Asset Accounting Configuration

So let me go over the config document. So, like I said, the first thing we have to do is create our Depreciation Area. What I did, I copied the standard US depreciation area and named it on my own, and then assigned it to my company code. So, I went in under Financial Accounting, Asset Accounting, Organization Structure. 

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I went to copy Chart of Depreciation. And then I copy reference, then I clicked on copy. And I used the 1US, this is the standard. Normally, it’s the 0US, but I guess somebody changed it. So basically, what I’m doing is I’m using the standard SAP chart of account for the US and copying it to my Chart of Account. So, I chose Z50 for my chart of depreciation. So, basically, it will copy from the standard chart to my chart. So, after copying it, I can go and see that. So now this will be created, “Sample Chart of Depreciation: USA”, so I can change the name. I changed the name to my Chart of Accounts. So now after doing this, I will have my Chart of Depreciation. Let me also go here. So, under Financial Accounting, Asset Accounting, Organization Structure, then Copy Reference Chart of Depreciation.

So, I go here. Here. Click on this. So, it’s a big list because it’s a test server, you have normally, it should be 0US, but I guess, it is something different. So, I used the 1US, and I copied to mine. And then I went in and changed the name when it copied to mine. Then I went in and changed the name for my Z50.

And then the next thing you want to do is assign this to your company code. So I went in this transaction, Assign Chart of Depreciation to Company Code. 

This is my company code. I assigned my Chart of Depreciation to my company code. So now you can either create your own chart of depreciation, or you can just use mine and attach it to your company. It’s up to you, if you want to create your own you can do that, or you can use my chart and assign it to your company code. 

And then the next step is Specify Number Assignment Across Company Codes.

These are the document number range that we have. So, I’m just using the range that is for company code 001. You can create your new one also, but I’m just using for the company code 001. But you can also create your own also. It’s one of the transactions you have to do for default values for tax. I’ll just use for the US as U0 for 0% and S0 for the customer invoice and vendor invoice. So, you have the default values you can use for your company.

Then comes the important transaction, define Asset Classes. As you will notice, it will be a big list because everybody tried to create their own asset class, and now it’s a mess. 

So, Organization Structure 🡪 Asset Classes 🡪 Organization Classes 🡪 Define Asset Classes. 

So now it’s a big list, it’s a big list. But, you know, it should be no more than 7 or 8. But everybody created their own asset class, so that’s a problem. So, I’ll be using these, 3000, 3001, and 4000. You can also use the same, or if you want, you can create your own also. So, 3000 I’m using for Fixture and fittings, 3001 for Machinery, and 4000 for Asset under construction. So, these I want to use, but for my company, all the Asset Classes will be available to me. Like I said, Asset Classes are at the client level. 

For Define Number Range Interval, since for my company I’m using number range for 001, so I don’t have to do this step. You do this step only if you have assigned number ranges for your company. If you’re using 001, what I’m doing is, I’m saying, okay whatever the number range for 001 is, I want to use that. So, I don’t have my own number range. So, for number ranges, I don’t have any because I’m using whatever is for company code 1. So that’s the number range I’m using. So, I don’t need this step, Define Number Range Interval, because I’m using 001 number range interval. 

 

So now I’m going to create some GL accounts because I need, like I said, for these Asset Classes, each asset class will be assigned to a GL account. Basically, each asset class will be assigned to 2 GL accounts, one for the acquisition which will have the cost, the other one for Accumulated Depreciation. And Accumulated Depreciation will be a credit account, and you will see that when you will post depreciation. So, we will need 2 accounts for each so at least 6 GL accounts. Not for this because we don’t depreciate it as in construction, so 5 GL accounts for these Asset Classes. And we will need a couple of more also. So, then I went in FS00, and I started with my first Asset Class, Furniture and Fixture.

So, I chose the 161000, and I need balance sheet here. And then the important thing is under the recon account; so, in the AR and AP, we use customer and vendors, so, for asset account, we will choose assets. So that will be the link between the sub ledger and the main ledger. This reconciliation account. So, we will do this for the first asset class, Furniture, and then we will need a field status group. So, we’ll do the same thing, we will need a similar account for Accumulated Depreciation: Furniture. So, in the control data, we will have to choose assets also. And then we will need one GL account for the Machinery. Same thing in the control data, you need to check assets for that. And then we will need Accumulated Depreciation Account for Machinery. And then we will need one for AUC, Asset Under Construction. And we just need one general account for acquisition, just a Fixed Asset Acquisition Account. And we also need an expense account for gain or loss. If we scrap an asset, we might have a loss or gain, so we need a GL account for that. So, I created a P&L GL account. So, for that, I also need to create a cost element because it’s a P&L account. So, I went in and created a cost element also. And I also need a GL account for my depreciation expense. So, in P&L account, then you need to do the cost element also. 

Then after that, I need to define how basically, that’s one of the integrations between fixed asset and GL. It will come in the next few steps. So, these are available Depreciation Areas.

As we discussed, we need at least one for book. So, Depreciation Area 01 is normally used for book. So, I’m going to say, yes, GL to 1. 1 is basically you want to post to GL? Yes. And all rest of them, I don’t want to post to the GL.

 

And then this is the most important part in the integration, “Assign GL Accounts”. 

So let me do that in SAP so you will see that. Go to Integration with GL, Assign GL Accounts.

So first, it will take me to my Chart of Depreciation. So, I will select my Chart of Depreciation, double click on Account Determination, and then I will get Account Determination. 

Basically, each Asset Class also is assigned to Account Determination. So, my account determination will be 30000 for Fixtures, 30001 for my Machinery, and then 40000 for my AUC or down payments. So, I’ll be using these 3. So first, I will select Fixtures and fittings. 30000 is my first asset class that will be assigned to this Account Determination. Click on Balance Sheet Accounts.

So, what I have to do now is assign the GL accounts. So, this is the account determination for asset class 3000. I need acquisition account. So, this is my acquisition account, 16100. I need some gain or loss account. These are my gain or loss. And I also need a contra account, fixed asset acquisition account. And then for depreciation, I will need the depreciation expense account, 640,000. And then I need accumulated depreciation account for my fixtures and fittings asset class. 

And then the same thing for the next one. If I go in 300001, 

then I have 162000 for machinery. And for depreciation, I have 172000 for accumulated depreciation. So, 162 GL account will have accumulated depreciation 172, and fixed asset account 161 will have accumulated depreciation 171. 

And then for my AUC, I have this account, 164000.

And there is nothing in depreciation because we don’t depreciate the Asset Under Construction accounts. 

So, the fixtures and fitting, you will notice that it has just one more 0, this account determination, so the asset class is linked with the account determination. And in account determination, you have all the GL accounts. Now for machinery, 162, 172, and AUC 164. 

 

So let me show you one more thing. Under Asset Classes, Specify Account Determination; So, this is the link, basically. In Asset Classes, if I go in Asset Class, Define Asset Class, so, in my 3000 asset class, it’s linked with account determination 30,000. 

And asset class 3001 is linked with account determination 30,001. And in the account determination, we will enter all the GL accounts.

 

For Determine Depreciation Areas in Asset Class; So how many areas do we want in one asset class? And let’s go over that.  Valuation 🡪 Determine Depreciation Areas. So, as we saw there are so many depreciation areas, but if we don’t want to use all of them, we can specify which ones we want to use for our assets. So that’s exactly what I did for my 3,000 asset class.

I deactivated the other ones that I don’t need. I just checked the Deactivate. In my case, so this is my chart of depreciation, Z50, my asset class 3,000, and then under that, I have the depreciation areas. 01 is the book depreciation, it’s activated. There’s another book depreciation, I don’t need another one, I deactivate it. I have one for ACRS/MACRS; This is normally used for tax accounting and also alternate minimum tax. So, I uncheck these three and rest of them is all checked. So, in the asset master, when I will create a new asset, I will only see these three areas. 

Then I have the Depreciation Key. This controls what method of depreciation you want to use. And again, it’s a big list, we want something with the straight-line depreciation. And these are the available depreciation key for straight line depreciation. 

So, I’m using LINR: straight line from rem. life to book value 0. And, you know, all the keys are configured for you, you don’t have to go in, you know it’s a long configuration if you want to configure that, but it’s all configured for you. 

It has a useful life also for 5 years. And then for ACRS/MACRS, we have a different Depreciation Key; m 200, MACRS for 3, 5, 7, 10 years property, and then we have one for all. Chances are any type of deprecation method you need; it will be available as a key. I doubt that you will have to ever create a new deprecation key. It should be available to you in the standard keys. So again, for my asset, I’m using only 3 depreciation areas, book, ACRS/MACRS, and alternate minimum tax.

Let me show you quickly how it will look in the asset master data. We will go into detail, but I’ll just give you, I’m creating a new asset, AS01 as a transaction. So, first thing it will ask me, what is my asset class? I am creating an asset class 3,000 for fixtures and fittings. Company code 50, press ‘enter’.

Alright. Description, just say “Desk”. Now go to the next tab. Most information I don’t need to enter, but some information is required, like the Cost Center that’ll be used for depreciation. So, enter the name of the asset, the asset class. And based on the asset class, account determination is coming up automatically. So, 3,000 was linked to 30,000 account determination. 

And if I go into depreciation areas here, I will see only these three. 

Why? Because I have only unchecked these 3. Area 01, 10, and 11. And that’s what’s coming up in the master record. And the life is also proposed by, you know, I can change that, if it’s different I can change that. And I can go ahead and save this.

So now this asset, 30006, was created. There is no value in it, but it’s just a number that’s created. So that’s what it’s controlling. So, I don’t want to see a big list. I just want to see these, so that’s why I only see these.  And again, for the machinery, it’s also the same. And let’s see for AUC. Let’s see for AUC what is my depreciation key, because I don’t want to depreciate these assets.

I have 000 key. Which is no depreciation and no interest. So, this depreciation key is used for the assets that I don’t want to depreciate.

 

And there’s some config that you will need to do for account assignment that you want to say, yeah, you want to charge your depreciation to Cost Center, activate Cost Center posting, and then you want to specify the account assignment object. So, I’ll do for my company code,

select this, double click this, and then area 1 I want to use for my posting. 

And then I just entered the cost center I want to use for planned depreciation, but please post it to the cost center that is in the master record. That’s how it will post to that cost center. So, it will basically debit the GL account that I have for depreciation, 64,000, and then the cost center it will use that is in the Asset Master Record. It will debit 64,000 because why? Because I have 64,000 cost center in my assigned GL accounts for my 3,000.  

So, I have this GL account for my asset class, 64,000. So, it will debit depreciation expense to this GL account and credit accumulated depreciation for this GL account. Debit 640,000 for the depreciation, and use the cost center that is in the asset master record. And then credit this balance sheet account, accumulated depreciation.

I guess that’s all the config we need. After doing this config, what we will do is we will create an asset like I did a few minutes ago. You will create an asset in your company code, and then we will post an invoice. With that invoice, basically we are assuming that we received the asset, we received the invoice. Now with that invoice, it will debit the asset and credit vendor. And when it will debit asset, now we will have some value in the asset. Let me quickly do that, for the asset that I just created. 

 

So, if I go in display, AS03,

if I go in asset values; so, these are the 3 levels. If I go in AS03, I can go in master data, I can go in depreciation area, and I can go in asset values. This will give me the value. 

Right now, I have $0.00 in this asset. So, once I post an invoice to it, then I will have some dollars in it. Or I can show you the one that I already have. I think I have 3005.  

This is one of the assets that I have for $100. And so, it will give me the value, and its life is 5 years. So that’s why it will depreciate $20 this year. So, $100 divided by 5 is 20. So, its value end of the year for 2010, it will be $80. 100 minus 20 for the depreciation. Net book value will be $80. And this will be the posted values.

In this example, we are assuming that we want to start depreciation from the 1st of the month. So that’s why in period 4, it will do depreciation for the 4 months, and then after that, it will do it on a monthly depreciation. And for the whole year, it will be $20. And so far, it’s all plan values. But after we run the real the depreciation for April, then this will turn to green. Probably, I might have some that I post a depreciation, looks like I don’t have. But we will see that when we post the petition for April for this asset, this yellow plan will turn to green and will say posted. And that will debit the expense and credit accumulated depreciation.

 

Let’s do the End User Transaction. So first, what we’re going to do is we will create an asset. So, the transaction to create a new asset is AS01. So AS01, and then Asset Class, let’s do asset class 3,000. So, I created an asset in Vimby’s company. Let me do that in Arandia’s company and see if I can do that, asset class 3000 in company code 200.

Now I have to describe the asset, the name, let’s say it’s a table. And some additional information, I mean, these are optional, I don’t have to enter them now. The next important information is under Time Dependent tab. Here, I have to enter the cost center. This cost center will be charged when it will post depreciation. We have already entered the GL account, 64000, but we don’t have a cost center. Cost center will come from each asset account master data. So, if I do a search in Arandia’s company; so let me choose 6,000 cost center. And if I go into depreciation area,it will give me information like the life of the asset, 5 years, and that kind of information. That’s all I need. That’s the main information, name, cost center, that’s all I need at this point. So, as you can see in the asset tab, it’s saying INTERN. So, it means once I click save, then it will give me the asset number at the bottom. So, SAP will give me the asset number. So, the asset number in Arandia’s company is 3009. Let me create one in Abid’s company, 0140. So let me do ‘Desk’. 

Cost Center; I’ll search in, Abid’s company, and I’ll choose 50,000 as cost center.  So just the cost center and name, then save. So Abid’s asset number is 30010. And I already have an asset in Vimby’s company, but let me create one more. Let me create one in Vimby’s company, V100. Okay let me do a ‘Chair’. Time dependent. Let me search in a cost center. 50,000. 

So now I have 30011 in Vimby’s company. So now we have the asset numbers. There are no values in it. It’s just an asset number. Let’s go and view this. So, I can also go from here. Accounting 🡪 Financial Accounting 🡪 Fixed Assets 🡪 Assets 🡪 Create. So, we went in AS01 to create. Now let’s say I want to change it or display. So, change is AS02. Display is AS03. So let me just display. So, I’ll just double click on that.

So now I have three levels here: Master Data, Deprecation Areas, Asset Values. Basically, these two are in one area, Master data and this is Depreciation Area. I was getting a separate tab for that, but it’s basically the same thing. If I click on it (Depreciation areas), I can go directly to the last tab, depreciation area. And if I want to see the values, I can click this Asset Values. And it should show me $0 because we have not booked any charges to it. So, everything is 0. 

So now let’s go ahead and post the invoice. So, invoice is F-90. And this is an old transaction, so it’s not like FB50, it’s not very user friendly. So, you need to know the posting keys, and I will show you. So, let’s do F-90. So, let’s post in Vimby’s company first. Let’s choose January 1st as posting and document date. 

So here, see, this is the old transaction. So, we have Document Date, Posting Date, Document Type is automatic, Company Code, Currency. At the bottom, we will have to enter, first so it is giving us the posting key automatically for the vendor. Posting key 31. If I open this, from 30, it’s the vendor invoice.

31 is credit vendor. So, if I look for vendors in Vimby’s company, I find one vendor, I’ll use UPS. 

I’ll press ‘enter’. It’ll give me a warning, ‘adjusted for period 4’. That’s fine. I’ll press enter again. Now I can enter the amount that I want to credit the vendor. Let’s say, 500. Now it’s very important, now we have to debit the asset. Like I said, it’s not like FB50, it’s the old transaction, so you need to know the posting key. So, to debit an asset, the posting key is 70. If I scroll down, 70 is debit asset, 75 credit asset. In this transaction, we’re debiting asset, so we will choose posting key 70. And once we enter posting key 70, this account field will correspond to that. Now this account will mean asset number. I can also do a search. I will use the last one that we created, was 3011.