Parallel Accounting in SAP ERP 6.

17

Fixed Asset Accounting

in
Ledger Approach

in SAP New General Ledger

with Business Function FIN_AA_PARALLEL_VAL

Product Management Financials

January, 2014
Agenda

Multi-GAAP Accounting for Fixed Assets in Ledger Approach

Parallel Valuation in FI-AA (BF FIN_AA_PARALLEL_VAL)

Depreciation Areas
Valuation Decisions
G/L Integration
CO Integration
Processes:
Asset Aquisition with valuation differences
Depreciation
Integrated Asset Retirement
Assets under Construction
Low Value Assets

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Structure of the Presentation

At the end of this presentation you will be able to explain how

Parallel Accounting for Fixed Assets can be portrayed using General

Ledger Accounting (new) under the Ledger Approach.

The underlying assumptions and prerequisites for these slides are:

Software copmponent SAP_FIN is installed with release 6.17.
Business Function FIN_AA_PARALLEL_VAL is active.
Asset Accounting (new) is active.

In detail you will be able to configure and explain

Depreciation Areas
Valuation Decisions
G/L Integration
CO Integration
Fiscal Year Variants
Processes:
Asset Aquisition with valuation differences
Depreciation
Integrated Asset Retirement
Assets under Construction
Low Value Assets

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Parallel Accounting in FI-AA (ERP 6.17)
Depreciation Areas - basics

The FI-AA application component portrays parallel accounting using depreciation areas:
Accounting principles are defined and assigned to ledger groups.
Every depreciation area has to be assigned to one of these ledger groups.
The depreciation area settings specify whether
No postings are made (Area Does Not Post)

Asset balances and depreciation are posted in realtime* (Area Posts in Realtime)

Only depreciation is posted (Area Posts Depreciation only)

APC update to the G/L account is real time in all ledgers.*

An identical G/L account number can be used in different ledgers. In this way, only one APC
account and only one VA account, for example, are required for all accounting principles of an
asset class. A reduced version of the chart of accounts can be used for easier reference.
General Ledger and FI-AA sub ledger are required to be reconciled per currency: For every
currency type defined per G/L ledger a corresponding depreciation area need to be defined.
*The periodic posting run (RAPERB2000) is needed for depreciation areas for Special Items (Sonderposten-Bereiche) only.
Only for this exceptional requirement the posting indicator may as well be set to the value (Area Posts APC and depreciation
periodically
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Parallel Accounting in FI-AA (ERP 6.17)
Required Depreciation Areas

The portrayal of parallel valuation requires the depreciation areas listed below.

For every ledger there must be a depreciation area with posting indicator Area posts in
realtime. In these areas, APC update is accurate with every transaction in real time. (Delta
areas are not necessary, delta postings are not used.).

The following examples assume:

There are three different valuations: IFRS, local GAAP (L-GAAP), Tax*.
The local GAAP- and the Tax* ledger are non leading ledgers
Only one currency type is considered relevant for this example

Posting of
Ledger Group/
Depreciation area Ledger Leading Aquisition and Period
Accounting Principle
Production Cost Depreciation

01 0L / IFRS 0L X X X

20 (calculation) 0L / IFRS 0L X

30 N1 / local GAAP N1 X X

60 N2 / Tax* N2 X X

* Note that no content is delivered by SAP for country-dependend Tax valuation.

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Parallel Accounting in FI-AA (ERP 6.17)
Required Depreciation Areas

In Area 01
Asset balance sheet values and depreciation are posted real time.
In Area 20
Only cost-accounting depreciation is posted; another type of depreciation can be specified, and the
accounts specified need to be created as cost elements. Area 20 need to be integrated with ledger
group including the leading ledger.
In Area 30
Asset balance sheet values are posted real time
Where appropriate, depreciation is posted with a different base value.
In Area 60
Asset balance sheet values are posted real time
Where appropriate, depreciation is posted with a different base value.

General features:
The leading ledger assignment is flexible. IFRS (or any group GAAP) can as well be assigned to area 30.
Activation differences (postings with differing APC values such as capitalization of freight costs under local
GAAP) are entered manually via ledger group specific documents.

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Parallel Accounting in FI-AA (ERP 6.17)
Valuation decisions

Approach and Valuation Affect:

Same approach, but different valuation: An identical G/L account number can be used in different
ledgers. By the field Alternative Depreciation Area in the depreciation area it can be ensured, that
the G/L account determination is defined only once. In this way, only one APC account and one
account for accumulated depreciation, for example, are required for all accounting principles of an
asset class. A reduced version of the chart of accounts can be used for easier reference.
Different approaches:
Transaction activated as Fixed Asset in IFRS and as Current Asset in local: A different G/L account number
can be used in different depreciation areas.
Transaction activated in IFRS, and registered as expense in local GAAP: Per asset class or per asset master
the depreciation areas for local GAAP can be flagged as Deactive in Determine Depreciation Areas in the Asset
Class.

Customizing: Different depreciation parameters (such as method and useful life)

are defined for each depreciation area in an asset or asset class.

"Post-Capitalization of Cash Discount to Assets"

With document splitting active: Cash discounts are capitalized with payments real time.
Without document splitting: periodic run of SAPF181.

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 Parallel Accounting in FI-AA (ERP 6.17)
G/L integration

Every depreciation area has to be assigned to a ledger group in G/L. For every thus assigned ledger
group there must be exactly one APC-carrying area with posting indicator area posts realtime.
Consequently, asset postings are updating separate ledgers in FI in real time.
the leading ledger, which usually represents group accounting,
every further non-leading ledger representing the corresponding accounting principle (local GAAP, Tax, ).

A depreciation area with posting indicator Area Posts in Realtime must not inherit values from any other
deprecation area: The Adoption of values from depreciation area must be initial.

If a G/L ledger is updated by more than one currency type, for each such additional currency a
depreciation area with posting indicator Area does not post has to be defined and assigned to the
specific ledger group.

Value and parameter take over must only be defined within the same ledger group assignment.

For integrated asset acquisition postings a Technical Clearing Account for Integrated Asset Acquisitions
is to be defined. Thereby the business transaction integrated asset acquisition can be divided into an
operational part and a valuating part. The operational part (vendor invoice) is updated ledger group
independent, the valuating part (asset capitalization) is updated per ledger group via separate documents.

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 Parallel Accounting in FI-AA (ERP 6.17)
Integration with Controlling

Scenario 1:

Depreciation area 01 posts to Controlling

This is the leading depreciation area
It posts to the leading ledger
It posts to Controlling
Accounts are created as cost elements
In Controlling, the leading valuation is
It may use the same accounts as depreciation areas 30 and 60
portrayed as the cost-accounting approach.
Depreciation area 20 is not used.

Posting of
Ledger Group/
Depreciation area Ledger Leading Aquisition and Period
Accounting Principle
Production Cost Depreciation

01 0L / IFRS 0L X X X (CO)

30 N1 / local GAAP N1 X X

60 N2 / Tax N2 X X

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 Parallel Accounting in FI-AA (ERP 6.17)
Integration with Controlling

Scenario 2:

Depreciation area 01 does not post to Controlling

This may be configured as leading depreciation area
It posts to the leading ledger
It generally uses the same accounts (not created as cost elements) as
depreciation areas 30 and 60

Depreciation area 20 posts to Controlling

It posts to the leading ledger
It posts to Controlling The cost-accounting approach portrayed
Accounts are created as cost elements differs from that in the leading valuation.
The accounts used are different to those used in depreciation areas
01, 30, and 60

Posting of
Ledger Group/
Depreciation area Ledger Leading Aquisition and Period
Accounting Principle
Production Cost Depreciation

01 0L / IFRS 0L X X X

20 (calculation) 0L / IFRS 0L X (CO)

30 N1 / local GAAP N1 X X

60 N2 / Tax N2 X X

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 Parallel Accounting in FI-AA (ERP 6.17)
Integration with Controlling

Scenario 3:

Depreciation area 01 does not post to Controlling

Some of the (P&L) accounts it uses may be different to those used by
depreciation areas 30 and 60
In Germany and Austria, the current trend is to portray the German
Commercial Code (HGB) in area 01

Depreciation area 20 is not used.

Depreciation area 30 posts to Controlling In Controlling, group accounting is

It posts to Controlling (leading area) portrayed as the leading valuation with the
Accounts are created as cost elements
group approach being portrayed in area 30.
Some of the (P&L) accounts used may be different to those used in
depreciation area 01

Posting of
Ledger Group/
Depreciation area Ledger Leading Aquisition and Period
Accounting Principle
Production Cost Depreciation

01 N1 / IFRS N1 X X

30 0L / local GAAP 0L X X X (CO)

60 N2 / Tax N2 X X

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Parallel Accounting in FI-AA (ERP 6.17)
Fiscal Year Variants

The start date and end date of the fiscal year variant in the depreciation areas in
Asset Accounting need to correspond to the fiscal year variant (FYV), of the
leading ledger.

Non leading ledgers can use a different FYV if Business Function FIN_AA_CI_1
is active and if the Allow Differing Variants for Depreciation Areas with G/L
Integration-flag is activated in customizing. Again, the start and end date of the
fiscal year must be unique.

If a deviating fiscal year start and end date in non-leading ledgers is required for
a certain accounting principle, a work-around as described in SAP Note 1951069
can be implemented: the accounting principle can be assigned to a ledger group
with two ledgers, one of which shares the FYV of the leading ledger and is the
representative ledger of this ledger group, the other has the deviating FYV. (For
restrictions on this, see SAP Note 844029).Value and parameter take over must
only be defined within the same ledger group assignment.

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Parallel Accounting in FI-AA (ERP 6.17): Processes
Asset Acquisition

Different APC values reflecting different accounting principles have to be posted to the
ledgers (for example, freight costs shall not be capitalized for local GAAP).

01 IFRS
30 L-GAAP
60 Tax FI-AA

FI-GL

IFRS (Leading) local

Postings IFRS GAAP Tax
0L local GAAP
Vendor Invoice against technicial 0L N1 N2
N1 Tax clearing and tax account (1 doc.)
N2 over gross amount including freight
Asset Acquisition (Activation) 0L
against technical clearing account
N1
per accounting principle (1 doc. Per
ledger) N2
Reduction of APC by freight costs
-- N1 --
(ledger group-specific document)
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Parallel Accounting in FI-AA (ERP 6.17) : Processes
Asset Acquisition with valuation differences (e.g. freight costs not capitalized for local GAAP)

Document Entry: Financial Accountant

31 K Vendor 160000 (Payable) 10.200

70 A Asset FIAA-1000-0 PRCTR1 KOSTL1

L-GAAP 40 S GL 4xxxxxx (freight expense) 200

Freight shall not be capitalized
75 A Asset 13000 (Machines) PRCTR1 KOSTL1 in local GAAP (New Transaction:
limit posting to LG N1 (local GAAP))
Generated documents:
BLANK
(1) With LG Blank D 70 Tec.Clearing Acc. Acquisition 999999 10.200
C 31 Account Payable 160000 10.200

(2a) With LG 0L (IFRS) IFRS

D 70 Machines 13000 10.200
C 75 Tec.Clearing Acc. Acquisition 999999 10.200

(2b) With LG N1 (local GAAP) L-GAAP

D 70 Machines 13000 10.200
C 75 Tec.Clearing Acc. Acquisition 999999 10.200

(2c) With LG N2 (TAX) Tax

D 70 Machines 13000 10.200
C 75 Tec.Clearing Acc. Acquisition 999999 10.200

(3) With LG N1 (local GAAP) L-GAAP

D 40 Freight Expense 4xxxxxx 200
C 75 Machines 13000 200
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Parallel Accounting in FI-AA (ERP 6.17) : Processes
Asset Acquisition with valuation differences (e.g. freight costs not capitalized for local GAAP)

Asset Reconcilation. IFRS

AP Reconcilation Tech.Clear.Acc.Acqu. Freight expenses
1) 10.200 1) 10.200 2a) 10.200 2a) 10.200

Asset Reconcilation L-GAAP

1) 10.200 1) 10.200 2b) 10.200 2b) 10.200 3) 200 3) 200

Asset Reconcilation Tax

1) 10.200 1) 10.200 2c) 10.200 2c) 10.200

Transaction vendor invoice

1) Technical Clearing Account Acquisition to Vendor LG Blank
2a) Asset to Technical Clearing Account Acquisition LG IFRS
2b) Asset to Technical Clearing Account Acquisition LG local GAAP
2c) Asset to Technical Clearing Account Acquisition LG Tax

Transaction correction freight cost

3) Freight expenses to Asset LG local GAAP

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Parallel Accounting in FI-AA (ERP 6.17) : Processes
Depreciation

Assets are depreciated using different depreciation rules in accordance with different
accounting principles. The use of different depreciation parameters (such as method and
useful life) for the different accounting principles produces different depreciation values,
which are posted to the corresponding ledgers
01 IFRS
30 L-GAAP
60 Tax FI-AA

FI-GL

IFRS (Leading) local

Postings IFRS GAAP Tax
0L local GAAP
Straight-line depreciation over
N1 Tax 0L -- --
5 years as per IFRS
N2 Straight-line depreciation over
-- N1 --
10 years as per local GAAP
Degressive depreciation over
-- -- N2
3 years as per Tax Law

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Parallel Accounting in FI-AA (ERP 6.17) : Processes
Integrated Asset Retirement

Due to the different net book values, the accounting principles can produce different
losses/gains that need to be posted to the respective ledgers.

(Assumption: gains are achieved under IFRS, whereas local GAAP and Tax produce losses)

01 IFRS
30 L-GAAP
60 Tax FI-AA

FI-GL

IFRS (Leading)
Postings IFRS local Tax
local GAAP GAAP
0L
Customer invoice against Sales 0L N1 N2
N1 Tax Revenue
N2 Asset Retirement with gains 0L -- --
Asset Retirement with losses -- N1 --
Asset Retirement with losses -- -- N2

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Parallel Accounting in FI-AA (ERP 6.17) : Processes
Integrated Asset Retirement

Document Entry: AR Accountant

01 C Customer 140000 (Receivable) 8.500

(Assumption:
50 S 820000 (Sales revenue asset retir.) Asset# Net book value IFRS 8.000-, local GAAP 9.000,-, Tax 9.500)

Generated documents:
(5) With LG Blank BLANK
D 01 Account Receivable 140000 8.500
C 50 Sales revenue Asset Retirement 820000 8.500

(6) With LG 0L (IFRS) IFRS

D 40 Clearing Acc.Asset Retirement 825000 8.500

C 75 Machines 13000 8.000

C 50 Gain/Loss 2xxxxx 500

LGAAP
(7) With LG N1 (local GAAP) D 40 Clearing Acc.Asset Retirement 825000 8.500
C 75 Machines 13001 9.000
D 40 Gain/Loss 2xxxxx 500
LGAAP
(8) With LG N2 (Tax) D 40 Clearing Acc.Asset Retirement 825000 8.500
C 75 Machines 13001 9.500
D 40 Gain/Loss 2xxxxx 1000

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 Parallel Accounting in FI-AA (ERP 6.17) : Processes
Integrated Asset Retirement

IFRS
AR Rec. Clear.Acc.Retir. Sales revenue. Asset Reconcilation Acc.Depr. Depr.Exp. Gain/Loss

5) 8.500 6) 8.500 5) 8.500 2a) 10.000 6) 10.000 6) 2.000 3) 2.000 3) 2.000 6) 500

L-GAAP
Asset Reconcilation Acc.Depr. Depr.Exp. Gain/Loss
5) 8.500 7) 8.500 5) 8.500 2b) 10.000 7) 10.000 7) 1.000 4) 1.000 4) 1.000 7) 500

Tax
Asset Reconcilation Acc.Depr. Depr.Exp. Gain/Loss
5) 8.500 8) 8.500 5) 8.500 2b) 10.000 8) 10.000 8) 500 4) 500 4) 500 8) 1000

Transactions (Retirement) with sales revenue of 8.500

5) Customer Invoice LG Blank
6) Asset retirement LG IFRS
7) Asset retirement LG local GAAP
8) Asset retirement LG Tax

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Parallel Accounting in FI-AA (ERP 6.17) : Processes
Asset under Construction

For assets under construction, the following distinction is made:

Without investment measure:

Such assets are treated as regular asset acquisition.

As investment measure:
Costs are collected on a WBS element or an internal order (capitalization key in
the master record).
The costs are collected and capitalized/settled to the asset. They are assigned
to the depreciation area on the basis of the combination of capitalization key
and capitalization version. In this way, different percentages of capitalization
can be applied.
Additional external invoices that need to be handled differently depending on
each accounting principle have to be entered as an adjustment document after
the asset has been capitalized (as a regular asset acquisition).

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 Parallel Accounting in FI-AA (ERP 6.17) : Processes
Asset under Construction (Investment Measure)
The expenses are collected on an internal order and settled to the asset under construction.
Different APC values have to be capitalized using different accounting principles.
Assumptions:
Freight Costs are capitalized under IFRS only
100% of other expenses are capitalized under IFRS and
local GAAP
80% of other expenses are capitalized under Tax Law.

(Percentages applied are defined in the capitalization key

of the asset under construction.)
01 IFRS
30 L-GAAP
FI-GL 60 Tax FI-AA

IFRS (Leading)
local GAAP local
0L Postings IFRS
GAAP
Tax

N1 Tax Settlement of internal order to asset

N2 under construction with 100% incl. 0L -- --
freight costs
Settlement of internal order to asset
-- N1 --
under construction with 100%

Settlement of internal order to asset

-- -- N2
under construction with 80%

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Parallel Accounting in FI-AA (ERP 6.17) : Processes
Asset under Construction (Investment Measure) (e.g. freight costs not capitalized for local GAAP)

Process Assumptions:
flow: Other expenses, Freight Costs are capitalized under
Freight costs IFRS only
100% of other expenses are
capitalized under IFRS and local
Investm. GAAP
Order 80% of other expenses are
Ext. Procurement,
Production costs
capitalized under Tax Law.
Settlement AuC, Asset

Generated documents by settlement:

IFRS
(1) With LG 0L (IFRS)
D 70 Machines 32000 10.200
C 50 Other Expenses 415000 10.000
C 50 Freight Expenses 472000 200

local GAAP
(2) With LG N1 (local GAAP)
D 70 Machines 32000 10.000
C 50 Other Expenses 415000 10.000

Tax
(2c) With LG N2 (TAX)
D 70 Machines 32000 8.000
C 50 Other Expenses 415000 8.000

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Parallel Accounting in FI-AA (ERP 6.17) : Processes
Asset under Construction (Investment Measure) (e.g. freight costs not capitalized for local GAAP and Tax)

Asset Reconcilation. IFRS

Other expenses Freight expenses
(1) 10.200 (1) 10.000 (1) 200

Asset Reconcilation L-GAAP

(2) 10.000
(2) 10.000

Asset Reconcilation Tax

(3) 8.000
(3) 8.000

Settlement of Investment Order

(1) Asset to Other expenses and to Freight expenses LG 0L (IFRS)
(2) Asset to Other expenses LG N1 (local GAAP)
(3) Asset to Other expenses LG N2 (Tax)

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 Parallel Accounting in FI-AA (ERP 6.17) : Processes
Depreciation of Low-Value Assets

The limits for low-value assets differ depending on the Accounting Principle applied.
The maximum low-value asset amount is defined in the country data (OA08)
(the country key has been assigned to the company code). It can as well be defined per company code
and depreciation area (OAYK).
Assets with APC that are smaller or equal to the smallest LVA value of all accounting principles are
capitalized in an asset class and depreciated immediately.
All assets that are greater than the smallest LVA value of all accounting principles are created in a second
asset class. Whereas in one area immediate depreciation occurs at 100%, depreciation is performed in
another area corresponding to the useful life. Changes to the respective depreciation key and the useful
life need to be made manually in the asset master record for each depreciation area.
01 IFRS
30 L-GAAP
FI-GL 60 Tax FI-AA

IFRS (Leading)
local
Postings IFRS Tax
local GAAP GAAP
0L
Straight-line depreciation over
N1 Tax 3 years as per IFRS
0L -- --
N2
-- N1 --
Immediate depreciation as per local
GAAP and per Tax Law
-- -- N2

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Parallel valuation of fixed asset s in account approach
Assets activated in only some (but not all) valuations

Different valuation approach - transactions activated in IFRS, and registered

as expense in local GAAP (one-sided asset): :
Only relevant ledger groups need to be represented on the asset or on asset class by their
corresponding depreciation areas
All transactions issued within FIAA will affect the capitalization only for those valuations
which are relevant for the involved asset(s).
P&L postings for all other ledger groups have to be handled manually by the end user

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Parallel valuation of fixed asset s in account approach
Assets activated in only some (but not all) valuations

Behavior during integrated asset acquisitions:

Due to the necessity to balance the technical clearing account, for each ledger group assigned to
the chart of depreciation a separate document has to be posted.
If a certain ledger group is not represented on the asset by an area which posts APC online to GL,
the posting will be re-directed to Account for non-operating expense (KTNAIB)
If no ledger group is represented on the asset by an area which posts APC online to GL, the system
issues an error can be changed into warning, then statistical areas in FI-AA will be updated

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Parallel valuation of fixed asset s in account approach
Assets activated in only some (but not all) accounting principles

Behaviour of one-sided assets (continued):

Behavior during integrated retirements:
For those ledger groups which are not represented on the asset by an area which posts APC online
to GL, the revenue will remain on the manually entered revenue account. The end user might need
to manually transfer this value to a different P&L account.
If no ledger group is represented on the asset by an area which posts APC online to GL, the system
issues an error (which can be changed into warning, then statistical areas in FI-AA will be updated)
Behavior during creation of assets:
Due to the P&L posting of acquisition costs during integrated acquisitions, the system has to check
that no other depreciation area in this accounting principle posts depreciation to GL. Otherwise, the
expense amounts in the P&L statement would be doubled over the useful life of the asset
If such a setup is found, the system issues an error message. This message can be changed into a
warning, e.g. if the asset is not used for integrated acquisitions

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Summary

You should now be able to explain how Parallel Accounting for

Fixed Assets can be portrayed using General Ledger Accounting
(new) under the Ledger Approach. In detail you should be able to
explain
the necessary configuration on the level of depreciation areas
the fundamental valuation decisions to be taken,
Configure the
G/L Integration as well as the
CO Integration of Fixed Asset Accounting
the degree to which different Fiscal Year Variants per valuation are
supported by SAP ERP 6.17
how the Balance Sheet is affected by FI-AA-processes:
Asset Aquisition with valuation differences
Depreciation
Integrated Asset Retirement
Assets under Construction
Low Value Assets
Assets activated in some but not all valuations (ledger groups)
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