Asset Accounting 2

So on the other day, we were going through the basic introduction about asset accounting. And, so what I told you, account determination. The main assets which you see in the balance sheet are called account determination, land, buildings, plant and machinery, furniture and fixtures, vehicles, low value assets, AUC, that is asset and the construction, all these things.

Thank you for reading this post, don't forget to subscribe!

Then we have asset class. Asset class is nothing but we divide account determination into different groups, like buildings, admin building, factory building, guest house, like that, plant and machinery, heavy, non heavy, furniture and fixtures, factory furniture, office furniture, vehicles, factory vehicles, office vehicles like this. And, again, in each and every asset class, we are going to create asset master record, and this is a sub asset master record. So sub asset master is nothing but any associated asset with the main asset, and this also we have seen. Let us go with the configuration now. So with reference to the understanding whatever we had, so asset accounting. So financial accounting, asset accounting, organization structures. First is, copy reference chart of depreciation. So I told you here chart of depreciation is nothing but just like chart of account.

Here, we have depreciation areas. There will be so many depreciation areas. Maybe, for example, depreciation as per the companies act, depreciation as per income tax act, depreciation as per cost accounting requirement, depreciation as per the group, depreciation, something like there are different types of depreciations we do have. So copy reference chart of depreciation. So this chart of depreciation, we cannot create, we need to copy it. So copy reference chart of  depreciation, step number 1. Double click on copy reference after depreciation.

In this, we have 3 steps. Copy reference after depreciation. Double click on copy reference chart of depreciation. So, here, click on copy as. SAP has given us chart of  depreciations for different countries. We need to copy Indian chart of depreciation. So for all countries, we have depreciation chart. So what are the existing chart of depreciation? First, we need to copy it and we need to change the name as per the company’s requirement. See, from chart of  depreciation. So we need to copy chart of depreciation for India. Similarly, if you have company code US, you can copy US company code. See here, this is chart of depreciation for India. This is 1IN. 

Double click on that.  1IN is being copied to chart of  depreciation. Our chart of  depreciation is Doctor Reddy Labs chart of depreciation. (DRCD). Press enter. Do you really want to transfer number ranges also? Yes. Let me create own request.

DRLB. Chart of depreciation 1IN copied to DRCD. Now, what we have copied, we’ll see that. Go to the 2nd step, specify depreciation description. DRCD, sample of chart of depreciation in India. So what I will do is Chart of  depreciation. Save it. Now, what is that we have copied? Copy delete depreciation areas. Here, you can see the depreciation areas. These are the depreciation areas that have been copied from this standard chart of depreciation. Book depreciation, depreciation as per the income tax act, cost accounting depreciation, consolidated balance sheet in local currency, consolidated balance sheet in group currency, something like that. Depending upon the requirement of the company, we keep it. Otherwise, see, unless otherwise required, you can remove it. I don’t want all these things. Select it. Delete it. Save it. And here, GL1, GL0

GL1 means post in real time. Here, just don’t post it. Real depreciation area. If you take 1, there’s a real depreciation area. Of course, post in real time. Post in GL area post in real time. One book depreciation post in real time. Area does not post. Right here, for 15, does not post. Means, only one depreciation we can post.

We cannot post more than 1 depreciation. Not cannot see, it is not required. So what are the depreciation we calculate as per the income tax act? I don’t want to post it. Only depreciation as per the companies act only, we post it to the GL account. So that’s what it says. Only depreciation as per the company’s act is going to be posted to GL account. Income tax, etc, we calculate only for the purpose of submission of the income tax return. So that’s why that should not be posted to GL account. Only 2 depreciation areas we have skipped. Rest of the things we have deleted. 

Next, assign chart of depreciation to company code. So what we need to do is we have to assign the chart of depreciation to company code. But here, immediately, it will not accept. There’s the reason for that. See here. Let me see. If you try to assign this, chart of depreciation for DRL India, try to save. It will not allow you. Company code entries for DRLB are incomplete.

Means what we need to do is, first, before we assign, we need to create 0 tax codes, and we need to assign the 0 tax codes to the company code. The reason is that system understands that whenever you are going to buy any asset, we need to pay tax and that should be reflected. And, if you are not paying any tax, for example, when you are uploading the asset accounting covering balances, I need not pay any tax. But when you are buying an asset, yes, you have to pay the sales tax on that, excise duty on that, everything, all those taxes we have to pay. So on certain transactions, we are paying tax. On certain transactions, we are not paying tax. That’s why system will generally expect the taxation for every transaction whatever you post. But when you are uploading your opening balances, even then, the value of the asset is going to be increased here. But in that, you need not pay any tax. Rather, we don’t pay any tax. For that purpose, there is a small configuration we need to do. Here, in case of SAP, in asset accounting, every transaction whatever you pay, system expect even the tax component also in that. Now, we have to tell to the system, there are certain zero tax codes which will be allowed to post without any tax. So that we need to define and assign it to the company code. Then only system will allow me to save this. Otherwise, we cannot assign chart of depreciation to company code. If you remember, we have already created sales tax codes. We have to create 0 tax codes now. Tax on sales or purchases.

Basic settings. So we need to, first of all, check whether our company code has been when our tax processor is linked to country d or not. Okay. DRL tax. Define tax course for sales and purchase. Here, we need to create certain 0 tax codes. What are the taxes that we have already created? D1, D2. Anyhow, we have to create A0V0. A0 is output tax. 0% of tax.

Tax type a output tax. 0% output tax. Nothing but we are telling to the system there is many input tax, output tax both 0% we need to create first. We need not write anything here. Automatically, we treated it as 0. A0 means output tax. V0 means input tax. This is called input tax. We save it. Just we have created 0 tax code. Nothing more than that. Not percentage. Nothing is given here. And it only created the 0 tax code. Assign tax codes are non taxable transactions. Here, give just V0A0. Input tax, output tax.

Input tax code is V0. Output tax code is A0. So, this seems to be a bit confusing to you why we are doing all those things. So, first, imagine that we have created 0 tax code and 0 tax code had has been linked to company code. That’s all. Because for this company code, even though if you don’t have any tax write on any transaction as a transaction, the system will allow us. If you don’t do that, first of all, here itself system is not allowing you. Copy reference, chart of depreciation. Assign chart of depreciation to company code. So by default system says that unless you are going to create 0 tax codes, I will not allow you to assign company code and chart of depreciation. Now see, it allows you to save now. So once you assign create and assign 0 tax codes to the company code, then only system will allow you, system will allow you to assign the chart of depreciation to company code. So we have assigned the chart of depreciation to company code. Now specify number, not required. Okay. Asset class. Specify account determination. Now I need to define the account determination. What is meant by account determination?

Account determination is nothing but the main assets, whatever you want to show in the balance sheet, land, building, plant and machinery. So these are the things I need to create. These are the standard account determination. So in the standard account determination, it will use only numbers. So if every one of us try to use the numbers, it is difficult for us to identify. That’s what I will do is I’ll use alphabets only. Real estate, similar rates, 10,000 Building, fixtures and fittings, vehicles, so as many number of assets you have.

All those things you have to first create account determination as per the balance sheet requirement of the client. For example, I’m taking only few. Even we have low value assets, AUC is also there. So as the number of assets you want, you can create. But, what I’m doing is I’m not creating all. What about vehicles, plant and machinery? I think plant and machinery also should be there. Okay. It is there, I take.

What I will do is I’ll create land real estate means land, buildings, technical assets, machines means plant and machinery. I’m taking only 3. But when you practice, you take vehicles, settings and fixtures. All those things also you can copy. Otherwise, go to new entries and create it. Why don’t we click on new entries. Account determination. DRLBLAND for lands. Similarly, DRLB for buildings, DRLBBULD. 

This is account determination. Remember that we are creating whatever the number of assets that has been shown in the balance sheet, we have to create all these things. Then, DRLB plant and machinery. Apart from that, I’m going to show you one more thing, AUC. DRLBAUC. That’s a certain reconstruction. So 4 assets I’m creating. But while practicing, you create land and building, plant inventory, furniture and fixtures, vehicles, all those things you can create. This we’ll see here.

Come out. Create screen layout rule. Say, account determination we have created. Nothing but we have used an abbreviation, and, so this part we have created, land, buildings, plant and machinery. But when we have created the code, we have used the company code, suffix as company code, And, next to 50% of the digits, that is the 4 digits we are using which represents the asset. I wanted to tell you something. Here, we have screen layouts. This screen layout, we are going to copy it. Copy from this standard. We cannot create. We have to copy it. And, screen layout, we have seen that several places. That is for, GL account, customer master, vendor master at different places. Similarly, in asset accounting also, we have screen layout rule. I’m copying 1,000 for real estate. That is for land. Buildings, General machines, this is for plant and machinery. This is for asset and reconstruction. Select these rules. Click on copy as. Here, what I will do is DRLA . Here what I will do is screen layout rule, SLR FOR LAND-DRL GRP. Similarly, DRBU. I’m just giving the name. Screen layout rule for buildings. SRL FOR BUILDNGS-DRL GRP. DRDM,  Screen layout rule. SRL FOR PLANT AND MACHINERY-DRL GRP. This is DRAU screen layout rule, SRL FOR  ASSET UNDER CONSTRUCTION. Press enter. Number of entries copied for. Save it.

So we are creating these 4 rules we have created, and the usage will be done subsequently. In the next coming steps, we are going to use it. Define number range interval. What is this number range interval? This is for the purpose of assets. Enter your company code. Click on intervals. 

First of all, 01, What I will do is I’ll take 1. Always I’ll do one thing. 1 to 1,000. These numbers are not meant for the purpose of creation of asset master records. 02, 1000,1 to 2000. 03. 2,001 to 3,000. So here, for AUC, what I’m doing, I’m creating 09. So here, what I will do is, here, if I do like this, 8,001 to 9,000. Save it. So these are the number ranges which we are creating for the purpose of creation of asset master record numbers. 

That I will show you. Next is define asset class. Today, let us stop here.