Asset Accounting is a subsidiary ledger of Financial Accounting. The appropriate General Ledger accounts are updated each time you post. The asset class contains default values and control elements which are passed on to the individual assets when you open a new asset master record. By entering useful default values, you reduce the time and effort needed for creating new asset master records. You also ensure that the records in a given class are handled uniformly.
The asset class is used to:
- sub-classify the General ledger accounts and
- group master records by specific criteria.
Functions of the Asset Class
The asset class contains default values and control elements which are passed on to the individual assets when you open a new asset master record. By entering useful default values, you reduce the time and effort needed for creating new asset master records. You also ensure that the records in a given class are handled uniformly.
The asset class is the most important criteria for structuring fixed assets from an accounting point of view. Every asset has to be assigned to exactly one asset class. The asset class is used to assign the assets (and their business transactions) to the correct general ledger accounts. The most important tasks of the asset classes are:
- Assignment of default values when creating assets (particularly depreciation terms)
- The grouping of assets for reporting purposes
Asset classes are made up of a master data section and a section for valuation data. You define the master data section of an asset class once on the client level. The valuation data section is dependent on the assigned chart of depreciation, which in turn is directly linked to the company code.
You can define any number of asset classes in Customizing. You use the asset classes to categorize assets according to the needs of your enterprise. The asset classes are valid across company codes. The catalog of asset classes, therefore, applies uniformly to all company codes. This is true, even if the company codes use different charts of depreciation, and therefore different depreciation areas and You can assign different charts of depreciation to an asset class so that all assets in this class will be treated differently in each country.
- The Chart of Depreciation is assigned to company code, therefore a class may have multiple Charts of Depreciation relevant to it.
- The asset classes are valid across company codes. The catalog of asset classes, therefore, applies uniformly to all company codes. This is true, even if the company codes use different charts of depreciation, and therefore different depreciation areas
- You can assign different charts of depreciation to an asset class so that all assets in this class will be treated differently in each country.
Special Asset Class
Assets under construction require their own asset class. Choosing the depreciation key ‘0000’ ensures that depreciation is not calculated for the asset under construction in depreciation areas that are posted to the balance sheet (in accordance with the legal requirements in most countries). However, special tax depreciation and investment support are possible even on uncompleted assets. Assets under construction have to be shown separately in the balance sheet. It is possible to post down payments on assets under construction if you enter transaction type group 15. You can enter credit memos on the asset under construction after its complete capitalization if you allow negative acquisition and production costs (APC). The component IM (Investment Management) is available for managing more extensive asset investments from a controlling-oriented perspective.
Without Line Item Settlement
- Assets under construction in this asset class are managed without the option of a line-item final settlement to receiver assets or cost centers. As a result:
- Only complete transfers or simple partial transfers are possible (in other words, you can only transfer either prior-year acquisitions or current-year acquisitions in one given posting transaction).
- You can only transfer to one target asset per posting transaction. You have to enter the amount of the transfer manually.
- There is no connection to the original asset under construction in the capitalized asset. Therefore, there is no exact proof of origin for the original postings.
Under construction with Line Item Settlement
- Assets under construction in this asset class are managed with the option for final line item settlement to receiving assets or cost centers. As a result:
- On the capitalized asset, you can then see the relationship between the capitalized asset and original postings to the asset under construction – you can accurately identify the origin of the postings.
- AUC’s can be settled to multiple final assets/asset classes
Under construction from Investment Measure
- Assets under construction in this asset class to be created solely for capital investment measures (internal orders or projects).
- The assets in this class can not then be directly created and posted in Asset Accounting. The assets can only be processed by means of an order or WBS element, to which they are assigned.
You will generally need values for fixed assets for various business and legal purposes (for example, for book depreciation, cost-accounting depreciation and so on). In the R/3 FI-AA system, it is, therefore, possible to manage values in parallel in as many depreciation areas as you want.
There is no set relationship defined in the system between the chart of accounts and chart of depreciation.
Asset Accounting Company Code
You have to set up company codes in Financial Accounting first. Then assign them to a chart of depreciation, and add the data necessary for Asset Accounting. You can use the company code for Asset Accounting only after making these modifications.
Creating Asset Master Record
When you create the asset master record, you have two options:
- You can use the asset class, to which the asset will belong, to provide default values. The asset class then supplies the most important control parameters in the asset master record.
- You can use an existing asset as a reference for creating the new asset master record. (Possibly the reference asset has default values that are more suitable than those in the asset class.)
Enter additional information, such as an asset text. When you save, you receive an asset number (if the asset class is assigned to a number range that uses internal number assignment). This asset number is also the account number of the individual asset account.
When you create the asset master record, you have two options:
- Use the asset class, to which the asset will belong, to provide default values. The asset class then supplies the most important control parameters in the asset master record.
- Use an existing asset as a reference for creating the new asset master record.
Some information in the asset master record can be managed as time-dependent data. This is of particular significance for cost accounting assignments (for example, cost center, order, project). Shift operation and asset shutdown, both of which can have a direct effect on depreciation, should also be recorded on a monthly basis as part of this time-dependent data.
The history of time-dependent assignments is stored in the system over the entire life of an asset.
Capital Work in Progress and Assets
Capital WIP is referred to as Assets under Construction in SAP and is represented by a specific Asset class. Usually, depreciation is not charged on Capital WIP.
All costs incurred on building a capital asset can be booked to an Internal Order and through the settlement procedure can be posted onto an Asset Under Construction. Subsequently, on the actual readiness of the asset for commercial production, the Asset Under Construction gets capitalized to an actual asset.
Quick Reference Guide on Working with Fixed Assets
The functions for handling tangible and intangible assets enable you to illustrate and document the development of fixed assets for accounting purposes. Asset accounting is a subsidiary ledger of the general ledger and is used to manage and document in detail for fixed asset transactions. In Fixed Asset accounting, you can update depreciation and make changes to asset balance sheet values in asset accounting. You can also make various account assignments to cost accounting for these transaction types. As a result of the integration in the System. Asset Accounting (FI-AA) transfers data directly to and from other SAP components. For example, you can post from the retirements fiscal year data a component directly to FI-AA. Locking, reversal, and scrapping including updating changes, company codes and asset number information with or without vendors, fiscal, closing and manual adjustments.
The Quick reference on Fixed Assets will provide you all the steps in:
- Creating an Asset Master Data – AS01
- Create Asset Master Data Category-Leasing/Insurance Depreciation- AS01
- Change Asset Master record data- AS02
- Display Asset Master Data AS03
- Asset Acquisition-Without Vendor- ABZON
- Asset Value Display- AW01N
- Screen information- AW01N
What are Group Assets
The tax requirements in some countries require the calculation of depreciation at a higher group or level of assets. For this purpose, you can group assets together into so-called group assets.
Asset Acquisition with Vendor
You can post the acquisition of a purchased asset in several different ways, using different components of the R/3 System:
- In Asset Accounting (FI-AA) in integration with Accounts Payable (FI-AP), but without reference to a purchase order.
- In Asset Accounting, without reference to a purchase order, without integration with Accounts Payable (posting to a clearing account – with or without clearing).
- In Materials Management (MM) at goods receipt or invoice receipt (refer to Processing Asset Acquisitions in Purchasing (FI-AA/MM) and Goods Receipt and Invoice Receipt with Reference to Asset).