ASSET ACCOUNTING

■ THIS COMPONENT IS USED TO PROCESS THE BUSINESS

TRANSACTIONS RELATING TO ASSETS
■ THE FOLLOWING ARE THE ASSET TRANSACTIONS
■ ACQUISITION OF ASSETS
■ SALE OF ASSETS
■ TRANSFER OF ASSETS
■ SCRAPPING OF ASSETS
■ CALCULATION OF DEPRECIATION AND BALANCE SHEET
VALUES
■ ASSET ACCOUNTING IS ALSO MAINTAINED ON THE
PRINCIPLES OF SUBSIDIARY LEDGERS
■ THE PURPOSE OF THE ASSET ACCOUNTING IS TO CALCULATE
AND POST THE DEP AND TO FIND THE VALUES OF ASSETS TO
BE REPRESENTED IN THE BALANCE SHEET
 DEPRECIATION

■IT IS THE REDUCTION IN THE VALUE

OF ASSET DURING THE EXPECTED
USEFUL LIFE OF THE ASSET DUE TO
NORMAL WEAR AND TEAR
SCHEME OF ENTRIES
DEPRECIATION A/C DR 100000

TO ACC DEP ON ASSET A/C 10000

PROFIT AND LOSS A/C DR 100000

TO DEPRECIATION A/C 100000

 ASSET CLASSES
■ IT IS THE CRIETERIA FOR CLASSIFYING THE
ASSETS OF THE COMPANY ACCORDING TO
MANAGEMENT AND LEGAL REQUIREMENTS
■ ASSET CLASSES PROPOSE THE DEFAULT
VALUES FOR ASSET MASTER RECORDS AND
DEPRECIATION CALCULATION ON THE
ASSETS CREATED UNDER THE RESPECTIVE
CLASS
 ASSET CLASSES

BUILDINGS PLANT VEHICLES ASSETS

LAND F AND F
MACHINERY UNDER
NO CNSTRUCTION
01 02 03 04 05
RANGE 06
1 100001 200001 300001 400001 500001
VALUES TO TO TO TO
TO TO
100000 200000 300000 400000 500000 600000

Master record for main asset plant and machinery 200001-0

Master record for sub asset generator 200001-1
Master record for sub asset tool kit 200001-2
 RULES FOR CREATION OF
ASSET MASTER RECORDS
1. MAIN ASSET MASTER RECORDS ARE
CREATED WITH REFERENCE TO
ASSET CLASS
2. SUBASSET MASTER RECORDS ARE
CREATED WITH REFERENCE TO THE
MAIN ASSET MASTER RECORD
 DEPRECIATION AREA
IT IS THE AREA SHOWING THE
VALUATION OF FIXED ASSETS FOR
PARTICULAR PURPOSE SUCH AS
INDIVIDUAL FINANCIAL
STATEMENTS,BALANCE SHEET FOR
TAX PURPOSE,OR MANAGEMENT
ACCOUNTING VALUES
 CHART OF DEPRECIATION
■ A LIST OF DEPRECIATION AREAS
■ EACH COMPANY CODE IS ALLOCATED TO ONE
CHART OF DEPRECIATION
■ A CHART OF DEPRECIATION CAN BE USED BY
SEVERAL COMPANY CODES
■ THE CHART OF DEPRECIATION AND CHART OF
ACCOUNTS ARE INDEPENDENT TO EACH OTHER
■ THE CHART OF DEPRECIATION IS ALWAYS TO BE
COPIED FROM REF CHART OF DEPRECIATIONS
DEFAULTLY DELIVERED WITH THE SOFTWARE
 DEPRECIATION TYPES IN SAP
■ 1. ORDINARY DEPRECIATION

THE PLANNED DESTRIBUTION OF THE

ACQUISITION COST OF THE AN ASSET OVER
THE COURSE OF ITS USE FUL USING A
DEPRECIATION METHOD. THE ORDINARY
DEPRECIATION DEPICTS THE VALUE
REDUTION CASUED BY THE NORMAL WEAR
AND TEAR.
 SPECIAL DEPRECIATION
THE DEPRECIATION PROVIDED FOR THE
TAX REASONS .
THIS IS ALSO CALLED TAX
DEPRECIATION
 UNPLANNED DEPRECIATION
■ THE REDUCTION IN THE VALUE OF
THE ASSET DUE TO AN EVENT WHOSE
EFFECT IS PERMANENT

THA UNPLANNED DEPRECIATION IS

ALWAYS TO BE POSTED MANUALLY.
 EXAMPLE

BOOK VALUE OF ASSET AS ON 1.4.2007 100000

FIRE ACCIDENT OCCURRED ON 25.7.2007

THE ASSET WAS REVALUED AFTER ACCIDENT

AS INR 60000
SO THE DIFF OF 40000 IS CALLED UNPLANNED
DEPRECIATION
 ACCOUNT DETERMINATION
■ IT IS THE KEY USED TO IDENTIFY THE
ASSET CLASSES AND THE RELEVANT
GL ACCOUNTS TO BE UPDATED FOR
THE ASSET TRANSACTIONS I.E
ACQUISITIION OF ASSET,SALE OF
ASSET,SCRAPPING OF ASSET ,TRANSFER
OF ASSET AND DEPRECIATION ON THE
ASSET
 SCREEN LAY OUT RULE
■A GROUP OF SETTINGS THAT
SPECIFIES:
THE FIELDS THAT SHOULD BE
MAINTAINED IN THE ASSET MASSTER
RECORD
WHETHER THE FILEDS ARE REQUIRED
ENTRY FIELDS OR OPTIONAL ENTRY
FIELDS
 Multi level methods

Using the different combinations of method and rate

of depreciation during the Different phases
of expected useful life of the asset
 Multilevel methods

cost of the asset Rs.100000 purchased on 1.4.2009

Expected useful life 10 years

From 1.4.2009 to 31.3.2012 for 3 years slm+5%

From 1.4.2012 to 31.3.2016 for 4 years wdv+5%
From 1.4.2016 to 31.3.2019 for 3 years slm +4%
 Sale of asset

Acq. Cost of the asset 500000

Less: acc. Dep 40000
------------
Net book value of asset 460000
Less: sale proceeds 450000
------------
Loss on sale of asset 10000
------------
Journal entry in normal accounting

Bank/customer a/c dr 450000

Acc dep on asset a/c dr 40000
Loss on sale of asset a/c dr 10000
to asset a/c 500000
 Journal entry in sap

Bank/customer a/c dr 450000

to sale of asset a/c 450000

Acc dep on asset a/c dr 40000

Sale of asset a/c dr 450000
Loss on sale of asset a/c dr 10000
to asset a/c 500000
 Transfer of asset
In the normal accounting there will be
No journal entry
sap entry
New asset a/c dr 200000
to old asset a/c 200000

Acc dep on old asset a/c dr 10000

to acc dep on new asset a/c 10000
 Scrapping of asset

Acq cost of asset 100000

Less: acc dep 2000
-----------
Net book value of 98000
asset ------------
 Jouranl entry

Acc dep on asset a/c dr 2000

Loss due to scrapping a/c dr 98000
to asset a/c 100000

In sap also same entry is posted.