CHART OF DEPRECIATION The chart of depreciation is a list of depreciation areas arranged according to business and legal requirements.

The chart of depreciation enables you to manage all rules for the valuation of assets in a particular country. You must assign a chart of depreciation to each company code that is defined in asset accounting .SAP provides country-specific charts of depreciation with predefined depreciation areas. These charts of depreciation serve only as a reference for creating your own charts of depreciation, and are therefore not directly accessible in the SAP system. When creating a chart of depreciation, you have to copy a chart of depreciation. When you create a chart of depreciation, the system copies all of the depreciation areas in the reference chart of depreciation. You have to delete any depreciation areas that you do not need in your chart of depreciation.

In general, you are required to calculate values for assets for different needs, both internal and external (such as book depreciation and cost depreciation). Therefore, the Asset Accounting component enables you to manage values for assets in parallel in up to 99 depreciation areas. The chart of depreciation, therefore, is a directory of depreciation areas organized according to business management requirements. You define the characteristics, and thereby the significance, of the individual depreciation areas in each chart of depreciation. A depreciation area is always assigned to only one chart of depreciation. You flexibly define the keys for the automatic depreciation of assets in each chart of depreciation. They are based on elements for calculation (calculation methods, period controls, and so on) that are available client-wide.

SAP supplies typical reference charts of depreciation for each country. They have different depreciation areas and depreciation keys depending on that countrys specific requirements. You cannot use these charts of depreciation directly. You must create your own chart of depreciation by copying the reference chart of depreciation. Delete any depreciation areas that are not needed. The graphic below shows the standard chart of depreciation for the USA.

We can copy the above chart of depreciation and delete those depreciation areas that are not needed.

Integration You have to assign each company code defined in Asset Accounting to exactly one chart of depreciation. In the interests of keeping asset values uniform in your company, you should restrict the number of charts of depreciation used to as few as possible. Company codes in countries with the same valuation rules or company codes of a certain industry sector generally use the same chart of depreciation. The assignment of a company code to a chart of accounts is independent from its assignment to a chart of depreciation. This means that several company codes can use the same chart of accounts, although they have different charts of depreciation (and vice versa). The organizational structure (chart of accounts/chart of depreciation) below shows one possible organization:

The organizational structure (chart of accounts/chart of depreciation) below shows one possible organization:

CHART OF ACCOUNTS In the General Ledger, you can define different charts of accounts. Each company code is assigned to exactly one chart of accounts. The chart of accounts is used for the account assignments within Asset Accounting. The account assignment is controlled by means of the asset class in Asset Accounting. You have to specify an account determination in each asset class. In this account determination, you specify the G/L accounts in which automatic posting takes place for different transactions. When you post with account assignment to an asset, the system determines the G/L account that is posted, based on four things: the chart of accounts valid in the company code, the depreciation area that is to be posted, the account allocation key, and the transaction type. The key of an account determination must be stored in the asset class. The account determination links an asset master record to the general ledger accounts to be posted for an accounting transaction using the asset class. Usually, you need at least the same number of account determination as you have asset balance sheet accounts in the general ledger. When you post with account assignment to an asset, the system determines the G/L account that is posted, based on four things: the chart of accounts valid in the company code, the depreciation area that is to be posted, the account allocation key, and the transaction type.

The chart of accounts contains all accounts in the general ledger. In Financial Accounting, exactly one chart of accounts is assigned to every company code. This assignment is also binding for Asset Accounting The transaction type identifies the type of business transaction. Using the transaction type, the system posts the transaction to the appropriate accounts of the given account determination.

Assignment of Company Code Asset Accounting uses the same company codes as the General Ledger. However, you need to define these company codes further with the specifications needed for Asset Accounting. In order to make a company code usable in Asset Accounting, you have to assign a chart of depreciation to the company code. You do so in Customizing for Asset Accounting. Choose Organizational Structures Assign Chart of Depreciation to Company Code. Also make the following system settings at the company code level: 1) Company code for number assignment (for number assignment across company codes) The asset number uniquely identifies a fixed asset. It always consists of the main asset number and the asset sub-number. There are two ways of carrying out number assignment in the system: a) External number assignment b) Internal number assignment In the case of external number assignment, the user directly assigns the asset number. The system displays only the defined number interval, and issues an error message if a number is already assigned. In the case of internal number assignment, the system automatically assigns consecutive numbers. 2) Fiscal year variant You make specifications for fiscal years and posting periods in the SAP R/3 System in Customizing for Financial Accounting. This is done in the fiscal year variant in the global parameters of the company code. You define the relationship between calendar dates and FI posting periods in the fiscal year variant. For this reason, you can enter all dates (for example, the asset value date of the posting) as calendar dates, even when you are using a non-calendar fiscal year. Using the fiscal year variant, the system determines which posting period is involved. 3) Depreciation area for net worth tax 4) Document type for posting depreciation 5) Settlement profile for the settlement of assets under construction

Assignment of Business Area

If you specify in Customizing for the General Ledger that business area balance sheets should be created for a company code, the system requires that assets be assigned to a business area during master record maintenance. The business area can also be adopted automatically from the cost center that you entered. As long as a fixed asset is assigned to a business area, the system makes account assignment of all postings to this asset to this business area, including depreciation and gain or loss postings on asset retirement. If you want to assign a fixed asset, which has already been posted, to another business area, you have to transfer the fixed asset to a new asset master record. The posting becomes effective at the same time in the General Ledger. If you do not create business area balance sheets, you can change the business area in the time-dependent assignments in the asset master record. ASSET CLASS Asset classes are the most important means of structuring fixed assets. You can define an unlimited number of asset classes in the system. You use the asset classes to structure your assets according to the requirements of your enterprise. Asset classes apply in all company codes. We use the transaction code SPRO and enter into the following screen:

We click on this tab and move to the next screen as:

Here we click on financial accounting and move further: The next screen comes like this:

Here we click on asset accounting and move ahead in following manner:

For creating a new asset class we use the following steps: Choose ORGANISATIONAL STRUCTURE ASSET CLASS

We click on asset classes and get the following screen

Here we click on define asset classes. Then we move to the next screen as follows:

Here we click on the tab of new entry to create a new asset class.

In the above screen we fill in the required information and then save it. On saving a new asset class will be created. In the above screen we see that we have to give information regarding ACCOUNT DETERMINATION also. So we have to firstly create an account determination also. Let us see the process of creation of account determination.

In the above screen we execute the tab of SPECIFY ACCOUNT DETERMINATION. We move to the next screen.

Here we click on NEW ENTRIES to create a new ACCOUNT DETERMINATION.

In the next screen we give the account determination number and its description and save it. On saving the information a new account determination will be created. After an asset class has been created and an account determination specified we have to assign a depreciation area to that asset class. Generally, the assets in an asset class use the same depreciation terms (depreciation key, useful life). Therefore, you do not have to maintain the depreciation terms in the asset master record. Instead, they can be default values from the asset class. In this step, you specify the depreciation terms that are to be used in your asset classes. Depending on the definition in the screen layout control used, these depreciation terms are offered either as optional or mandatory defaults when you create an asset. For each asset class, you can maintain as many charts of depreciation with their depreciation areas as you need. This allows you to use the asset class in all countries belonging to the client. For determining depreciation area we use the following steps:

In the above screen we go to valuation section and from there we execute the tab of DETERMINE DEPRECIATION AREAS IN THE ASSET CLASS. On executing the above tab we get the following screen:

In the above screen we select the asset class and double click on depreciation areas. Then we get the following screen:

Here we have to remove the deactivation key from those depreciation areas which we want to be active. Here we also have to give the layout. For that we press F4 and then we get the option to select the following in a new screen:

From the screen at the right hand side we select 1000 which displays depreciation on main asset no. level. And then save it.

MASTER DATA IMG DATA DATA FINANCIAL ACCOUNTING ASSET ACCOUNTING MASTER SCREEN LAYOUT DEFINE SCREEN LAYOUT FOR ASSET MASTER

Here we define the screen layout control for asset master data. The screen layout control contains the specifications for the field groups in the asset master record. We enter the screen layout control in the asset class. This method allows you to structure the master record individually for each asset class.

Here we execute define screen layout for asset master data and get the following screen:

Double click on define screen layout for asset master data. On double clicking it we get the following screen:

In the above screen we select the asset for which we have to define the screen layout. So in this case we have selected ASSET CLASS 3101 VEHICLES. Then we double click on LOGICAL FIELD GROUPS. The following screen will appear:

In the above screen we select GENERAL DATA and double click on FIELD GROUP RULES. We get the following screen:

Here we can maintain which is required, optional or no (suppressed entry) or any display.

Class if this indicator is set, it means maintenance allowable only at asset class level. Mn no. transfer entry from main asset number to sub number. Sb no entry allowed in sub asset number Copy copy field group from reference asset. After saving the required information, now we come back to the original screen like this:

In the above screen we select the next field as POSTING INFORMATION and then again double click on FIELD GROUP RULES. We get the following screen:

Here again we save the information as per the requirements and come back to the original screen.

In the same way we have selected TIME DEPENDDENT DATA and moved to the next screen

In the above screen we select the information as per requirement and save it. Now we go to the original screen and select the next field ALLOCATIONS

We move further by double clicking on FIELD GROUP RULES.

Again after selecting the required information we save and come to the original screen:

In the above screen we select LEASING and enter into the next screen as follows:

In the above screen we select leasing data 1 and 2 as optional fields. We save it and move back to the original screen. PERIOD CONTROL METHODS In customizing for asset accounting, we define the period control methods. The period control methods determine the depreciation start and end date for asset transactions. We can set an appropriate period control in the period control method for the four transaction categories: Acquisitions Subsequent acquisitions/post-capitalization Intra company transfers Retirements

Standard Period Control When you set up an asset company code, the system automatically generates period control rules. The most important of these include:

1) Pro rata at period start date Depreciation start/end is always at the beginning of the period in which the acquisition or retirement takes place. 2) Pro rata upto mid-period per period start date For transactions up to the middle of the period, the depreciation start or end date is dated from the beginning of the period. Transactions after mid-period, however, are dated from the beginning of the next period. 3) Pro rata at mid-period This rule corresponds to the first rule. However it is intended for depreciation calculation based on half periods. 4) First year convention of a half year 5) Year start date/mid-year/year-end For transactions on the first day of a fiscal year, the system calculates a whole year's depreciation, for transactions up to the middle of the year, half a year's depreciation and for transactions after mid-year, no depreciation. 6) 7) 8) 9) At the start of the year At mid-year At the end of the year (start in the following year) At mid-quarter

10) At the first quarter 11) At the following quarter/following month 12) At the following half-year Transactions up to the middle of the fiscal year have a depreciation start date on the middle of the year. Transactions after the middle of the fiscal year have a depreciation start date in the following year. In customizing we define period control method in the following manner:

Here we maintain period control methods. On executing we get the following screen:

In the above screen we have assigned different period control methods for different categories of transaction. In the above screen we have maintained 8 methods of period control. We take period control method 001 in which we have taken the following combination TRANSACTION ACQUISITION ACQ IN THE FOLLOWING YEAR RETIREMENT TRANSFER PERIOD CONTROL METHOD 01 01 02 02

In the same way we can maintain different period control methods. After we have maintained different period control methods we assign these period control methods to DEPRECIATION KEYS.

Now we see how we maintain depreciation keys and the assignment of period control to the depreciation key. In SPRO we go to valuation methods and therein under the tab of depreciation key we maintain depreciation key.

On executing the above tab we get the following screen:

In this step we maintain depreciation keys by assigning calculation methods to them. We can divide the duration of depreciation into several phases. When we enter a changeover method for one of these phases, the system changes over to the next phase as soon as the event specified in the changeover method has occurred. The system then uses the depreciation calculation that is specified in the calculation method for this phase. Activities 1. Maintain additional depreciation keys and their descriptions in accordance with your requirements. 2. Assign calculation methods to the depreciation keys. Maintain any other necessary parameters. 3. Set the status of the depreciation keys to "active".

If we want to maintain additional depreciation key, then click on new entries in the above screen. Then we get the following screen:

In the above screen we have different fields. We define the fields in the following manner: Dep. Key we give the name of the depreciation key.

Status - A depreciation key can have one of three statuses: Active: The depreciation key has no errors, and can be used in asset master records. Inactive: Either the depreciation key or one of its calculation methods has errors. The depreciation key cannot be used. Migrated: The depreciation key has been migrated by the migration program from the old table to the new table. The old depreciation key is currently still valid for the calculation of depreciation. In the above screen we have got a tab of Acquisition only allowed in capitalization year we set this indicator, if the system should only allow additional acquisitions in the year of the initial acquisition or of the capitalization date. This can be technically necessary, for example, if sum-of-the-years-digits depreciation is used. In addition, this function can be used for organizational purposes. We also have got another tab DEP TO THE DAY on activating this tab, the system calculates the depreciation to the day. Use Any period control methods entered in the depreciation key are ignored for the entire useful life of the asset. This applies to all transactions (acquisitions, retirements, and transfers). The system always uses the asset value date as the depreciation start date. The "depreciation to the day" function becomes active for an asset as soon as the asset has a corresponding depreciation key and the asset is capitalized (posted to). Once this takes place, it is no longer possible to switch off this function for the asset, even if you change the depreciation key. On the other hand, it is not possible to activate this function for an asset after it has already been capitalized using a different depreciation key. In the above screen, after we have filled in the required information we click on the tab of ASSIGNMENT OF CALCULATION METHODS. We get into the following screen:

In the above screen we click on the tab of new entries and get the following screen: .

DEP TYPE - The following depreciation types are used in the SAP System: Ordinary depreciation Special depreciation Unplanned depreciation Depreciation from write-off of reserves

PHASE - The duration of depreciation can be divided into several phases, during each of which the depreciation key uses different calculation methods for calculating depreciation. Using the changeover method, you specify what occurrence triggers the change in depreciation calculation. In other words, the system starts to use the calculation method of the next phase at this point. BASE METHOD -Base method of the depreciation key for calculating depreciation or imputed interest. DEC BAL METHOD - Declining-balance method of the depreciation key for calculating depreciation or imputed interest. PERIOD CONTROL METHOD here we assign the period control method to the depreciation key. MULTI LEVEL METHOD here we assign the multi level method to the depreciation key.

CHANGEOVER METHOD - Specifies when the changeover to a different phase of the depreciation key takes place. This changeover is necessary, for example, when you are using a declining-balance method of depreciation so that a net book value of zero is reached. MUTIPLE SHIFT here we can control the depreciation key to control the affects of multiple shift depreciation as following: The depreciation and the expired useful life are increased (thereby reducing the remaining useful life). Depreciation is increased; the remaining useful life is not reduced. Depreciation is not increased, and remaining useful life is not reduced. SCRAP VALUE here we specify the effect of scrap of base value in the following manner: The scrap value reduces the base value. The scrap value does not reduce the base value. The depreciation key continues to control this. We make this setting only if we calculate depreciation using different calculation methods in different phases with one depreciation key, and the scrap value is also treated differently. SHUT DOWN - Specifies that depreciation will be reduced or stopped if there are specifications for shutdown periods in the asset master record.

In asset accounting we define screen layout for asset master data and screen layout for asset depreciation areas separately. We have already defined the screen layout for asset master data and now we see the screen layout for asset depreciation areas. Define Screen Layout for Asset Depreciation Areas In this step we define the screen layout control for the depreciation terms (depreciation key, useful life, and so on) in the asset master record. This screen layout control is similar to the one for the general master data section of the asset master record. We can use it in a similar way to control the features of the depreciation areas in the asset master record. It is possible to make different specifications in each depreciation area.

SAP delivers two standard versions: depreciation on main number level depreciation on sub-number level We can take over these screen layout controls without changing them. The activities to be performed over here can be: 1. We can create our own screen layout controls, if needed. Copy one of the standard screen layout controls for this. For the individual field groups: define the characteristics of the master record screen (whether fields are required, optional, or should be suppressed) the maintenance level and whether it can be copied (when using a master record as a reference for setting up another master record). 2. Enter the screen layout control in the asset class. In customizing we can go to the screen layout for depreciation areas in the following manner:

On executing, we get the following screen:

In the above screen we double click on field group rules after selecting either of the screen layouts i.e. depr at main asset level or at sub asset level. We get the following screen:

In the above screen we have got the following tabs. Field group - Using the field groups, we can combine the fields in the asset master record in functional and logical groups. The technical handling of the field group (required entry, optional entry, and suppression) is controlled via the respective screen layout rule in the asset class.

Field group name Using the field groups, we can combine the fields in the asset master record in functional and logical groups. The technical handling of the field group (required entry, optional entry, and suppression) is controlled via the respective screen layout rule in the asset class. Indicator: Required entry field If this indicator is set, the screen layout rule defines the corresponding field group as a required entry field. Optional entry field indicator If this indicator is set, the screen layout rule defines the corresponding field group as an optional entry field. Indicator: Suppressed entry field If this indicator is set, the screen layout rule suppresses the corresponding field group in the asset master record. Indicator: Entry allowed in asset class If this indicator is set, the screen layout rule defines the asset class as the maintenance level for the corresponding field group. Here we define MAINTENANCE LEVEL. A specification that defines the level at which a field in the asset master record can be maintained. These levels are: Asset class Main asset number Sub number Maintenance level definition is part of the screen layout. For example, if you define the main asset number as the maintenance level for a field, the field receives a default value from the asset class. However, you still have the option to change this value when you maintain master data at the main asset number level. Ind.: Transfer entry from main asset number to sub-number If this indicator is set, the screen layout rule defines the asset main number as the maintenance level for the field group. This means that when a sub-number is created for the asset, the values for this field group in the sub-number are supplied by the asset main number. Indicator: Copy field group from reference asset If this indicator is set, the screen layout rule specifies that when you create an asset using another asset as a reference, the specified field group is automatically supplied with values from the reference asset. In the above screen we have maintained DEPRECIATION KEYS AND USEFUL LIFE as required entry. Click on save. Thereafter we update the following: IMG financial accounting asset accounting valuation determine depreciation areas in the asset class.

On executing we get the following screen:

In the above screen we select an asset class and then double click on depreciation areas, and then we get the following screen:

In the above screen we see that the fields for depreciation key and useful life have become mandatory. This is because we maintained these fields as required fields at the time of DEFINE SCREEN LAYOUT FOR ASSET DEPRECIATION AREAS.