However, batch processing is required to transfer the depreciation values, interest, etc., to the FI module.
The FI-AA and CO integration helps in:
>Assigning an asset to any activity type. Internal Orders act as a two-way link to the FI-AA:
(i) They help to collect and pass on the capital expenditure to assets,
(ii) they collect the depreciation/interest from FI-AA to controlling objects. (Note that when there is a situation where the asset master record contains an internal order and a cost center, the depreciation is always posted to the internal order and not to the cost center.)
The depreciation and the interest are passed on to the cost/profit centers.
What is a Lean Implementation in FI-AA?
A ‘Lean Implementation’ is the scaled-down version of the regular FI-AA configuration in IMG, with minimal configuration required to enable asset accounting. This is suitable for small companies using the standard functionalities of asset accounting, and also in situations where the Asset Catalog is not that large.
You should not opt for lean implementation if:
- You need more than Depreciation Areas
- You need to Depreciate In Foreign Currencies as well
- You have Group Assets
- You need to define your own Depreciation Keys/Transaction Types/ Reports
- You need a Group Consolidation
What are the kinds of Assets in SAP?
An asset can be a Simple Asset or Complex Asset. Depending on the requirement, assets are maintained with Asset Main Numbers and Asset Sub numbers. A complex asset consists of many Sub-Assets; each of them identified using an asset sub number. You may also use the concept Group Asset in SAP.
Explain Complex Assets and Asset Sub numbers?
A ‘Complex Asset’ in SAP is made up of many master records each of which is denoted by an ‘Asset Sub number.’ It is prudent to use asset sub numbers if:
You need to manage the ‘subsequent acquisitions’ separately from the initial one (for example, your initial acquisition was a PC, and you are adding a printer later).
You want to manage the various parts of an asset separately even at the time of ‘initial acquisition’ (for example, an initial purchase of a PC where you create separate asset master records for the monitor, CPU, etc.).
You need to divide the assets based on certain technical qualities (keyboard, mouse,etc.).
When you manage a complex asset, the system enables you to evaluate the asset in all possible ways such as
(i) For a single sub number
(ii) For all sub numbers
(iii) For select sub numbers
What is Group asset in SAP? When you will use this?
A ‘Group Asset’ in SAP is almost like a normal asset except that it can have (any number of) sub-assets denoted by Asset Sub numbers. The concept of group asset becomes necessary when you need to carry out depreciation at a group level, for some special purposes such as tax reporting. Remember that SAP’s way of depreciation is always at the individual asset level. Hence, to manage at the group level, you need the group asset. Once you decide to have group assets, you also need to have ‘special depreciation areas’ meant for group assets; you will not be able depreciate a group asset using a normal depreciation area. Unlike Complex Assets, you can delete a group asset only when all the associated sub numbers have been marked for deletion.
What is Asset Super Number in SAP?
The concept of ‘Asset Super Number,’ in FI-AA, is used only for reporting purposes. Here, you will assign a number of individual assets to a single asset number. By using this methodology, you will be able to see all the associated assets with the asset super number as a single asset (for example, brake assembly line) or as individual assets (for example, machinery, equipment in the brake assembly line).
What is a Chart of Depreciation? How does it differ from a Chart of Accounts?
A ‘Chart of Depreciation’ contains a list of country-specific depreciation areas. It provides the rules for the evaluation of assets that are valid in a given country or economic area. SAP comes supplied with default charts of depreciation that are based on the requirements of each country. These default charts of depreciation also serve as the ‘reference charts’ from which you can create a new chart of depreciation by copying one of the relevant charts. After copying, you may delete the depreciation areas you do not need. However, note that the deletion must be done before any assets are created.
You are required to assign a chart of depreciation to your Company Code. Remember that one Company Code can have only one chart of depreciation assigned to it, even though multiple Company Codes can use a single chart of depreciation.
The chart of accounts can be global, country specific, and industry specific based on the needs of the business. The chart of depreciation is only country specific. The charts are independent of each other. Open table as spreadsheet Chart of Depreciation Chart of Accounts Established by FI-AA. Established by FI.
A chart of depreciation is a collection of country specific depreciation areas. The chart of accounts is a list of GL accounts used in a Company Code. The chart of accounts contains the chart of accounts area and the Company Code area. The chart of depreciation is country specific. Usually you will not require more than one chart of account. SAP comes delivered with many country specific charts of depreciation as ‘reference charts’ which can be copied to create your own chart of depreciation.
Depending on the requirement you may have an ‘operating chart of accounts,’ ‘country specific chart of accounts,’ ‘global chart of accounts,’ etc. One Company Code uses only one chart of depreciation. One Company Code uses only one chart of accounts.
Many Company Codes, in the same country, can use the same chart of depreciation.
Several Company Codes within the same country can use the same chart of accounts.
How do You Create an Asset Accounting Company Code?
- Define the Company Code in FI configuration, and assign a chart of accounts to this Company Code.
- Assign a chart of depreciation to this Company Code in FI-AA configuration.
- Add necessary data for the Company Code for use in FI-AA, and your ‘asset accounting Company Code’ is now ready for use.
What is Depreciation? Explain the Various Types?
‘Depreciation’ is the reduction in the book value of an asset due to its use over time (‘decline in economic usefulness’) or due to legal framework for taxation reporting. The depreciation is usually calculated taking into account the economic life of the asset, expected value of the asset at the end of its economic life (junk/ scrap value), method of depreciation calculation (straight line method, declining balance, sum of year digits, double declining, etc.), and the defined percentage decline in the value of the asset every year (20%, or 15%, and so on).
The depreciation can either be planned or unplanned. Planned depreciation is one which brings down the value of the asset after every planned period; say every month, until the asset value is fully depreciated over its life period. With this method, you will know what the value of the asset at any point of time in its active life. On the contrary, unplanned depreciation is a sudden happening of an event or occurrence not foreseen (there could be a sudden break out of a fire damaging an asset, which forces you to depreciate fully as it is no longer useful economically) resulting in a permanent reduction of the value of the asset.
In SAP, you will come across three types of depreciation:
- Ordinary depreciation, which is nothing but ‘planned depreciation.’
- Special depreciation, which is over and above ‘ordinary depreciation,’ used normally for taxation purposes.
- Unplanned depreciation, which is the result of reducing the asset value due to the
sudden occurrence of certain events.
Define Depreciation Areas?
Fixed assets are valued differently for different purposes (business, legal, etc.). SAP manages these different valuations by means of ‘Depreciation Areas.’ There are various depreciation areas such as book depreciation, tax depreciation, and depreciation for cost-accounting purposes, etc.
A depreciation area decides how and for what purpose an asset is evaluated. The depreciation area can be ‘real’ or a ‘derived one.’ You may need to use several depreciation areas for a single asset depending on the valuation and reporting requirements. The depreciation areas are denoted by a 2-character code in the system. The depreciation areas contain the depreciation terms that are required to be entered in the asset master records or asset classes.
SAP comes delivered with many depreciation areas; however, the depreciation area 01—Book Depreciation is the major one.
The other depreciation areas are:
Book depreciation in group currency
Consolidated versions in local/group currency
Tax balance sheet depreciation
Special tax depreciation
Country-specific valuation (e.g., net-worth tax or state calculation)
Values/depreciations that differ from depreciation area 01 (for example, cost-accounting reasons)
Derived depreciation area (the difference between book depreciation and country-specific tax depreciation)
How do You Set up Depreciation Area postings to FI from FIAA?
You need to define how the various depreciation areas need to post to FI-GL. It can be any one of the following scenarios:
Post depreciation through ‘periodic processing.’
Post both the APC (Acquisition and Production Costs) and depreciation through periodic processing.
Post the APC in ‘real time’ but depreciation through periodic processing.
No values are posted.
However, you need to ensure that at least one depreciation area is configured to post values automatically to the FI-GL. Normally, this depreciation area will be 01 (book depreciation). For the rest of the depreciation areas, it may be configured that they derive their values from this area and the difference thus calculated is automatically posted to FI-GL. There may also be situations where you may define depreciation areas just for reporting purposes, and these areas need not post to the GL.
What is an Asset Class?
An ‘Asset Class’ in SAP is the basis for classifying an asset based on business and legal requirements. It is essentially a grouping of assets having certain common characteristics. Each asset in the system needs to be associated with an asset class. An asset class is the most important configuration element that decides the type of asset (such as land, buildings, furniture and fixtures, equipment, assets under construction, leased assets, low value assets, etc.), the document number range, data entry screen layout for asset master creation, GL account assignments, depreciation areas, depreciation terms, etc. An asset class is defined at the Client level and is available to all the Company Codes of that Client.
The asset class consists of:
- A header section—control parameters for master data maintenance and account determination.
- A master data section—default values for administrative data in the asset master record.
- A valuation section—control parameters for valuation and depreciation terms.
The asset class can be:
- Technical assets
- Financial assets
- Leased assets
- AuC (assets under construction)
- Low value assets
Why do you need Asset Classes?
An ‘Asset Class’ is the link between the asset master records and the relevant accounts in the GL. The account determination in the asset class enables you to post to the relevant GL accounts. Several asset classes can use the same account determination provided all these asset classes use the same chart of accounts and post to the same GL accounts.
What is an Asset Class Catalog?
An ‘Asset Class Catalog’ contains all the asset classes in an enterprise and is therefore valid across the Client. Since an asset class is valid across the Client, most of the characteristics of the asset class are defined at the Client level; however, there are certain characteristics (such as the depreciation key, for example), which can be defined at the chart of depreciation level.
Is it Possible to Create Asset Classes Automatically?
One of the benefits of lean implementation configuration is the ability to create asset classes automatically from the asset GL accounts. This tool selects only necessary system settings so that the asset classes are created automatically in a very short time. During the process of creation, the system allows you to delete all the existing objects (i.e., asset classes, number ranges, account allocations, field selections, etc.) before creating the new ones.
The prerequisites for automatic asset class creation include:
- Company Code must be assigned to a chart of depreciation
- Depreciation areas have already been defined
- GL account number is not more than 8 digits (otherwise you need to assign the classes manually)
Also note that you may need to maintain the GL account for ‘accumulated depreciation’ manually. The system maintains the necessary account assignment only with regard to the depreciation area 01 (book depreciation). If you need more areas, you may need to do that manually in the IMG.
What is an Asset Value Date?
The ‘Asset Value Date’ is the start date of depreciation for the asset. The ‘planned depreciation’ is calculated by the system based on this depreciation start date and the selected ‘depreciation term’ for that asset. Be careful with the posting date and asset value date. Both dates need to be in the same fiscal year.
What is an Asset Master?
An ‘Asset Master’ can be created by copying an existing asset in the same Company Code or another Company Code; it can also be created from scratch when it is done for the first time. Again, while creating the master, SAP allows you to create multiple assets in one step, provided all such assets are similar (having the same asset class and all belonging to the same Company Code).
From Release 4.5, the transaction codes for creating an asset master have been changed to the AS series instead of the earlier AT series (for example, create asset is code AS01 (AT01 before), change asset is AS02 (AT02 before), and so on. If you are more comfortable with the creation of assets using the conventional screen than with the ‘tab’ feature available now in the AS transaction series, you can do so, but you cannot find these transactions under ‘ASMN’!
Each asset master contains the necessary information to calculate the depreciation:
- Capitalization date/acquisition period
- Depreciation areas relevant for the asset
- Depreciation key
- Useful life/expired useful life
- Change over year, if any
- Scrap value, if any
- Start date of (ordinary depreciation)
Explain the Two Ways used to Create Asset Masters?
Copy an existing asset as a reference for creating the new one.
From an existing asset class create a new asset so that this asset class provides the
default control parameters for the new asset.
Is it Possible to Create Multiple Assets in a Single Transaction?
SAP enables you to create multiple (but similar) assets in one transaction. What you need to know is that all these assets should belong to the same asset class and the same Company Code. Enter the number of assets you need to create in the ‘Number of similar assets’ field. After creating the assets, you will be able to change the individual descriptions/inventory numbers when you are about to save the master records. When you save the master records, the system assigns a range of asset numbers.
The only drawback of using this method of creating assets in bulk is that you will not be able to create long text for any of these assets.
What is the Time-dependent Data in an Asset Master?
All the cost accounting assignment-related data such as cost center, internal orders or investment projects, etc., need to be maintained as ‘Time-dependent Data’ in asset masters. Additionally, the information related to asset shut-down and shift operation also needs to be maintained as time dependent. SAP maintains all the time-dependent data for the entire life span of the assets.
Explain Asset Acquisition?
‘Asset Acquisition’ can be through any one of the following three routes:
- External Acquisition through Purchase
External acquisition of assets will be primarily from vendors, who are either your business partners or third parties. It can also be from your affiliated companies (use Transaction Code: ABZP). The external asset acquisition can be done several ways:
- The asset can be posted in the MM module.
- The asset can be created in FI-AA with automatic clearing of the offsetting entry
(Transaction Code: ABZON). This can be achieved either of the following ways:
- The posting is made initially in FI-AP and the clearing account cleared when the posting is made to the asset (FI-AA).
- Post the asset with the automatic offsetting entry (FI-AA) and then clear the clearing account through a credit posting by an incoming invoice (FI-AP).
iii. When not integrated with FI-AP, you may acquire the asset in FI-AA with an automatic offsetting entry without referencing a Purchase Requisition (PR). This
kind of acquisition is necessary when:
- You have not yet received the invoice or
- When the invoice has already been posted in FI-AP
- When integrated with FI-AP, acquire the asset in FI-AA using an incoming invoice but without a reference to a Purchase Order (PO).
- In-house Production/Acquisition
In-house Asset Acquisition is primarily the capitalization of goods/services produced by
your company. The costs associated with the complete or partial production of the
goods/services from within the company needs to be capitalized into separate asset(s).
Usually, the capitalization is done as follows:
- Create an order/project (in Investment Management) to capture the production
costs associated with the goods/services produced in-house.
- Settle the order/project to an AuC (Asst under Construction).
iii. Distribute/Settle the AuC so created into new asset(s). You will be using the
Transaction Type 110 for asset acquisition from in-house production.
- Subsequent Acquisition
When the asset/vendor accounts are posted, the system updates the corresponding GL
accounts (FI-AP and FI-AA) through relevant account determinations. SAP uses various
kinds of ‘transaction types’ to distinguish the different transactions. During acquisition the system makes the following entries in the asset master data:
Date of initial acquisition/period and year of acquisition.
Capitalization date of the asset.
Start date for ordinary depreciation (the start date is determined from the asset
value date/period/year of acquisition).
Vendor is automatically entered in the ‘origin.’
What are Automatically Set in the Asset Masters during Initial Acquisition?
- Date of capitalization
- Acquisition period
- Posting date of original acquisition
- Depreciation start date (per depreciation area)
Why it is Necessary to Block an Asset Master Record?
In case you decide that you do not want to post any more acquisitions to an existing asset, then it is necessary for you to set the Block Indicator in the asset master record. This is usually the case with AuC, where after the capitalization you no longer want any further additions to the asset. The block indicator prevents only further postings but not transfers or retirements or depreciation; even after an asset is blocked, you can continue to depreciate it as in the case of other assets.
How do you delete an Asset Master?
You can ‘Delete an Asset Master’ record from the system only when there are no transactions posted to it. The system will not allow you to delete the master record if there are transactions against the asset, even if you reverse all the previous transactions pertaining to the asset and bring down the asset value to zero. However, unlike FI-AR, FI-AP, or FI-GL where archiving is a prerequisite to delete the master records, you may delete the asset master records without archiving. When deleted, the system also deletes the asset number.