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SAP FI CO Module

Fixed Asset Accounting and


configuration
Presented by Iraj Idafar
Definition of Fixed Assets
• Assets are expected to be used for more than one accounting period. Fixed assets
are generally not considered to be a liquid form of assets unlike current assets.
Examples of common types of fixed assets include buildings, land, furniture and
fixtures, machines and vehicles. The term 'Fixed Asset' is generally used to
describe tangible fixed assets. This means that they have a physical substance
unlike intangible assets which have no physical existence such as copyright and
trademarks.

• Fixed assets are not held for resale but for the production, supply, rental or
administrative purposes. Assets that held for resale must be accounted for as
inventory rather than fixed asset. So for example, if a company is in the business of
selling cars, it must not account for cars held for resale as fixed assets but instead
as inventory assets. However, any vehicles other than those held for the purpose
of resale may be classified as fixed assets such as delivery trucks and employee
cars.
Fixed Assets
• What are classified as Tangible fixed assets
– Land and Buildings (both Freehold and Leasehold)
– Plant & Machinery
– Motor Vehicles
– Computer and Office Equipment
• What are classified as Intangible fixed assets
– Goodwill
– Websites
– Trademarks
– Patents
Definition of Depreciation / Amortisation

The rate at which an asset(s) declines in value


over time based on usage
Depreciation / Amortisation
• What is Depreciation (tangible assets) or Amortisation (Intangible Assets)

• Company Depreciation Policy


– Determined by Company/Client as part of their accounting policy
– Determined by FRS (Financial Reporting Standards) such as IFRS, UK
GAAP as defined by the Financial Reporting Council (FRC)

• Basis of calculation of Depreciation


– Straight Line method
– Reducing Balance method (also referred to as declining balance
method in some countries)
– Units of Production (used mainly in Management accounting) – some
machinery have fixed life based on units of production of goods
Overview of Fixed Asset Accounting – General
Treatment in Accounting Software
• General Ledger (G/L) Accounts for fixed asset cost to be held in Chart of Accounts (COA)

• General Ledger (G/L) Accounts for accumulated depreciation held in Chart of Accounts (COA)

• The above accounts need to be created as balance sheet items and are held in the Assets
Category

• Annual/Periodic depreciation charge General Ledger accounts in Profit and Loss section of
COA and held in the Depreciation Category or Overhead Expenses

• The accounts for the depreciation charge in the period need to be created in COA

• Depreciation policy and rates to be set up in Software

• Fixed Asset register needs to be created in Software

• Asset classes need to be defined in Software


Accounting Entries Required in Software

• Acquisition of Asset
– DR – G/L Account for Fixed Asset Cost (A0010)
– CR – G/L Account for Bank/Cash or Vendor (A0011)

• Periodic (monthly or annual) Depreciation Charge


– DR – G/L Account in P&L for Depreciation Charge (A0011)
– CR – G/L Account in Balance Sheet for Accumulated Depreciation on
Asset (Exxxx)

• Net book Value (NBV)


– DR – G/L Account for Fixed Asset Cost Minus (A0010)
– CR – G/L Account for Accumulated Depreciation (A0011)
SAP Configuration Overview 1
• Step 1 - Create Chart of Depreciation (COD) –
you can use SAP pre-defined COD
• Step 2 - Create a new COD by using Copy
method and rename
• Step 3 - Assign input tax code to Non-Taxable
acquisitions (Usually land & Buildings)
• Step 4 - Assign COD to Company Code
SAP Configuration Overview 2
• Step 5 - Create Financial Statement Version using
SAP Pre-defined
• Step 6 - Specify Financial Statement Version in
Company Code
• Step 7 - Create Asset Register
– Define Screen and Fields to be populated by user
– Define Account determination – which type of asset to
be assigned to which G/L account
– Assign G/L Account to Account determination table
(Asset Class)
SAP Configuration Overview 3
• Step 8 - Create Number ranges for Fixed Asset
G/L Accounts
• Step 9 - Create and Define Asset Classes
• Step 10 - Assign Asset classes to Company Code
• Step 11 - Create and Define Depreciation Areas
for Company Code
• Step 12 - Assign Depreciation Areas to Company
Code
• Step 13 - Activate Depreciation Keys as per client
requirements
SAP Detailed Configuration – Preparation

• Create New G/L Accounts for each asset type


as follows:
– Asset Cost (B/S)
– Asset Acc Depreciation (B/S)
– Asset Disposal (B/S)
– Depreciation Cost (P&L)
– Gain/Loss on Disposal (P&L)
SAP Detailed Configuration – Step 1
• Path: IMG >Financial Accounting (FA)> Asset Accounting>
Organisational Structures> Copy Reference
COD/Depreciation Areas

• Create COD Name [IRAJ]


• [Copy As] from [1GB]
• [Enter]
• [Save]
SAP Detailed Configuration – Step 2
• Path: IMG >Financial Accounting (FA)> Organisational
Structures> Copy Reference COD/Depreciation Areas

• Enter description for COD


• Edit entry ‘COD for Company IRAJ’
• [Enter]
• [Save]
SAP Detailed Configuration – Step 3
• Path: IMG >Financial Accounting (FA)> Organisational
Structures> Depreciation Areas

• Click on Third Activity button on Project manager


• Leave information as is
– 1–1
– 2–0
– 15 – 0
– 20 – 3
– 60 - 2
• [Enter]
• [Save]
SAP Detailed Configuration – Step 4
• Path: IMG >Financial Accounting (FA)> Asset Accounting> integration with the General
Ledger> Assign input tax indicator for non-taxable acquisitions
• Search for company code by pressing [Position]
• Double click on column input Tax
• Select Tax Code A1 – 0%
• Double click on column Output Tax
• Select Tax Code T1 – 0%
• Ignore error/warning message
• [Enter]
• [Save]
SAP Detailed Configuration – Step 5
• Path: IMG >Financial Accounting (FA)> Organisational Structures> Assign COD to Company
Code

• Select Company Code


• Enter COD name in Table [IRAJ]
• [Enter]
• [Save]
SAP Detailed Configuration – Step 6
• Path: IMG >Financial Accounting (FA)> Asset Accounting> Integration with the General
ledger> Specify the financial statement version for asset reports

• Search for Company code using [Position] button


• Highlight line with Company Name [IRAJ]
• Double click on Folder on left hand side [Assign Financial Statement Version]
• Select [BAGB] (Commercial Balance Sheet (Great Britain))
• Press [Enter]
• Change all entries to same Financial Statement [BAGB]
• [Enter]
• [Save]
SAP Detailed Configuration – Step 7
• Path: IMG >Financial Accounting (FA)> G/L Accounting> Business Transactions> Closing>
Document> Define the Financial Statement Versions

• Copy As [BAGB]
• Click [New Entries]
• Rename Financial Statement Version as ‘Financial Statement version for Company IRAJ’
• Enter maintain Language field as ‘EN’ (English)
• [Enter]
• [Save]
• Go back to Step 6 and re-assign new Financial statement version to Company Code
SAP Detailed Configuration – Step 8
• Path: IMG >Financial Accounting (FA)> Asset Accounting (AA)> Master Data> Screen
Layout> Create Screen for Asset master Data

• Create a new entry in table


• Copy as from previous screen
• [Enter]
• [Save]
SAP Detailed Configuration – Step 9
• Path: IMG >Financial Accounting (FA)> Asset Accounting (AA)> Master Data> Screen
Layout> Define Screen for Asset master Data

• Select any entry from List by highlighting line


• Click on ‘Logical Field Groups’ folder on left of screen
• Double click on your selection this will reveal another table
• Copy the parameters for the next stage
• [Exit]
SAP Detailed Configuration – Step 10
• Path: IMG >Financial Accounting (FA)> Asset Accounting (AA)> Master Data> Screen
Layout> Define Screen for Asset Depreciation Data

• Create a new entry in table as in Step 8 & 9 (copy from a similar class or pre-defined SAP
• Copy as from previous screen
• [Enter]
• [Save]
SAP Detailed Configuration – Step 11
• Path: IMG >Financial Accounting (FA)> Asset Accounting (AA)> Organisational Structure>
Asset Classes> Specify the account determination

• Create new table entry [IRAJ]


• Copy as from a similar class or pre-defined SAP template
• [Exit]
• [Save]
SAP Detailed Configuration – Step 12
• Path: IMG >Financial Accounting (FA)> Asset Accounting (AA)> Integration with the general
ledger> Assign GL Accounts

• Search for COA [IRAJ]


• Double Click on this chart
• Double click on Balance Sheet Accounts and Populate as required
• Double click on Depreciation Accounts and Populate as required
• [Enter]
• [Save]
SAP Detailed Configuration – Step 13
• Path: IMG >Financial Accounting (FA)> Asset Accounting (AA)> Organisational Structures>
Asset Classes> Define Number range intervals

• Copy from Standard Company Code 1000


• To company code Number [IRAJ]
• [Enter]
• [Save]
• Double click to check all entries correctly copied
SAP Detailed Configuration – Step 14
• Path: IMG >Financial Accounting (FA)> Asset Accounting (AA)> Organisational Structures>
Asset Classes> Define Asset Classes

• Double Click on the entry


• Populate information
• Under Asset Type field select the asset type from the COA [IRAJ01]
• Under Screen layout rule field select the screen layout rule 1000
• Change Status of AuC (Asset Under Construction) field to ‘Line Item Settlement’ if it is
abuilding still under construction and depreciation not yet chargeable. Otherwise leave as
default
• Select/Change Real Estate indicator from Drop down
• [Enter]
• [Save]
SAP Detailed Configuration – Step 15
• Path: IMG >Financial Accounting (FA)> Asset Accounting (AA)>
Valuation> Determine the depreciation areas in the asset class

• Choose Chart of Depreciation [IRAJ]


• Highlight line
• Double click on Folder on left of Screen
• Modify layout
• Uncheck Deactivate
• Enter depreciation key 0000 (leaves the decision to end user at
time of creation of asset master record)
SAP Detailed Configuration – Step 16
• Path: IMG >Financial Accounting (FA)> Asset Accounting (AA)>
Depreciation> Valuation Method> Depreciation key> maintain
depreciation Key
• Assign type of depreciation from table
• Assign phase from drop down menu
• When form is complete
• [Enter]
• [Save]
• In Depreciation Key table Highlight Depreciation Key
• Status will appear [Inactive]
• Press the [Activate] Button
• [Enter]
• [Save]
References
• http://accounting-simplified.com/financial/fixed-assets/

• http://www.accaglobal.com/uk/en/technical-
activities/technical-resources-search/2013/january/uk-
accounting-standards.html

• https://www.frc.org.uk/Our-Work/Codes-
Standards/Accounting-and-Reporting-Policy/Standards-in-
Issue/FRS-15-Tangible-Fixed-Assets.aspx
Thank You

Presented by

Iraj Idafar