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Parallel Accounting in the

SAP Simple Finance add-on


for SAP Business Suite powered by SAP HANA
Fixed Asset Accounting
in SAP New General Ledger

Product Management Financials


October, 2014

SAP Accounting powered by SAP HANA

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 Account Approach and
Ledger Approach.

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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Contents

Account approach for parallel valuation


configuration
processes

Ledger approach for parallel valuation


configuration
processes

Summary

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Parallel valuation of Fixed Assets in


account approach
Configuration

Accounting principles, depreciation areas and G/L Integration


Required depreciation areas (example)
Valuation decisions
CO integration scenarios

SAP Accounting powered by SAP HANA

Parallel valuation of fixed assets in account approach


Accounting principles
The FI-AA application component portrays parallel accounting using depreciation areas integrated across
the suite via accounting principles:

Accounting principles have to be defined explicitly even in the account approach for parallel
accounting.

Thereby the corresponding valuation (e.g. IFRS, local GAAP, Tax*) is defined and named.

All sub ledgers and feeding applications in accounting can be integrated per accounting principle.

Every depreciation area has to be assigned to one of these accounting principles.

Ledger groups as technical link: Even though in the account approach only one single ledger 0L is
defined and updated, to each accounting principle a unique and distinct ledger group needs to be
assigned.

These ledger groups only relate to and embrace the one single leading ledger 0L.

They serve as a technical means of integration per valuation on document level. Thereby a navigation from line item
reporting (e.g. out of the Asset Explorer) into the related documents is facilitated.

They do not imply the introduction of a ledger concept under the account approach:

System users (end users) are not bothered by and do not see a ledger group. Ledger groups do not necessarily
show up on a screen.

Only the one single and unique leading ledger 0L is updated and used in reporting. All of these ledger groups just
refer to ledger 0L.

*Financial statements for tax-legislation based valuation are supported and can be implemented. Note however
that no (localized) content for tax valuation is delivered by SAP!
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Parallel valuation of fixed assets in account approach


Depreciation Areas valuation and reconciliation
The FI-AA application component portrays parallel accounting using depreciation areas:

Depreciation areas represent valuation decisions in the fixed asset accounting sub ledger.

In the asset class or single asset master, asset valuation is determined by depreciation keys and useful life per
depreciation area.

Valuating transaction (e.g. in the closing process) can be explicitly restricted by depreciation area or accounting
principle.

For each asset class the G/L account determination for asset reconciliation account and Accumulated depreciation
account for ordinary depreciation is defined per depreciation area.

Depreciation areas establish valuation consistency

Any leading depreciation area of a valuation must not inherit values from any other deprecation area: The Adoption
of values from depreciation area must be initial.

Value and parameter take over must only be defined within the same accounting principle assignment.

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Parallel valuation of fixed assets in account approach


Depreciation Areas valuation and reconciliation
The FI-AA application component portrays parallel accounting using depreciation areas:

Depreciation areas establish reconciliation between asset sub ledger and G/L per currency:

For every additional currency type defined on the company code a corresponding depreciation
area with posting indicator Area does not post needs to be defined in the leading accounting
principle. Thus FI-AA is reconcilable with the Balance Sheet in each valuation and each relevant
currency.

Depreciation areas establish reconciliation between asset sub ledger and G/L in real time.

The depreciation area settings specify whether


Asset balances are posted in real time*, depreciation is posted
periodically.

(Area Posts in Realtime or


Area Posts APC immediately
and depreciation periodically**)

Only depreciation is posted

(Area Posts Depreciation only)

No postings are made

(Area Does Not Post)

For every accounting principle there must be at least one leading depreciation area which posts
ACP in real time. Thus APC update to the G/L account is real time in all accounting principles.*

* 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
** Non-leading depreciation areas for parallel valuation are configured with posting indicator Area posts APC immediately and
depreciation periodically, which means the same as real time.
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Parallel Accounting in FI-AA


Valuation decisions

Approach and Valuation Affect:

Same approach, but different valuation: The corresponding asset reconciliation accounts for
each valuation belong to corresponding nodes in Financial Statement Versions.
Different approaches:

Transaction activated as Fixed Asset in IFRS and as Current Asset in local: The corresponding asset
reconciliation accounts for each valuation are assigned to Fixed Asset node in the IFRS Financial Statement
Version and to the Current Asset node in the local GAAP Financial Statement Version.
Transaction activated in IFRS, and registered as expense in local GAAP (one-sided asset): 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 valuation of fixed assets in account approach


G/L integration technical clearing account

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 updating only common
accounts, the valuating part (asset capitalization) is posting to accounting principle
specific accounts via separate documents.

On document-level both parts (operational part and valuating part) are each balancing
to zero.
The Technical Clearing Account for Integrated Asset Acquisitions is ensured to
balance to zero as well:

It is debited by the operational part and credited by the valuating part updating the leading
depreciation area (area with posting indicator Area Posts in Realtime ) with same amount. Both
documents are posted within the same logical unit of work.
Non-leading valuations are updating the Contra account: Acquisition value posting instead of the
technical clearing account.
It cannot be posted to manually, since it is defined as asset reconciliation account.

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Parallel valuation of fixed assets in account approach


Required Depreciation Areas

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

The following examples assume:

There are three different valuations: IFRS, local GAAP (L-GAAP), Tax*.

Only one currency type is considered relevant for this example

Posting of
Depreciation area

Accounting Principle

Aquisition and Production Cost

Period Depreciation

01

IFRS

20 (calculation)

IFRS

30

local GAAP

60

Tax*

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


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Parallel valuation of fixed assets in account approach


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.
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:
Activation differences (postings with differing APC values such as capitalization of freight costs under local
GAAP) are entered manually via accounting principle specific documents.

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Integration with Controlling

Scenario 1:
Depreciation

area 01 posts to Controlling

This is the leading depreciation area


It posts to Controlling
Accounts are created as cost elements
Depreciation

In Controlling, the international valuation is


portrayed as the cost-accounting approach.

area 20 is not used.

Posting of
Depreciation area

Accounting Principle

01

IFRS

X (CO)

30

local GAAP

60

Tax

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Aquisition and Production Cost

Period Depreciation

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Integration with Controlling

Scenario 2:

Depreciation area 01 does not post to Controlling


Accounts are not created as cost elements

Depreciation area 20 posts to Controlling

The cost-accounting approach portrayed

It posts to the P&L for the group valuation (e.g. IFRS)


It posts to Controlling
Accounts are created as cost elements

differs from group valuation.

Posting of
Depreciation area

Accounting Principle

Aquisition and Production


Cost

Period Depreciation

01

IFRS

20 (calculation)

IFRS

30

local GAAP

60

Tax

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X (CO)

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Parallel valuation of fixed assets in account approach


Integration with Controlling

Scenario 3:
Depreciation

area 01 does not post to Controlling

P&L accounts in area 01 are not created as cost elements


Depreciation

area 20 is not used.


Cost Accounting is valuated according

Depreciation

area 30 posts to Controlling

to local valuation portrayed in area 30.

It posts to Controlling
P&L accounts are created as cost elements

Posting of
Depreciation area

Accounting Principle

Aquisition and Production


Cost

Period Depreciation

01

IFRS

30

local GAAP

X (CO)

60

Tax

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Parallel valuation of fixed assets in account approach


Assets activated in only some (but not all) accounting principles

Different valuation approach - transactions activated in IFRS, and registered


as expense in local GAAP (one-sided asset): :

Only relevant accounting principles 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 accounting
principles which are relevant for the involved asset(s).

P&L postings for all other accounting principles have to be handled manually by the end user

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Parallel valuation of fixed assets in account approach


Assets activated in only some (but not all) accounting principles

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 assets in account approach


Assets activated in only some (but not all) accounting principles

In the new architecture (continued):

Behavior during integrated retirements:

For those accounting principles 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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Parallel valuation of Fixed Assets in


account approach
Processes

Asset Aquisition
Depreciation
Asset Retirement and scrapping
Asset under Construction
Low Value Assets

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Parallel valuation of fixed assets in account approach


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

01 IFRS
30 L-GAAP
60 Tax

L-GAAP

IFRS

Pure
Local GAAP
Accounts

Pure IFRS
Accounts

FI-AA

Tax
Common
Accounts

Postings
Pure
Tax GAAP
Accounts

Vendor Invoice against technicial


clearing and tax account (1 doc.)
over gross amount including freight
Asset Acquisition (Activation)
against technical clearing account
or contra account aquisition per
accounting principle (1 doc. Per
ledger)

Chart of Accounts
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Reduction of APC by freight costs


(ledger group-specific document)

IFRS
X

local
GAAP
X

Tax
X

X
X
X
--

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--

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Parallel valuation of fixed assets in account approach


Asset Acquisition with valuation differences

Document Entry:

Financial Accountant

31 K Vendor

160000 (Payable)

70 A Asset

FIAA-1000-0

L-GAAP

(e.g. freight costs not capitalized for local GAAP)

10.200
PRCTR1

KOSTL1

40 S GL

L4xxxxxx (freight expense)

200

75 A Asset

L13000 (Machines)

PRCTR1

KOSTL1

Freight shall not be capitalized


in local GAAP (New Transaction:
limit posting to AccPrinc local GAAP)

Generated documents:
(1) Common Accounts

(2a) With Acc.Princ. IFRS

(2b) With Acc.Princ. local GAAP

(2c) With Acc.Princ. TAX

(3) With Acc.Princ. local GAAP

70

Tec.Clearing Acc. Acquisition

999999

10.200

31

Account Payable

160000

10.200

70

I13000

10.200

75

999999

10.200

70

L13000

10.200

75

Contra Account Aquisition

L999999

10.200

70

Tax
Machines

T13000

10.200

75

Tec.Clearing Acc. Acquisition

T999999

10.200

40

75

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IFRS
Machines
Tec.Clearing Acc. Acquisition
L-GAAP
Machines

L-GAAP
Freight Expense
Machines

L4xxxxxx

200

L13000

200
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Parallel valuation of fixed assets in account approach


Asset Acquisition with valuation differences

AP Reconcilation
1) 10.200

(e.g. freight costs not capitalized for local GAAP)

Asset Reconcilation.

Tech.Clear.Acc.Acqu.

2a) 10.200

1) 10.200 2a) 10.200

Contra Acc.Acqu.
1) 10.200

1) 10.200

200

Asset Reconcilation

3) 200

Tax

2c) 10.200 2c) 10.200

Transaction vendor invoice


1) Technical Clearing Account Acquisition to Vendor
2a) Asset to Technical Clearing Account Acquisition
2b) Asset to Contra Account Acquisition
2c) Asset to Contra Account Account Acquisition

(common accounts)
( IFRS accounts )
(Local GAAP accounts)
(Tax GAAP accounts)

Transaction correction freight cost


3) Freight expenses to Asset

(local GAAP accounts)

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L-GAAP

Asset Reconcilation

2b) 10.200 2b) 10.200 3)

1) 10.200

Contra Acc.Acqu.
1) 10.200

IFRS
Freight expenses

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Parallel valuation of fixed assets in account approach


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 accounts

01 IFRS
30 L-GAAP
60 Tax

L-GAAP

IFRS

Pure
Local GAAP
Accounts

Pure IFRS
Accounts

FI-AA

Tax
Common
Accounts

Pure
Tax GAAP
Accounts

Chart of Accounts
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Postings

IFRS

local
GAAP

Tax

Straight-line depreciation over


5 years as per IFRS

--

--

Straight-line depreciation over


10 years as per local GAAP

--

--

Degressive depreciation over


3 years as per Tax Law

--

--

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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

L-GAAP

IFRS

Pure
Local GAAP
Accounts

Pure IFRS
Accounts

FI-AA

Tax
Common

Accounts

Pure
Tax GAAP
Accounts

Postings

IFRS

local
GAAP

Tax

Customer invoice against Sales


Revenue common accounts

Asset Retirement with gains

--

--

Asset Retirement with losses

--

--

Asset Retirement with losses

--

--

Chart of Accounts
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Integrated Asset Retirement

Document Entry:

AR Accountant

01 C Customer 140000 (Receivable)

8.500

50 S 820000 (Sales revenue asset retir.) Asset#

(Assumption:
Net book value IFRS 8.000-, local GAAP 9.000,-, Tax 9.500)

Generated documents:
(5) To common accounts

(6) To IFRS accounts


(Acc.Princ. IFRS)

(7) To local GAP accounts


(Acc.Princ. local GAAP)

(8) To Tax-valuation accounts


(Tax-GAAP)

01

Account Receivable

140000

8.500

50

Sales revenue Asset Retirement

820000

8.500

IFRS
40
Clearing Acc.Asset Retirement

I825000

8.500

75

Machines

I13000

8.000

50

Gain/Loss

I2xxxxx

500

LGAAP
40
Clearing Acc.Asset Retirement

L825000

8.500

75

Machines

L13000

9.000

40

Gain/Loss

L2xxxxx

500

LGAAP
40
Clearing Acc.Asset Retirement

T825000

8.500

75

Machines

T13000

9.500

40

Gain/Loss

T2xxxxx

1000

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Integrated Asset Retirement
IFRS
AR Rec.
5) 8.500

Clear.Acc.Retir. Sales revenue.


6) 8.500

5) 8.500

Sales revenue.
5) 8.500

5) 8.500

7) 8.500

8) 8.500

5) 8.500

Sales revenue.
5) 8.500

Asset Reconcilation

Acc.Depr.

Depr.Exp.

Gain/Loss
6) 500

2a) 10.000 6) 10.000 6) 2.000 3) 2.000 3) 2.000

Asset Reconcilation

Acc.Depr.

2b) 10.000 7) 10.000 7) 1.000 4) 1.000 4) 1.000

Asset Reconcilation
2b) 10.000 8) 10.000

Acc.Depr.
8) 500 4) 500

L-GAAP
Gain/Loss

Depr.Exp.

7) 500

Tax
Gain/Loss

Depr.Exp.
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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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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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.)

L-GAAP

IFRS

Pure
Local GAAP
Accounts

Pure IFRS
Accounts

Tax

01 IFRS
30 L-GAAP
60 Tax

Postings

FI-AA

IFRS

Common
Accounts

Pure
Tax GAAP
Accounts

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local
GAAP

Tax

Settlement of internal order to asset


under construction with 100% incl.
freight costs

--

--

Settlement of internal order to asset


under construction with 100%

--

--

Settlement of internal order to asset


under construction with 80%

--

--

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Asset under Construction (Investment Measure)

Process
flow:

(e.g. freight costs not capitalized for local GAAP)

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.

Other expenses,
Freight costs

Investm.
Order

Ext. Procurement,
Production costs

Settlement

AuC, Asset

Generated documents by settlement:


(1) To IFRS accounts

(2) To local GAAP accounts

(2c) To Tax GAAP accounts

70

50

50

IFRS
Machines

I32000

10.200

Other Expenses

I415000

10.000

Freight Expenses

I472000

200

local GAAP
70
Machines

L32000

10.000

50

Other Expenses

L415000

10.000

70

Tax
Machines

T32000

8.000

50

Other Expenses

T415000

8.000

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Asset under Construction (Investment Measure)

Asset Reconcilation.
(1) 10.200

Asset Reconcilation
(2) 10.000

Asset Reconcilation
(3) 8.000

Settlement of Investment Order


(1) Asset to Other expenses and to Freight expenses
(2) Asset to Other expenses
(3) Asset to Other expenses

2014 SAP AG or an SAP affiliate company. All rights reserved.

(e.g. freight costs not capitalized for local GAAP and Tax)

Other expenses

Freight expenses

(1) 10.000

Other expenses
(2) 10.000

Other expenses
(3) 8.000

IFRS

(1) 200

L-GAAP

Tax

(IFRS accounts)
(local GAAP accounts)
(Tax GAAP accounts)

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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.

L-GAAP

IFRS

Pure
Local GAAP
Accounts

Pure IFRS
Accounts

Tax
Common

Accounts

Pure
Tax GAAP
Accounts

2014 SAP AG or an SAP affiliate company. All rights reserved.

01 IFRS
30 L-GAAP
60 Tax

Postings
Straight-line depreciation over
3 years as per IFRS
Immediate depreciation as per local
GAAP and per Tax Law

FI-AA

IFRS

local
GAAP

Tax

--

--

--

--

--

--

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Parallel valuation of fixed assets in account approach


Assets activated in only some (but not all) accounting principles

Different valuation approach - transactions activated in IFRS, and registered


as expense in local GAAP (one-sided asset): :

Only relevant accounting principles 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 accounting
principles which are relevant for the involved asset(s).

P&L postings for all other accounting principles have to be handled manually by the end user

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Parallel valuation of fixed assets in account approach


Assets activated in only some (but not all) accounting principles

Behavior during integrated asset acquisitions:

Due to the necessity to balance the technical clearing account, for each accounting principle
assigned to the chart of depreciation a separate document has to be posted.
If a certain accounting principle 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 accounting principle 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 assets 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 accounting principles 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 accounting principle is represented on the asset by the leading area of this valuation, 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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Parallel valuation of Fixed Assets in


ledger approach
Configuration

G/L Integration on the level of depreciation areas


Required depreciation areas (example)
Valuation decisions
CO integration scenarios

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Parallel valuation of fixed assets in ledger approach


Accounting principles
The FI-AA application component portrays parallel accounting using depreciation areas integrated across
the suite via accounting principles:

Accounting principles have to be defined explicitly even in the account approach for parallel
accounting.

Thereby the corresponding valuation (e.g. IFRS, local GAAP, Tax*) is defined and named.

All sub ledgers and feeding applications in accounting can be integrated per accounting principle.

Every depreciation area has to be assigned to one of these accounting principles.

Ledger groups define G/L-integration per area: a unique and distinct ledger group needs to be
assigned to each accounting principle.

These ledger groups usually have one distinct ledger serving as ledger from which financial statements for the
corresponding valuation are produced.

Since the ledger group is updated in the document header, it serves as well as a means of integration per valuation
on document level. Thereby a navigation from line item reporting (e.g. out of the Asset Explorer) into the related
documents is facilitated.

Indirectly every depreciation area is assigned to one of these ledger groups via assignment of accounting principles.

*Financial statements for tax-legislation based valuation are supported and can be implemented. Note however
that no (localized) content for tax valuation is delivered by SAP!
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Parallel valuation of fixed assets in ledger approach


Depreciation Areas valuation and reconciliation
The FI-AA application component portrays parallel accounting using depreciation areas:

Depreciation areas represent valuation decisions in the fixed asset accounting sub ledger.

In the asset class or single asset master, asset valuation is determined by depreciation keys and useful life per
depreciation area.

Valuating transaction (e.g. in the closing process) can be explicitly restricted by depreciation area or accounting
principle.

For each asset class the G/L account determination for asset reconciliation account and Accumulated
depreciation account for ordinary depreciation is defined on each depreciation area with posting indicator Area
posts in realtime.

Alternatively an identical G/L account number can be used in different accounting principles, if in areas to inherit the
account determination the Alternative Depreciation Area is defined accordingly. In this way, only one APC account
and only one VA account, for example, are required for several accounting principles of an asset class. A reduced
version of the chart of accounts can be used for easier reference.

Depreciation areas establish valuation consistency

A leading depreciation area of a valuation must not inherit values from any other deprecation area: The Adoption of
values from depreciation area must be initial.

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

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Parallel valuation of fixed assets in ledger approach


Depreciation Areas valuation and reconciliation
The FI-AA application component portrays parallel accounting using depreciation areas:

Depreciation areas establish reconciliation between asset sub ledger and G/L per currency:

For every additional currency type defined on the company code a corresponding depreciation
area with posting indicator Area does not post needs to be defined in each accounting principle.
Thus FI-AA is reconcilable with the Balance Sheet in each valuation and currency.

Depreciation areas establish reconciliation between asset sub ledger and G/L in real time.

The depreciation area settings specify whether


Asset balances are posted in real time*, depreciation is posted
periodically.

(Area Posts in Realtime**)

Only depreciation is posted

(Area Posts Depreciation only)

No postings are made

(Area Does Not Post)

For every accounting principle there must be at least on depreciation area with posting indicator
Area posts in realtime. Thus APC update to the G/L account is real time in all accounting
principles.*

* 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 valuation of fixed assets in ledger approach


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: Cash discounts are capitalized via periodic run of SAPF181.

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Parallel valuation of fixed assets in ledger approach


G/L integration technical clearing account

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 with ledger group
BLANK, the valuating part (asset capitalization) is updated per ledger group and
accounting principle.

On document-level both parts (operational part with no ledger group specified and
valuating parts with specific ledger groups) are each balancing to zero.
The Technical Clearing Account for Integrated Asset Acquisitions is ensured to
balance to zero as well in each valuation:

It is debited by the operational document and credited by the valuating document of for each ledger
group with same amount. All documents are posted within the same logical unit of work.
It cannot be posted to manually, since it is defined as asset reconciliation account.

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Parallel Accounting in FI-AA


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

Depreciation area

Ledger Group/
Accounting Principle

Ledger

01

0L / IFRS

0L

20 (calculation)

0L / IFRS

0L

30

N1 / local GAAP

N1

60

N2 / Tax*

N2

Leading

Aquisition and
Production Cost

Period
Depreciation

X
X

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


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Parallel Accounting in FI-AA


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


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 (one-sided asset): 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


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
Depreciation area

Ledger Group/
Accounting Principle

Ledger

01

0L / IFRS

0L

30

N1 / local GAAP

60

N2 / Tax

2014 SAP AG or an SAP affiliate company. All rights reserved.

Leading

Aquisition and
Production Cost

Period
Depreciation

X (CO)

N1

N2

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Parallel Accounting in FI-AA


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
Accounts are created as cost elements
The accounts used are different to those used in depreciation areas
01, 30, and 60

The cost-accounting approach portrayed


differs from that in the leading valuation.

Posting of
Depreciation area

Ledger Group/
Accounting Principle

Ledger

01

0L / IFRS

0L

20 (calculation)

0L / IFRS

0L

30

N1 / local GAAP

N1

60

N2 / Tax

N2

2014 SAP AG or an SAP affiliate company. All rights reserved.

Leading

Aquisition and
Production Cost

Period
Depreciation

X
X (CO)

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Parallel Accounting in FI-AA


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)


Accounts are created as cost elements

portrayed as the leading valuation with the


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
Depreciation area

Ledger Group/
Accounting Principle

Ledger

01

N1 / IFRS

N1

30

0L / local GAAP

0L

60

N2 / Tax

N2

2014 SAP AG or an SAP affiliate company. All rights reserved.

Leading

Aquisition and
Production Cost

Period
Depreciation

X (CO)

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Parallel Accounting in FI-AA


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 valuation of Fixed Assets in


ledger approach
Processes

Asset Aquisition
Depreciation
Asset Retirement and scrapping
Asset under Construction
Low Value Assets

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Parallel Accounting in FI-AA: 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 GAAP

0L

Tax

N1
N2

Postings

IFRS

local
GAAP

Tax

Vendor Invoice against technicial


clearing and tax account (1 doc.)
over gross amount including freight

0L

N1

N2

Asset Acquisition (Activation)


against technical clearing account
per accounting principle (1 doc. Per
ledger)

0L

Reduction of APC by freight costs


(ledger group-specific document)
2014 SAP AG or an SAP affiliate company. All rights reserved.

N1
N2
--

N1
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Parallel Accounting in FI-AA: Processes


Asset Acquisition with valuation differences

Document Entry:

Financial Accountant

31 K Vendor

160000 (Payable)

70 A Asset

FIAA-1000-0

L-GAAP

(e.g. freight costs not capitalized for local GAAP)

10.200
PRCTR1

KOSTL1

40 S GL

4xxxxxx (freight expense)

200

75 A Asset

13000 (Machines)

PRCTR1

KOSTL1

Freight shall not be capitalized


in local GAAP (New Transaction:
limit posting to LG N1 (local GAAP))

Generated documents:
(1) With LG Blank

(2a) With LG 0L (IFRS)

(2b) With LG N1 (local GAAP)

(2c) With LG N2 (TAX)

(3) With LG N1 (local GAAP)

BLANK
Tec.Clearing Acc. Acquisition

70

999999

10.200

31

160000

10.200

70

13000

10.200

75

999999

10.200

70

13000

10.200

75

Tec.Clearing Acc. Acquisition

999999

10.200

70

Tax
Machines

13000

10.200

75

Tec.Clearing Acc. Acquisition

999999

10.200

40

75

2014 SAP AG or an SAP affiliate company. All rights reserved.

Account Payable
IFRS
Machines
Tec.Clearing Acc. Acquisition
L-GAAP
Machines

L-GAAP
Freight Expense
Machines

4xxxxxx

200

13000

200
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Parallel Accounting in FI-AA: Processes


Asset Acquisition with valuation differences

AP Reconcilation

Tech.Clear.Acc.Acqu.

1) 10.200

1) 10.200 2a) 10.200

(e.g. freight costs not capitalized for local GAAP)

Asset Reconcilation.

Freight expenses

2a) 10.200

L-GAAP

Asset Reconcilation
1) 10.200

1) 10.200 2b) 10.200

2b) 10.200 3)

200

Asset Reconcilation
1) 10.200

1) 10.200 2c) 10.200

IFRS

3) 200

Tax

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: 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 GAAP

0L

Tax

N1
N2

2014 SAP AG or an SAP affiliate company. All rights reserved.

Postings

IFRS

local
GAAP

Tax

Straight-line depreciation over


5 years as per IFRS

0L

--

--

Straight-line depreciation over


10 years as per local GAAP

--

N1

--

Degressive depreciation over


3 years as per Tax Law

--

--

N2

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Parallel Accounting in FI-AA: 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
GAAP

Tax

Customer invoice against Sales


Revenue

0L

N1

N2

Asset Retirement with gains

0L

--

--

Asset Retirement with losses

--

N1

--

Asset Retirement with losses

--

--

N2

local GAAP

0L

Tax

N1
N2

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Parallel Accounting in FI-AA: Processes


Integrated Asset Retirement

Document Entry:

AR Accountant

01 C Customer 140000 (Receivable)

8.500

50 S 820000 (Sales revenue asset retir.) Asset#

(Assumption:
Net book value IFRS 8.000-, local GAAP 9.000,-, Tax 9.500)

Generated documents:
(5) With LG Blank

(6) With LG 0L

(7) With LG N1

(8) With LG N2

(IFRS)

(local GAAP)

(Tax)

BLANK
01
Account Receivable

140000

8.500

50

820000

8.500

IFRS
40
Clearing Acc.Asset Retirement

825000

8.500

75

Machines

13000

8.000

50

Gain/Loss

2xxxxx

500

LGAAP
40
Clearing Acc.Asset Retirement

825000

8.500

75

Machines

13001

9.000

40

Gain/Loss

2xxxxx

500

LGAAP
40
Clearing Acc.Asset Retirement

825000

8.500

75

Machines

13001

9.500

40

Gain/Loss

2xxxxx

1000

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Sales revenue Asset Retirement

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Parallel Accounting in FI-AA: Processes


Integrated Asset Retirement
IFRS
AR Rec.
5) 8.500

Clear.Acc.Retir. Sales revenue.


6) 8.500

5) 8.500

Asset Reconcilation

7) 8.500

5) 8.500

8) 8.500

5) 8.500

Gain/Loss
6) 500

Acc.Depr.

2b) 10.000 8) 10.000

Acc.Depr.
8) 500 4) 500

L-GAAP
Gain/Loss

Depr.Exp.

2b) 10.000 7) 10.000 7) 1.000 4) 1.000 4) 1.000

Asset Reconcilation
5) 8.500

Depr.Exp.

2a) 10.000 6) 10.000 6) 2.000 3) 2.000 3) 2.000

Asset Reconcilation
5) 8.500

Acc.Depr.

7) 500

Tax
Gain/Loss

Depr.Exp.
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: 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: 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.)

FI-GL

01 IFRS
30 L-GAAP
60 Tax

FI-AA

IFRS (Leading)
local GAAP

0L

Tax

N1
N2

2014 SAP AG or an SAP affiliate company. All rights reserved.

Postings

IFRS

local
GAAP

Tax

Settlement of internal order to asset


under construction with 100% incl.
freight costs

0L

--

--

Settlement of internal order to asset


under construction with 100%

--

N1

--

Settlement of internal order to asset


under construction with 80%

--

--

N2

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Parallel Accounting in FI-AA: Processes


Asset under Construction (Investment Measure)

Process
flow:

(e.g. freight costs not capitalized for local GAAP)

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.

Other expenses,
Freight costs

Investm.
Order

Ext. Procurement,
Production costs

Settlement

AuC, Asset

Generated documents by settlement:


(1) With LG 0L

(IFRS)

(2) With LG N1 (local GAAP)

(2c) With LG N2 (TAX)

IFRS
Machines

70

50

50

local GAAP
70
Machines

32000

10.000

50

Other Expenses

415000

10.000

70

Tax
Machines

32000

8.000

50

Other Expenses

415000

8.000

2014 SAP AG or an SAP affiliate company. All rights reserved.

32000

10.200

Other Expenses

415000

10.000

Freight Expenses

472000

200

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Parallel Accounting in FI-AA: Processes


Asset under Construction (Investment Measure)

Asset Reconcilation.
(1) 10.200

(e.g. freight costs not capitalized for local GAAP and Tax)

Other expenses

Freight expenses

(1) 10.000

(2) 10.000

Tax

Asset Reconcilation
(3) 8.000

Settlement of Investment Order


(1) Asset to Other expenses and to Freight expenses
(2) Asset to Other expenses
(3) Asset to Other expenses

2014 SAP AG or an SAP affiliate company. All rights reserved.

(1) 200

L-GAAP

Asset Reconcilation
(2) 10.000

IFRS

(3) 8.000

LG 0L (IFRS)
LG N1 (local GAAP)
LG N2 (Tax)

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Parallel Accounting in FI-AA: 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.

FI-GL

01 IFRS
30 L-GAAP
60 Tax

FI-AA

IFRS (Leading)
Postings

local GAAP

0L

Tax

N1
N2

2014 SAP AG or an SAP affiliate company. All rights reserved.

Straight-line depreciation over


3 years as per IFRS
Immediate depreciation as per local
GAAP and per Tax Law

IFRS

local
GAAP

Tax

0L

--

--

--

N1

--

--

--

N2

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Parallel valuation of fixed assets in account approach


Assets activated in only some (but not all) accounting principles

Different valuation approach - transactions activated in IFRS, and registered


as expense in local GAAP (one-sided asset): :

Only relevant accounting principles 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 accounting
principles which are relevant for the involved asset(s).

P&L postings for all other accounting principles have to be handled manually by the end user

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Parallel valuation of fixed assets in account approach


Assets activated in only some (but not all) accounting principles

Behavior during integrated asset acquisitions:

Due to the necessity to balance the technical clearing account, for each accounting principle
assigned to the chart of depreciation a separate document has to be posted.
If a certain accounting principle 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 accounting principle 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 assets 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 accounting principles 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 both, Account and 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 Accounting
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

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