EXP_0004

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SAP AG 2003

Parallel Financial Reporting Options in an SAP System:

Fixed assets

Current assets

Provisions

Cost-of-sales method

Cash flow / diverse reports / segment reporting

Contents:

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List the different valuation approaches of individual balance sheet items and explain how they can be implemented in an SAP system.

Unit Objectives

At the conclusion of this unit, you will be able to:

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Overview Diagram

AC206

Implementation Project

Implementation Options

Current Trends

Balance Sheet Itemsand Reporting

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Fixed Assets

AC206Balance Sheet Items and Reporting

Fixed assets

Current assets

Cost-of-sales accounting


Provisions

Consolidation

The fixed assets section deals with the following topics:

Fixed assets

Low-value assets

Internally generated (intangible) assets

Leasing

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Your company is analyzing individual balance sheet items with regards to the differences in local GAAP, IAS/IFRS, and US-GAAP.

You are also considering using the options available with SAP.

Business Scenario

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LocalGAAP U.S. GAAPIAS

Useful life Useful life Useful life

Depreciation type Depreciation type Depreciation typeStraight-lineDeclining balance

Mostly straight-line Mostly straight-line

Tax-based depreciation approach Prohibited Prohibited

(Equality of Treatment Principle)

ProhibitedNo revaluation Revaluation allowed

(Writeup to historical cost)

Variations in Fixed Asset Valuations: Examples

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Mapping in Asset Accounting

Local GAAP

Cost Est.

Group valuation

Dep. Acc. e.g. for IAS

APC valuesreal time

FI CO

Integration?

Integration?

Integration?

Fixed Asset X

AccountDetermination

Dep. Acc.Book Dep.

Bal.ShtAcc

e.g. for IAS

Bal.ShtAcc

Book Dep.

CostEst.

Dep.Acc

DepreciationAreas

APC valuesperiodic

or “direct”

The rules for depreciation (=> posting of values in the General Ledger) are determined for each depreciation area.

The depreciation areas can be assigned to various accounts.

Area 01 = Local GAAP: This is the current state for operational systems with a multitude of companies. It is not necessary to convert to “Area 01 = Group valuation” even if the international approach is the leading valuation. A conversion must be carefully considered. If you do want to make the conversion, you will want to implement the conversion in a separate “conversion project.” In many cases, it is not recommended to combine the introduction of parallel financial reporting with the conversion of the leading valuation, but rather to set up two projects.Special features of depreciation area 01:

It is guaranteed that the corresponding FI asset balance sheet accounts can only be posted to with asset account assignment, to prevent reconciliation differences to the greatest degree possible.

Determining gains or losses in investment support depreciation areas on the liabilities side is only correct if the local approach is stored in area 01.

Statistical updating of CO is only possible from area 01 (key word: Direct activation).

Opening postings for leasings are only possible for area 01.

Area 01 = US-GAAP / IAS: During a new system implementation, you should consider using this approach, but do not necessarily have to.

Caution: As of SAP R/3 Enterprise, the data of a periodic posting depreciation area can be posted directly (for each movement).

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Data Staging: Fixed Assets

Balance sheet account

Local GAAPBalance sheet

accountIAS / U.S. GAAP

?

Local GAAP

Parallel valuation

Set up an additional depreciation area

Opening balances

Consultation with external auditor

Copy an existing depreciation area

Possible to transfer data from an existing area Manual transfer (or transfer by program) of the opening balances for the additional area (remote consulting by SAP)

a) Data is transferred and depreciated in the same way as before - only new fixed assets are changed to U.S. GAAP / IAS

b) Data is transferred and the depreciation key and useful life are changed starting from the current year

c) Opening balances are recalculated

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Business Transactions

Asset acquisition from vendor € 20,000

Depreciation parameters

Area 01 – Local GAAP (straight line 10 years) € 2,000Area 60 – IAS (straight line 5 years) € 4,000

Sale with revenue (=> sales price)(possibly with customer)

€ 17,000

Example processes in the FI-AA component:

The net sales price (retirement revenue) of € 17,000 corresponds to a gross amount of € 19,720 with an assumed tax rate of 16%.

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Accounts Overview: Fixed Assets Handling

Offsetting Account IAS

Local GAAP IASSharedAccounts

Acquisition Stock Account

ExpenseDepreciation

Vendor(Payable)

Customer(Receivable)

Bal

ance

Shee

tP&

L

Gain/loss on Sale

Revenue from Sale

Clearing Revenuefrom Assets Sale



Value AdjustmentDepreciation


Gain/loss on Sale

ExpenseDepreciation

1) 20,000 20,000 1)

Business Transactions1) Local GAAP and IAS Purchase (online)2) IAS Offsetting account acquisition (periodic)3) Local GAAP and IAS Depreciation run (periodic)4) Local GAAP Sale with revenue (online)5) IAS Sale with revenue (periodic)

As the business transaction (=> fixed asset retirement) has not yet been entered, it can not be said whether “Gain/loss” will be a gain or loss!

You will subsequently recognize that there will be fundamental differences in the given numerical example in the different accounting principles.

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ExpenseDepreciation

Vendor(Payable)


Bal

ance

Shee

t

Gain/loss on Sale

Revenue from Sale






1) 20,000 20,000 1) 2) 20,000

2) 20,000

Business Transactions1) Local GAAP Purchase (online)2) IAS Offsetting account acquisition (periodic)3) Local GAAP and IAS Depreciation run (periodic)4) Local GAAP Sale with revenue (online)5) IAS Sale with revenue (periodic)

P&L

Gain/loss on Sale

ExpenseDepreciation

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2) 20,000



ExpenseDepreciation

Vendor(Payable)


Bal

anc

Shee

t

Gain/loss on Sale

Revenue from Sale






1) 20,000 20,000 1) 2) 20,0002,000 3)

3) 2,000

3) 4,000


P&L

Gain/loss on Sale

ExpenseDepreciation

3) 4,000

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2) 20,000



ExpenseDepreciation

Vendor(Payable)


Bal

ance

Shee

t

Gain/loss on Sale

Revenue from Sale






Loss on Sale

ExpenseDepreciation

1) 20,000 20,000 1) 2) 20,0002,000 3)

3) 2,000

3) 4,000

3) 4,000

4) 17,000

4) 17,000

20,000 4) 4) 2,000

4) 1,000

4) 17,000


P&L

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2) 20,000

Business Transactions1) Local GAAP Purchase (online)2) IAS Offsetting account acquisition (periodic)3) Local GAAP and IAS Depreciation posting run (periodic)4) Local GAAP Sale with revenue (online)5) IAS Sale with revenue (periodic)


AcquisitionStock Account

ExpenseDepreciation

Vendor(Payable)


Bal

ance

Shee

tP&

L

Gain on Sale

Revenue from Sale



AcquisitionStock Account



Loss on Sale

ExpenseDepreciation

1) 20,000 20,000 1) 2) 20,0002,000 3)

3) 2,000

3) 4,000

3) 4,000

4) 17,000

4) 17,000

20,000 4) 4) 2,000

4) 1,000

4) 17,000

5) 4,000 5) 20,000

5) 1,000

5) 17,000

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FI-AA – Account Solution– Summary

Company code: AC00Asset: 2158Depreciation area: 01 (HR)

Balance VA9011000 9011010

20 2

Company code: AC00Asset: 2158Depreciation area: 01 (HR)

Balance VA9011000 9011010

20 2

Value approach book depreciation:Company code: AC00Asset: 2158Dep.area: 60 (group)

Balance VA8011000 8011010

20 4

Company code: AC00Asset: 2158Dep.area: 60 (group)

Balance VA8011000 8011010

20 4

Value approach group depreciation:

The solution scenario recommended by SAPReasons: From an accounting viewpoint it is the cleanest solution and is supported by other SAP applications.Critical issue: Requires a lot of maintenance, relatively time-consuming.

Points to be considered:• You need an additional set of consolidated accounts (=> Fi).• You therefore may have to add a digit to your chart of accounts (=> FI).• You need a new balance sheet and P&L structure, to valuate consolidated accounts (=> FI).• In Asset Accounting, you need an additional depreciation area that periodically posts asset balances(or directly since SAP R/3 Enterprise) to the General Ledger.• During period-end closing for AA, you may have to start an additional (periodic) program(=> RAPERB2000), to post consolidated asset balance sheet accounts.

Carry out the following steps in the Customizing settings for Asset Accounting:

Copy depreciation area: In Asset Accounting Customizing settings, select Valuation Depreciation Areas Define Depreciation Areas. You can now copy depreciation area 01, for example, and rename it. Caution: Assign the new area ‘Posting in GL’ = 2 (periodic posting of APC values in General Ledger).

The new depreciation area must now be activated in all asset classes: In the Customizing settings for Asset Accounting, select Valuation Determine Depreciation Areas in the Asset Class.

Now you can enter consolidated accounts that were created in FI for the depreciation area in the account determination: In the customizing settings for asset accounting, select Integration with the General Ledger Assign G/L Accounts. In the individual account determinations, you must be able to supply the new consolidated area with the relevant asset balance sheet and depreciation accounts.

To view the new area, and if applicable, values in the new area on “old” assets (=> assets that were already activated before the new depreciation area was created), start the program RAFABNEW.

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Periodic APC Values Posting Options I

Up to an including SAP R/3 Enterprise: You can continue to post the APC values from areas that post periodically with the program RAPERB00. RAPERB00 places the APC values posting documents into a batch input session on a period-specific basis. This session must then be run.

Option as of SAP R/3 Enterprise, Ext. 1.10 or mySAP ERP: The program RAPERB2000 – APC values are posted directly to the (consolidated) asset balance sheet account, without a session, when the program is started.Prerequisites: You must define a document type with external numbering and assign it for each company code. The periodic APC documents are then created with this document type.

Document types for periodic APC values posting

IDES AC305 size 01AA01

Per. APC ValPoAPIDES AC305 size 00AA00

IDES1000

DescriptionDocument Type

NamePost..

New IntervalCurrent Number

2199999999

To Number

2100000000200921

ExtFrom NumberYearNo.

x

Document Type: APDocument Type: AP

No.range 21

Settings for using RAPERB2000:

Define new document type: In Customizing settings for Asset Accounting (or directly in the Customizing settings for FI), select Integration with the General Ledger Post Depreciation to the General Ledger Specify Document Type for Posting of Depreciation Define Document Types.

To create a document number range: From the definition of the document type, use the Number Range Information button to go to number range interval maintenance, and create a new interval with external numbering.

Now create a new document type for your company code(s): In the Customizing settings for Asset Accounting, select Integration with the General Ledger Post APC Values Periodically to the General Ledger Specify Document Type for Periodic Posting of Asset Values.

Start RAPERB2000 (with mySAP ERP): In the SAP Easy Access menu, select Periodic Processing APC Values Posting

Start RAPERB2000 (mit R/3 Enterprise, Ext 1.10): In the SAP Easy Access menu, select Periodic Processing APC Values Posting (new)

Start a test run to display a comprehensive log that is formatted using the ALV. You can go to a document simulation for each document.

Start RAPERB00 (only until SAP R/3 Enterprise): In the SAP Easy Access menu, select Periodic Processing APC Values Posting

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Periodic APC Values Posting Options II

As of SAP R/3 Enterprise, the following options are also available: The “direct posting” of a depreciation area that posts periodically.What happens? After posting the real-time entry in the depreciation area 01, the system creates an individual posting for each movement in the periodic posting area.

Define depreciation area

Real depreciation area:Post to general ledger:…….…….

Document type: AA (Asset Accounting) Normal documentDocument number: 10000087 CC: AA00 FY: JJJJDocument date: DD.MM.YYYY Period: MMPosting date: DD.MM.YYYY

100.00Clear. Ass..199990502

100.0002158 000011000701

AmountPcShort TextAccountPstKyItem

Document type: AA (Asset Accounting) Normal documentDocument number: 10000088 CC: AA00 FY: JJJJDocument date: DD.MM.YYYY Period: MMPosting date: DD.MM.YYYYDocument header: RAPERB: 30/20030110-.....

20.00Oth. Exp.8204000402

100.00Clear. Ass..8199990503

80.00Tech. Ass..8011000401

AmountPcShort TextAccountPstKy

Item

Document from area 01: Document of area that posts periodically:

4 Area posts APC values directly and depreciation

To be able to post APC values directly, only the periodically posted area must be assigned accordingly (in mySAP ERP):

oadb

However, the individual posting document is still not a second real-time document. It is an advance RAPERB posting for each individual asset transaction. How can you recognize that:

The system posts the individual posting using the posting keys 40 and 50, and not 70 (or 75 for a retirement), in the same way as for the document from depreciation area 01.

Other special features of an individual posting:

The consolidated accounts used are not reconciliation accounts.

The document type is always the same as for book depreciation.

If, for some reason, the individual posting is not carried out, it is carried out by the next run of RAPERB2000

You can view the individual posting document in a test run of RAPERB2000. In this case, a reference number appears.

With mySAP ERP, you can also go directly from the Asset Explorer to the direct document.

Possible critical issue : There are substantially more documents generated than when using RAPERB2000.

Maintaining posting rules for parallel accounting principles: These customizing activities are obsolete in mySAP ERP. However, a posting rule like this must be maintained for SAP R/3 Enterprise to post directly.

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Capitalization of Low-Value Assets

Local GAAP

Low value assets

Handling based on tax law up to € 410.00

U.S. GAAP No ruling, tax flat-rate ruling (yearly USD 19,000 )

IAS No ruling, no fixed tax amount limits

The relevant taxation laws determine how low-value assets are mapped; in other words, this is country-specific. In Germany, the equality-of-treatment principle in taxation law has an effect on commercial law.

In Germany, for example, the low-value asset maximum value is € 410.00.

In Austria, for example, the low-value asset maximum value is € 400.

Impacts on accounting procedures:

The acquisition value can be fully depreciated in the year the asset was purchased, and must not be distributed across the (actual) useful life.

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Low Value Assets - Maximum Value:


Local GAAP(Germany)

for example, IAS

410,- €

2500,- €

1. Purchase of an asset(actual useful life: 5 years)

2. Purchase of an asset(actual useful life: 5 years)

400,- €

1200,- €

In this context, SAP recommends that two procedures be used. Each of these procedures is mapped in the system using an asset class:

Lowest common denominator principle: The smallest amount of all accounting standards is selected as the low-value asset maximum limit. All assets with acquisition costs under this maximum account are fully depreciated in all accounting standards/depreciation areas in the year in which they are purchased. All assets with acquisition costs that exceed this maximum amount are not treated as a low-value asset - under any accounting principles - and are therefore capitalized in another class.

Principle of lowest common denominator with manual interaction: Here, the low-value asset maximum limit is also the smallest amount of all accounting standards. Assets whose acquisition and production costs are below this amount are of course also handled as low-value assets. Assets whose acquisition costs exceed this amount (for example, € 1,200.00) are decapitalized in another relevant asset class instead of in the asset class low-value asset. In the segment, the depreciation key can however be manually changed to the low-value asset key. At the local level, the asset is depreciated using the standard useful life however, and at the group level it is fully depreciated in the year in which it was acquired. See the method used in the following example.

We advise against working with several low-value asset classes.

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Handling Tax Writeoffs for Low-Value Assets



Fixed AssetBalance Sheet Acc

Gain on Sale

Vendor(Payable)


Bal

.Sht

P&L

Loss on Sale

AccumulatedDepreciation



DepreciationExpense

DepreciationExpense

1) 400 400 1)

Business Transactions1) Purchase Case 12) IAS acquisition Case 13) Depreciation run Case 1

Offsetting Account Acquisition4) Purchase Case 2

5) IAS acquisition Case 26) Depreciation run Case 2

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Handling Tax Writeoffs for Low-Value Assets (2)




Gain on Sale

Vendor(Payable)


Bal

.Sht

P&L

Loss on Sale




DepreciationExpense

DepreciationExpense

1) 400 400 1)


Offsetting Account Acquisition

4) Purchase Case 25) IAS acquisition Case 26) Depreciation run Case 2 2) 400

2) 400

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Gain on Sale

Vendor(Payable)


Bal

.Sht

P&L

Loss on Sale




DepreciationExpense

DepreciationExpense

1) 400 400 1)




2) 4003) 400

3) 400

3) 400

3) 400

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Offsetting account IAS



Gain on Sale

Vendor(Payable)


Bal

.Sht

P&L

Loss on Sale




DepreciationExpense

DepreciationExpense

1) 400 400 1)




2) 4003) 400

3) 400

3) 400

3) 400

4) 1200 1200 4)

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Gain on Sale

Vendor(Payable)


Bal

.Sht

P&L

Loss on Sale



Fixed Asset Balance Sheet Acc

DepreciationExpense

DepreciationExpense

1) 400 400 1)


Offsetting Account Acquisition4) Purchase Case 2

5) IAS acquisition Case 26) Depreciation run Case 2 2) 400

2) 4003) 400

3) 400

3) 400

3) 400

4) 1200 1200 4) 5) 1200

5) 1200

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Gain on Sale

Vendor(Payable)


Bal

.Sht

P&L

Loss on Sale




DepreciationExpense

DepreciationExpense

1) 400 400 1)

Business Transactions1) Puchase Case 12) IAS acquisition Case 13) Depreciation run Case 1

Offsetting account acquisition4) Purchase Case 2

5) IAS acquisition Case 26) Depreciation run Case 2 2) 400

2) 4003) 400

3) 400

3) 400

3) 400

4) 1200 1200 4) 5) 1200

5) 1200

6) 1200

6) 12006) 240

6) 240

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Intangible Assets

Must be capitalized

Must be capitalized

Must not be capitalized

Actual costs can be capitalized

Must be capitalized

Research costs must not be

capitalized; certain development costs must be capitalized

Acquired intangible assets // also internally generated, tangible assets

Internally generated intangible assets (except research and development)

Research and development costs



Must be capitalized

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Internally Generated Intangible Assets

Internal orders or WBS elements (=> investment measures) with investment profile serve as cost objects/cost collectors

The components CO, PS and (possibly) IM are required.

An additional asset class, Assets under Construction (AuC), must be set up.

Valuation variances are shown using depreciation areas, useful life, and depreciation keys.

Expense account posting in local GAAP

Capitalization and depreciation in U.S. GAAP / IAS

The AuC asset class is special as it contains the allowed entry Investment Measure for the Status Assets Under Construction characteristic (in the master data part of the class – transaction OAOA).

An asset master record in this class can never be directly posted. The allotted funds always run first on the measure.

The AuC master record is directly linked with the measure.

The measure then (preliminary) settles the values on the AuC.

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Debiting and Settling the Investment Measure

Invoice 1

Investment measure

Cost center

Asset (AuC)Invoice 2

Internal activity

Posting costs to an investment measure

Preliminary settlement of costs that are not going to be capitalized, usually to cost centers –the rest goes (automatically) to the AuC

When settling investment measures, the percentage for the asset capitalization and the percentage for expenses can be set separately for each area. The cost-accounting area is always settled 100%.

Capitalization differences are reported on separate accounts. The difference is calculated in comparison with area 01. The accrual and settlement of the values that remain (after the preliminary settlement) for an AuC or asset occur periodically:

With settlements, various depreciation areas can be supplied with different percentages.

Where available, the cost-accounting depreciation area is always settled 100%. A credit posting is always made for the entire value of the investment measure.

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Settlement in Investment Management – Example

CO / IM / PS FI-AA

Investment order

0%100%10.000

IAS /cost-acc.

100 %10.000

0 %----

Local GAAP

Account

AuC(with activation

key)

Area

Preliminary settlement tocost center

11.000(1) -1.000(2)-10.000

0

1.000

(1)

(2)

Where available, the cost-accounting depreciation area is always settled 100% (statistically)

From a Controlling point of view, all values are then settled (=> measure is completely settled)

For orders in general: Different percentages can be settled for each cost category when a source structure is used.

Investment measures can even be settled on a line-item basis.

When a capitalization key is used, investment measures can also settle different capitalization amounts for each depreciation area.

This capitalization key is stored in the asset under construction.

Values can be added to the costs by preliminary settlement, that is, they are not capitalized. However, this then applies for all areas.

Values that have been settled preliminarily, cannot be capitalized again in any area

The account for expenses is set up in Asset Accounting Customizing. For each depreciation area, settlement is only possible to one account. A cost component split is therefore no longer available here.

The account cannot be transferred back to the costs again. No CO account assignment can be passed on for settlement.

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Investment order – debit entry:Total debit:

Costs:

Obligatory capitalization/group:

0 %=> 0,-- €

100 %=> 10.000,-- €

Capitalization according to local GAAP:

Treatment of tax writeoffsIAS/U.S. GAAP

11.000,-- €

1.000,-- €

10.000,-- €

Investment order – Credit entry/costs that must be capitalized:

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Leasing

Local GAAP U.S.-GAAPIAS

Account Balancing and Valuation

Leased assets are shown on the lessor’s or the lessee’s books depending on the application of various tests:

useful lifepresent value of lease paymentsbargain purchase option, and so on

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Operating Lease = Rent Leasing

ReceivableBalance Sheet

Account

Depreciation

Leasing Expense

Payable

Lessor Lessee

An operating lease is subject to a rental agreement.

Capitalization is with the lessor.

In the case of the lessee, the lease installment payments are treated as expenses.

According to U.S. GAAP/ IAS, the operating lease procedure is applied if none of the capital lease requirements are met.

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Lessor Lessee

Capital Lease = Finance Leasing

Receivable

Lease

Balance SheetAccountPayable

Interest Depreciation

The leasing asset is capitalized with the lessee when at least one of the following conditions are met:

At the end of the term of the lease, legal ownership passes to the lessee.

The lease contains a bargain purchase option for the lessee.

The rental period is at least 75 percent of the useful life of the leasing asset.

The present value value of the lease installment payments is at least 90 percent of the purchase price.

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Lessee

Leasing - Different Approaches to a Process

Operating Lease Capital Lease(Financing Leasing)

Payable

Leasing Expense

PayableAccount

Depreciation Interest

This is a case with very limited support in the R/3 System. Most of the postings must be made manually, without links to each other. This may be time-consuming.

No automatic system support is available.

The opening posting is always only possible in depreciation area 01.

In reporting and with internal clearing, the accounts have to be handled separately.

CRM provides a solution for lessors.

For the capital lease process, you can determine the acquisition and production costs of the asset from the lease installment payment when the asset is acquired (no change management).

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Leasing Assets – Display Options in System

The different leasing forms can be mapped using three different asset classes:

- Class 1: Operating lease assets (in all financial reporting):Asset is not capitalized in any depreciation area, but can be "managed" in Asset Accounting

- Class 2: Capital lease assets (in all financial reporting):Asset is capitalized locally and internationally – the opening posting (in a grid) can be used in area 01.

- Class 3: Leasing-mix assets:Although the asset is capitalized in the segment with the periodic APC values posting, the periodic payments, interest expenses, and local expense account postings are entered (manually) in FI. In this leasing case, the system does not provide much support.

Another, somewhat complex option (assuming that area 01 corresponds with local GAAP) for dealing with leasing-mix assets is to map the consolidated area (exclusively) in this class, in depreciation area 01. If you are implementing the account solution, this means that the consolidated accounts must be entered in account determination for this class in area 01.

The advantage of this is that you can use the opening posting for the consolidated values. You could also have depreciation posting post interest expenses.

The obvious disadvantage concerns reporting. If you want to analyze items from depreciation area 01, you must exclude the special leasing class from the selection. Vice versa, the values are missing if you want to report for the consolidated values using the consolidated area.

Tip : For leasing contracts, make sure that a unique handling of assets is possible for all accounting principles - avoid class 3.

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Leasing - basic scenario

Total value of equipment:

Term:

Lease installment payments p.a.:

Interest rate:

1.000.000,- €

5 years

231.000,- €

5%

Business Transaction - Leasing

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Opening Posting – Finance Leasing


Cash

Bal

ance

She

etP&

L

Asset Balance (AA)

Business Transactions1) Local : Opening posting [in display mode: AS03]2) IAS : RAPERB00 / RAPERB2000


Vendor

1) 231,0001) 231,0001) 231,0001) 231,0001) 231,000

Value Adjustment

Depr. Equipment Interest Paid

Interest Clearing Account

2) 1,000,109

Asset Balance (AA) VA

1) 1,000,109

Depr. Equipment Interest Paid

Interest Clearing Account

1) 154,891

2) 1,000,109

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Current Assets


Fixed assets

Current assets

Provisions



Consolidation

In the current assets section, the following topics are discussed:

Inventory

Purchased inventory

Manufactured inventory

Work in process

Payables and receivables

Securities

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Current Assets – Valuation of Inventory


Fixed assets

Current assets

Provisions



Consolidation

Inventory / Valuation of Inventory

Payables (and receivables)

Financial Instruments (such as Securities)

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Price Updates in the SAP System

Material Master

1. Raw Materials and Operating SuppliesMRP 2

EProcurement Type: External ProcurementAccounting 1

VPrice Control: Moving Av. Price

Assets LiabilitiesReserves

RM/OS5000

3. Semi-Finished Products/Work in Progress(WIP)

WIP

2. Finished / Semi-Finished Products (FP)MRP 2

HProcurement Type: In-House ProductionAccounting 1

SPrice Control: Standard Price

FP10000

Balance Sheet

Production Order 2000

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Material MasterMaterial Master

Accounting 2

Online

Key Date

Fields for Price Updates in the Material Master Record

Tax-based Price 1

Tax-based Price 2

Tax-based Price 3

Commercial Price 1

Commercial Price 2

Commercial Price 3

Accounting 1

Moving average price

Standard price

The moving average price and standard price fields (on the Accounting 1 tab) are used for current price updates. These values are updated online.

The Accounting 2 tab is suitable for mapping other valuations. A valuation on the key date takes place here.

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Strict Lowest Value Principle Lower of Cost or MarketNet Realizable Value

Local GAAP U.S. GAAPIAS

FIFO

Weighted averages

LIFO

Fixed value

FIFO

Weighted averages

FIFO

Weighted averages

Valuation of Materials / Warehouse Stocks

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Valuation of Inventory: Raw Materials and Operating Supplies

Balance Sheet Valuation Valuation Run 1 Valuation Run 2 ...

Value Determination Lowest Value LIFO FIFO

Price UpdateMaterial Master Tax-based Price 1, 2, 3 Commercial Price 1, 2, 3

List+

SummaryRevaluation


Expense

Raw Materials & Operating Supplies

Bal

.Sht

P&L

Adjustment AccountRaw Materials &

Operating Supplies100,000

5,000

7,500

Expense

7,500

5,000

Adjustment AccountRaw Materials &

Operating Supplies

100,000 euros are shown on the raw materials and operating supplies account, because this is the price that is calculated from the sales price or from the standard price. This value is updated online.

Valuation run 1 determines a value according to the lowest value principle, and writes this value to the Tax-Based Price 1 field.

Valuation run 2 determines a value according to the LIFO principle, and writes this value to the Tax-Based Price 2 field.

Valuation run 3 determines a value according to the FIFO principle, and writes this value to the Tax-Based Price 3 field.

A reporting program generates a list of the differences between the sales prices and the standard prices for each of the fields Tax-Based Price 1, 2, and 3. This list forms the basis of a manual FB01 reposting to each of the value adjustment accounts and each of the expense accounts.

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Local GAAP IAS U.S. GAAPDirect Material Costs

Direct production costs

Other direct production costs

Material overhead costs Optional

Production overhead costs Optional

Gen. admin. costs:Related to manufacture

Optional

Req. Req. Req.

Req. Req. Req.

Req. Req. Req.

Req. Req.

Req. Req.

Req. Req.

Gen. admin. costs:Not related to manufacture

Optional Prohibited Prohibited

Sales costs Prohibited Prohibited Prohibited

Inventory Costing – Manufactured Inventory

Inventory costing:

Manufactured products: In the standard cost scenario, various inventory costing/overhead costing versions are created for the different accounting principles used (normally material for the lowest values of each valuation, internal activities using the rates for each valuation overhead allocation sheet - tax overhead allocation sheet, overhead allocation sheet and overhead rates using the corresponding percentages).

Depending on the accounting principles and the use of existing rights of election, different inventory costings are included in the corresponding overhead costings.

The system determines overhead rates using a costing sheet in which overhead percentages are recorded.

The costing sheet is stored in the valuation variant of the costing variant.

If you want to map different valuation approaches, two or more costings must be carried out using different costing variants.

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Inventory Valuation: Inventory Costing

Costing Run

Local GAAP IAS U.S. GAAP

Value

CO Prices / Rates

Price updateMaterial master

Tax-based price 1, 2, 3 Commercial price 1, 2, 3

List+

Summaryrevaluation


Value adjustmentfinished products

Expenditurevalue adjustment

Finished products

Bal

ance

Shee

tP&

L

Value adjustmentfinished products

200,00010,000

10,000

15,000

Expenditurevalue adjustment

15,000

VariantInventory Costing

€ 200,000 is shown on the finished products account because this is the price that is calculated from the sales price or from the standard price. This value is updated online.

The local GAAP costing run uses the cost items to calculate a price and writes this price to the Tax-Based Price 1 field.

The IAS costing run uses the cost items to calculate a price and writes this price to the Tax-Based Price 2 field.

The US GAAP costing run uses the cost items to calculate a price and writes this price to the Tax-Based Price 3 field.

A reporting program generates a list of the differences between the sales prices and the standard prices for each of the fields Tax-Based Price 1, 2, and 3. This list forms the basis of a manual FB01 reposting to each of the value adjustment accounts and each of the expense accounts.

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Valuation of Inventory: Work in Progress (WIP)

Production order100 pieces Activity 10 Activity 20 Activity 30 Activity 40 Activity 50 Activity 60

Partial confirm.100 pieces Activity 10 Activity 20 Activity 30 Activity 40

(2+3) Determining WIP final confirm. subsequent period for local GAAP and U.S. GAAP

Local GAAP IASSharedaccounts

WIP

Change in stockWIP

Finished products

Bal

ance

She

etP&

L

WIP

3) 3500

Change in stockWIP

(1) Determining WIP on key datefor local GAAP + U.S. GAAP and production order settlement Act. 50

Act. 60

1) 15002) 1500

1) 20002) 2000

1) 15002) 1500

1) 20002) 2000

Factory activity3) 3500

There is a production order for 100 pieces. These products are manufactured in six different operations. On the key date, there is a partial confirmation. This is because only four of the processing steps have been completed. The product is unfinished and a corresponding balance sheet must be drawn up.

Depending on which cost items are included in the valuation, a different value approach is used here than on the key date (posting 1).

The crucial parameter for different valuation approaches is the results analysis version.

The remaining steps are carried out in the subsequent period. The product is finished and a final confirmation is issued. Each of the works in progress is released (posting 2) and the new finished product is valued at a standard price (posting 3).

Different valuations are subsequently determined and converted using inventory costing. See the overhead for inventory costing.

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Inventory Valuation: Procedure

Determine the write down for raw materials and purchased parts

Update the write down in the material master

Run inventory costing for manufactured products

Update the costing results in the material master

Determine the write down for own parts

Update the write down in the material master

Determine the revaluation difference of the stock

Manual posting in Financial Accounting on the adjustment accountlevel

The calculations may need to be made once for local GAAP and once for IAS or U.S. GAAP

To determine the balance sheet values of finished products, carry out the steps listed above in the order shown. WIP is calculated and posted automatically. In the next run (for example, final settlement) the WIP is released.

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Sales-Order-Related (Make-to-Order) Production


Standard method:Completed Contract (CC)

Percentage of Completion (POC)

Required:POC method, ...

... but only used for milestone agreement

... that is, implementation in line with activity progress

Required:POC method, ...

... that is, implementation in line with activity progress

Production time of at least two fiscal years

No mass production; made-to-order production based on customer orders instead

Order based on a contract for work and services (regular made-to-order production)

Parties to the contract are determined before production begins

Contractual obligation concerning performance of service and return service

Fluctuations in incoming orders mean that only a few objects are delivered one year, whereas several may be delivered in another year

Examples include: industrial plant construction, industrial engineering, shipbuilding

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Definition of Costs: IAS and U.S. GAAP

Production Material (Direct Costs)

Material Overhead Costs

Direct Labor Costs (Direct Costs)

Production Overhead Costs

Other Direct Production Costs

Based on contractual agreements, administration costs and sales costs that need to be allocated, as well as research and development costs

Costs from long-term contracts

Sales and administration costs, as well as research and development that is not specified in a contract, are not considered.

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Definition of Revenue: IAS and U.S. GAAP

Original specified sales revenue

Increase or reduction as a result of changes to the contract in the interim

Contractor’s settlement payments

Contractor’s special payments (falling short of the constructiontime)

Revenue from long-term contracts

Results analysis methods

Revenue-based method with profit realization

Revenue-based method without profit realization

Cost-based POC method

Quantity-based POC method

Completed contract method

The results analysis method that you choose depends on your specific business requirements. Companies usually use a variety of processing methods, and therefore they also use a number of different results analysis methods. The results analysis method contains the formula for determining the accrual data. The percentage of completion is determined from the actual revenue to planned revenue ratio. The costs of sales are calculated from the planned costs in relation to this percentage of completion.

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Example of Results Analysis

10,0006,000Costs

12,0000Revenue

PlanActual

(Assumed/estimated)Percentage of completion 75 % Proportional revenue 12,000 x 0.75 = 9,000-> Proportional costs 10,000 x 0.75 = 7,500-> Unrealized costs 7,500 – 6,000 = 1,500

IAS Journal Entries(1) Actual costs: Expenditure for external services 6,000

(2) Proportional revenue

Accounts receivable (G/L account)

for Change to asset value(P&L account)

9,000

(3) Provisions for unrealized costs

Expenditure for provisions 1,500

Context:

Results analysis based on the cost-based POC method produces another result in the context specified above:

Cost-based means that you are using a degree of completion of 60%.

As a result, a provision does not have to be made.

The unrealized revenue is recorded by the system, for example, using the posting record:Asset value (POC) for change to asset value (POC) 7,200.00 (=> 60% of 12,000)

For more details on scenarios for results analysis, see SAP note 108663.

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Example of Results Analysis - Revenue Approach


Vendor

Bal

ance

She

etP&

L

Receivables

9.000

Change to asset value9.000

Expenditure

Year 20XX


Customer

Bal

ance

She

etP&

L

Receivables

12.000 9.000

Change to asset value9.000

Revenue

12.000

Year 20XX+1

6.000

6.000

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Current Assets – Payables and Receivables


Fixed assets

Current assets

Provisions



Consolidation


Payables (and receivables)

Financial Instruments (such as Securities)

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Valuation of Receivables

Local GAAP US-GAAPIAS

Individual Value Write Downs and Flat-Rate Value Write Downs

No flat rates in the “narrower” sense***

Flat-rate value write downs –according to estimates

Reported using other expense

Stricter guidelines govern flat-rate value adjustments

Statement of actual losses on receivables in previous years

IAS actually allows only individual value adjustments

Individual Value Write Downs and Flat-Rate Value Write Downs

*** Flat-rate value adjustments in the narrower sense means write-down posting for or with the complete receivable balance.However, it is now possible to structure the receivables by due date, country of the customer and/or dunning level, for example. Write downs are still possible according to IAS as well (=> see IAS 39.64). SAP offers the program “Individual Flat-Rate Value Adjustments” for such a structuring.

Payables and receivables with a remaining term of more than one year are to be reported separately in the balance sheet or as an appendix.

The balance sheet or an appendix of cumulated value adjustments and how they have developed over the year are to be assessed as well.

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Doubtful receivables Manual postings using

special general ledger Balance of the

reconciliation account is not modified

Sales tax is still not takeninto account

Irrecoverable debts Manual posting

(write off the receivable) Reduction of the receivable

taking sales tax into account

Individual Value Adjustments

1 500

C

Reconc.Posting

Allowance for doubtful accounts

Customer

1100 Doubtful receivables

Allowance

* net,without tax (10%)

IVA for Receivables

1 500

IVA Expense

Receivables

100 000D

550

1500* 1500

In individual value adjustments, each receivable is evaluated individually.

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Flat-Rate Value Adjustments

Use if a single valuation is not possible due to the large number of individual receivables

Percentage approach

Asset-side deduction from the receivable amount

Determining flat-rates based on due dates

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Valuation Areas

Local GAAP

Valuation Areas Local GAAP

U.S. GAAP

Value Adjustment KeyVA Days Adjustment

%01 30 2,00001 60 3,000

Ctry

DEDE

Val.

LocalLocal

01 60 1,000DE US

Customer A

Acc. Manag.

Value Adjustment 01

XXXXCompany Code

Using valuation areas enables various methods to be used in parallel. The results can be stored in different accounts and ledgers.

Parallel Valuation

LocalGAAP

U.S.

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Individual Flat-Rate Value Adjustments: Example

Receivables:

30 days overdue, value adjustment 2 %


Local GAAP:

US-GAAP:

overdue by 30 days

overdue by 60 days

2,000

10,000


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Business Transactions1) Sales revenue posting2) Valuation run local GAAP (2000 x 2% = 40, 10,000 x 3% = 300)3) Valuation run US-GAAP (10,000 x 1% = 100)

Local GAAP US-GAAPSharedAccounts

Adjustment AccountReceivables

Flat-rate value adjustment to Receivables


Bal

ance

Sh

eet

P&L


SalesFlat-rate value adjustment

to Receivables

1) 10,0001) 2,000

1) 2,0001) 10,000

Individual EWB: Payment Method

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Business Transactions1) Sales revenue posting2) Valuation run local GAAP (2000 x 2% = 40, 10,000 x 3% = 300)3) Valuation run US-GAAP (10,000 x 1% = 100)

Local GAAP US-GAAPSharedAccounts


Flat-rate value adjustment to Receivables


Bal

ance

Sh

eet

P&L


SalesFlat-rate value adjustment

to Receivables

1) 10,0001) 2,000

1) 2,0001) 10,000

Individual EWB: Payment Method II

2) 40

2) 40

2) 300

2) 300

3) 100

3) 100

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Initial Measurement

Initial Measurement

Initial Measurement

Principle: Historical Rate

Principle: Historical Rate

Principle:Historical Rate

Subsequent Valuation



Payables at a higher key-date exchange rate where necessary

Key-date exchange rate

Key-date exchange rate

Receivables at a lower key-date exchange rate where necessary

Foreign Currency Valuation

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Customizing Valuation areas

Leading valuation - blank will continue to be run with SAPF181 in Profit Center Accounting !!!

Parallel valuation: CC (local law) Parallel valuation: IA (IAS)

Valuation methods Account determination Currency customizing

Program run SAPF100 (TR: F.05) Determining the difference between valuations Using valuation areas Valuations of open items / balances Line item list layout

Foreign Currency Valuation: Overview

Icons:

1a) Local GAAP valuation

DEMO method (Lowest Value Principle, Exchange Rate type M) valuation area CC (GCC)

Valuation for preparation of balance sheet

Always cancellation posting

Entry for the HGB valuation in an item (CC valuation area)

1b) IAS/U.S.-GAAP valuation

DEMO method (Lowest Value Principle, Exchange Rate type M) valuation area _(blank)


No reversal

Entry for the HGB valuation in an item (valuation area _) in the BSEG-BDIFF field

Subsequent debiting, balance sheet, and P&L statement (SAPF180/181) access

With incoming payments, the difference is distributed (realized and valuated)

2) IAS valuation

IAS method (always valuate, Exchange Rate type M) valuation area IA (IAS)


Always reversal posting

Entry for the IAS valuation (before the BI folder is run) in an item (valuation area IA)

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Valuation Methods: HGB (Lowest Value Principle)

Lowest value principleStrict lowest value principle

Revalue onlyReset

Always valuate

Valuation ProcessCorp. Group-VendorsCorp. Group-CustomersG/L valuation group. .

Balance Valuat.

Post per line itemWrite extractDocument type SA

Exchange Rate

Debit Bal.Exch.Rate Type M

Credit Bal.Exch.Rate Type M

Use Exchange Hedging

Minimum Difference

Determine Rate Type From Account BalanceExch.Rate Type From Invoice Reference

Valuation Method DEMO

Description Valuation with exchange rate type M

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Valuation Methods: IAS (Key-Date Valuation)

Lowest value principleStrict lowest value principle

Revalue onlyReset

Always valuate

Valuation ProcessCorp. Group-VendorCorp. Group-CustomersG/L Valuation Grp. .

Balance Valuat.

Post per line itemWrite extractDocument type SA

Exchange Rate

Debit Bal.Exch.Rate Type M

Credit Bal.Exch.Rate Type M

Use Exchange Hedging

Minimum difference

Determine Rate Type From Account BalanceExchange Rate Type From Invoice Reference

Valuation Method IAS

Description IAS Valuation with exchange rate type M

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Foreign currency valuation: ReceivablesConditions:

Document amount posted: For each $ 100.00 (see table for exchange rate)Exchange rate:1 € = 1 $ (=> exchange rate parity)


105.00 Euro=€ rate 0.95238Document 3:

99.65 Euro=€ rate 1.00351Document 2:

95 Euro=€ rate 1.05263Document 1:

New as of 4.6C: Report SAPF100 now valuates both open items in foreign currency and foreign currency balance sheet accounts. This report replaces report RFSBEW00, which should not be used anymore.

Define valuation methods (for example, for the lowest value principle).

Expense and revenue accounts have to be defined for exchange rate differences arising from valuation. Balance sheet adjustment accounts also need to be specified for payables and receivables accounts.

Open items are valuated at the line item level. If foreign currency balance sheet accounts are used, a balance valuation is carried out. Various valuation methods can be used.

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FC Valuation: Account Type 1

Local GAAP SharedAccounts

Receivables Adjustment Receivables (in Local Curr.)

Bal

.Sht

P &

L

Receivables Adjustment

Loss

Business Transactions:1) Initial situation: Receivables with different exchange rates2) Valuation run local law3) Valuation run IAS/U.S. GAAP

Rate 0.95 1) 105.26Rate 0.99 1) 100.35Rate 1.05 1) 95.24

Gain Loss Gain

U.S. GAAP/IAS

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Local GAAP SharedAccounts

Receivables Adjustment Receivables (in Local Curr.)

Bal

.Sht

P &

L


Loss

Business Transactions:1) Initial situation: Receivables with different exchange rates2) Valuation run local law3) Valuation run IAS/U.S. GAAP

Rate 0.95 1) 105,26Rate 0.99 1) 100,35Rate 1.05 1) 95,24

Gain Loss Gain

Entry in OI

2) 4.91-2) 0.-2) 0.-

CancellationKey date +1

2) 4.91

2) 4.912) 4.91

2) 4.91

U.S. GAAP/IAS

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Local GAAP U.S. GAAP/IASSharedAccounts

Receivables Adjustment Receivables (in local cur.)

Bal

.Sht

P &

L


Loss

Business Transactions:1) Initial situation: Receivables with different exchange rates2) Valuation run local GAAP3) Valuation run IAS/U.S. GAAP

Rate 0.95 1) 105,26Rate 0.99 1) 100,35Rate 1.05 1) 95,24

Gain Loss Gain

Entry in OI

2) 4.91-2) 0.-2) 5.11

2) 4.91

2) 4.912) 4.91

2) 4.91

3) 4.913) 5.11

3) 5.113) 4.91

3) 5.113) 4.91

3) 4.91 3) 5.11

CancellationKey date +1

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Current Assets – Financial Instruments


Fixed assets

Current assets

Provisions



Consolidation


Payables (and receivables)Financial Instruments (such as Securities)

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Financial Instruments: Overview

Investment and Borrowing Instruments

Money Market:• Fixed-term deposits• Deposits at notice• Commercial paper• Interest rate instrument• Cash flow transaction• Facility

Securities:• Stocks• Rights to benefits• Investment certificates• Bonds• Convertible bonds• Convertible debenture stocks• Warrants

Collateral Instruments

Foreign Exchange:• Spot exchange transactions• Forward exchange transactions• Foreign exchange swaps

Derivatives:• Cap / floor• Interest rate swaps• Cross-currency interest rate swaps• OTC options (interest, currency, securities)• Futures

Financial Instruments

Money market or foreign exchange transactions lend themselves if you want to transact short-term business to bypass liquidity squeezes or to use liquidity surpluses. In the medium to long-term area, security transactions lend themselves in this context.

Derivative financial instruments are used purely to hedge interest and currency risks.

Financial instruments can be mapped in the SAP system in the Treasury and Risk Management component. The contents of Treasury and Risk Management belong to the FSCM (Financial Supply Chain Management). The SAP Easy Access menu will (unfortunately) not be usable until mySAP ERP 2005 (=> ECC 6.0).

The functions of the Treasury and Risk Management are still under the Corporate Finance Management node in ECC 5.0.

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Local GAAP US-GAAP/IAS

Acquisition costs as depreciation limit

Securities in long-term investments:With permanent decrease in value obligatory write down for temporary decrease in value election.

Securities in CA:Valid in case of decrease in value, permanent mandatory write down.

Provisions for losses from derivative transactions

OC not necessarily maximum limit

4 holding categories (according to IAS39):

- Held to maturityTimescale: Long term (=> due date)

-Available for saleTime scale: Medium term

-Loans and ReceivablesTimescale: More long term

- Financial instruments at fair valuethrough profit and lossTime scale: More short term

=> Classification is checked on everykey date

Financial Instruments and Their Approach in the Balance Sheet

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Functions of Treasury (and Risk Management)

Definition of inventory management procedures, to create balance sheets in valuation areas, for example, in line with IAS and/or US-GAAP.

Hedge AccountingIAS 39 / FAS 133

Re-posting of valuation classes for APC values between holding categories of the same valuation area.

Definition of multiple valuation areasto map different accounting principles.

You can practically define as many valuation areas as you want for each company code – the valuation area ID is three-characters long (=> such as Area 001) and can be alphanumeric.

In practice, two to five valuation areas are common for mapping parallel financial reporting – for example:

Local

IAS

U.S.-GAAP

Other specialties:

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Inventory Management

Valuation Areas: Architecture

Parallel valuation

Rate gains


Valuation Area Local


Valuation Area US-GAAP


Valuation Area IAS

Transactionmanagement

such as:stock purchasesfixed-term depositinvestment...

Contrary to previous releases, there is no longer just one operative valuation area with other parallel valuation areas. This concept has changed as of Release 4.7 Extension 2.00.

All valuation areas are now of equal status.

The valuation 001 is indeed “distinguished” since only certain transactions can/should run there (for example, open customer items are only created in area 001), but there are no functional limits between the valuation areas and the same programs can be used in the different valuation areas, unlike before.

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Single Position Management

1000

5500

3000

Purchase on 01.02.

Purchase on 01.07.

Purchase on 01.12.

1000

5500

3000

Purchase on 01.02.

Purchase on 01.07.

Purchase on 01.12.

5500

3000

LIFO FIFO Manual Assignment

3000 1000

1000

5500

3000

Purchase on 01.02.

Purchase on 01.07.

Purchase on 01.12.

1000

A flow assumption process can be created for individual balance sheet items (securities and listed derivatives) to determine how the outgoing item is determined during a sale.

The following flow assumption processes are available:

LIFO = Last in First Out

FIFO = First in First Out

Manual assignment: The stock to be sold is determined in a dialog screen, allowing the sale to be divided between several different individual balance sheet items

Manual assignment for zero bonds: For zero bond "old acquisitions", corresponds to manual assignment with the restriction that a sale can only relate to one individual balance sheet item

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Re-posting of valuation classes enables balance sheet itemsto be re-posted between holding categories of the same valuation area.In this way, IAS balance sheet items, for example, that belong to the Held to Maturity (HtM) valuation class can be re-posted to the Available for Sale (AfS) valuation class so that balance sheet items can be restructured in accordance with organizational or legal requirements.

Re-posting of Valuation Classes

IASHtM AfS Loans and

Receivables

The membership of the securities positions to the various international valuation areas must be checked again and again on the evaluation key dates and changed if required.

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Integration in Treasury and Risk Management

Transaction Manager

FI-GL Market RiskAnalyzer

Market data Basic data for

valuations

Valuations, for example, calculation of present value

Accounts

Cash Management

The Transaction Manager and the Market Risk Analyzer are both original Treasury and Risk Management tools.

There are interfaces to FI and Cash Management.

Important market data such as exchange rates, interest rates or security prices are prepared with Market Data.

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Provisions


Fixed assets

Current assets

Provisions



Consolidation

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Types of Provision

Local GAAP U.S. GAAP/IAS

Obligatory approach for all debt provisions:- Uncertain payables- Imminent losses from unrealized transactions- Guarantees that can be made without legal obligation

Obligatory approach for exist. expense provisions:- Unrealized maintenance (3 months)- Clearing (12 months)

Approach election §249 for:-Unrealized maintenance 4-12 months (change in 2003 ?)

- All remaining expense provisions, if certain criteria are met

Debt provisions:- See local GAAP...

- ... Guarantees implicitly allowed,if financial obligation

Expense provisions:- Expense provisions not permitted

(incl. maintenance)

Special rules according to U.S. GAAP and (different details) IAS for restructuring provisions

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Local GAAP U.S. GAAP/IAS

Provision, if the occurrence of the commitment cannot be excluded (i.e. it is possible)

Expense provisions, if expenses are probable

Can the rate be estimated reasonably?

Occurrence likely*?

Probable (probability > 70 %) accrual mandatory

Reasonably possible (reasonably 30 to 70%)no accrual, explain in notes

Unlikely (remote < 30%) no action

* likely, probability is in USA > approx. 70%, IAS > approx. 50%

Probability

The percentages should be regarded as approximate values. No one can say for certain whether the probability is 69 percent or 71 percent.

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Provisions in the System

CO Controlling and its results analysis functions are available for the creation of provisions, for example, for unrealized costs or imminent losses.

Pension liabilities and other provisions are posted manually.

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Creating a guarantee provision

Local GAAP

IAS / U.S. GAAP 20,000 €

10,000 €

Payment of a guarantee receivable

Local GAAP

IAS / U.S. GAAP 8,000 €

Resolution of the provision

Local GAAP

IAS / U.S. GAAP 12,000 €

2,000 €

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Accounts Overview:Provisions with Separate Accounts

Offsetting AccountU.S. GAAP/ IAS


GuaranteeProvision

Guarantee Expense

Bal

.Sht

P &

L

OtherRevenue

GuaranteeProvisionCash

OtherRevenue

GuaranteeExpense

1) 20,000

Business Transactions1) Creating local GAAP provision 2) Creating provision IAS/U.S. GAAP3) Payment of guarantee receivable4) Adjustment local GAAP provision 5) Adjustment provision IAS/U.S. GAAP

1) 20,000

payment

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Accounts Overview:Provisions with Separate Accounts (2)



GuaranteeProvision

GuaranteeExpense

Bal

.Sht

P &

L

GuaranteeProvision

GuaranteeExpense

1) 20,000

Business Transactions1) Creating local GAAP provision 2) Creating provision IAS/U.S. GAAP3) Payment of guarantee4) Adjustment local GAAP provision 5) Adjustment provision IAS/U.S. GAAP

1) 20,000

payment

2) 10,000

2) 10,000

OtherRevenue

OtherRevenue

Cash

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GuaranteeProvision

GuaranteeExpense

Bal

.Sht

P &

L

GuaranteeProvision

GuaranteeExpense

1) 20,000


1) 20,000

payment

2) 10,000

2) 10,000

3) 8,000 3) 8,000 3) 8,000

3) 8,000

OtherRevenue

OtherRevenue

Cash

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GuaranteeProvision

GuaranteeExpense

Bal

.Sht

P &

L

GuaranteeProvision

GuaranteeExpense

1) 20,000


1) 20,000

payment

2) 10,000

2) 10,000

3) 8,000 3) 8,000 3) 8,000

3) 8,000

4) 12,000

4) 12,000

OtherRevenue

OtherRevenue

Cash

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GuaranteeProvision

GuaranteeExpense

Bal

.Sht

P &

L

GuaranteeProvision

GuaranteeExpense

1) 20,000


1) 20,000

payment

2) 10,000

2) 10,000

3) 8,000 3) 8,000 3) 8,000

3) 8,000

4) 12,000

4) 12,000

5) 2,000

5) 2,000

OtherRevenue

OtherRevenue

Cash

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Fixed assets

Current assets

Provisions



Consolidation

Cost-of-Sales Accounting

Local GAAP: Period accounting or cost-of-sales accounting

IAS: Period accounting or cost-of-sales accounting

U.S.-GAAP: Cost-of-sales accounting only

The distribution of cost-of-sales accounting functions requires cost center accounting or cost object controlling:

Distribution of the cost elements among the corresponding cost rows, e.g., costs of sales, sales, research and development, administration

Source-related assignment

Practice in small companies – Microsoft Excel

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P&L according to PA

Sales

+/- Balance sheet change

Operating profit (net)

Material expenses

+ Personnel expenses

+ Depreciation

+ Other bus. expenses

= Total expenses

Total output for the period

Total costs for the periodstructured according expense type

Period Accounting

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Sales

+ Selling expenses

+ Administration expenses

+ Research&Dev.Expenses

+ Production expenses of The period

Cost of Goods sold

Sales revenue for the period

Sales costs for the periodstructured according to business use

Functional area

Operating profit (net)

P&L according to Cost-of-Sales Accounting


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Accounts solution

Implementation in CO- Profitability segments CO-PA- Profit centers

Special ledger

Basic Options


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Cost-of-Sales Accounting: Option 1

The additional dimension of the business function is shown using the following accounts:

(1) Accounts Solution

XXXX.......XXXX.......XXXXMat.Cons.XXXXDep.XXXXSalary

R & DSalesAdmin.Production

Disadvantages:

Chart of accounts grows considerably

Almost impossible to handle account determination

Increase in asset classes (equipment, admin, sales, and so on)

Manual postings are prone to errors

Advantages:

Report is displayed compete with accounts

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Profitability Analysis (CO - PA)

Consists of characteristics and value fields. Company codeis an example of a characteristic.

(2) CO


Profit Center (EC – PCA)

A profit & loss statement in cost-of-sales accounting can be displayed in profit center accounting by profit center.

Disadvantages:

CO Basis is used for external purposes as a valuation approach

No direct reference to source document (CO-PA)

Difficult to reconcile with PA

Advantages:

An existing application in many cases, possibly with slightly different objectives

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(2) Special Ledger


General LedgerFI-GL Cost of SalesLedger

FI-SL

10001000 Mech. Engineering

20002000 Eng.& Constr.

30003000 Vehicles

Transaction figures by business area

G/L Account

300300 Sales

400400 Administration

500500 Research

Transaction figures by functional area

G/L Account

An additional ledger covers the additional information requirement by functional area.

Disadvantages:

Additional tool

Redundant data

Performance

Advantages:

FI data base

Additional free organizational dimension (functional area)

CO-internal postings can be tracked where necessary

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Derivation Options: Functional Areas

Items

40 Expense 0400 1000 1050 Bal.Sheet Acc 10-

Account Functional Area CO Object Amount

Manual EntryMaster Record ofthe CO Object

Master Record ofthe P&L Account

Substitution

Doc.

Ranking Order “Winner takes all”

If cost-of-sales accounting is activated for a company code, a functional area is determined for all P&L postings.

No functional area is determined when postings are made to balance sheet accounts, or when statistical key figures are entered in Controlling.

There is no link (reconciliation ledger) to FI for assessment/distribution in PCA.

To ensure consistent derivation, fields that are available for CO-internal clearing cannot be queried in the conditions for substitution (for example, assignment). FI substitution is also triggered during CO-internal clearing, but this would lead to other results.

In CO-PA, no functional area/partner functional area is stored.

If, in CO-PA, you want to report on costs from CO by functional areas, the cost centers can be used to assign the costs to a functional area. They can then be transferred to their own value fields in each functional area (or a functional area can be entered as a free characteristic in the derivation).

For cost-of-sales accounting, production variances in sales have to be displayed. For this purpose, periodic valuation can be used with an actual costing. This ensures that the sales variance is reported using cost elements belonging to this actual costing.

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Warning: A functional area could not be determined for this posting

Information

Dummy Postings

A substitution can be set up (if required) in order to check, in the final step, whether a functional area has been determined. 0990 may be entered as an error or dummy functional area.

This procedure makes it easier to search for errors and simplifies reconciliation with FI.

0050 Sales revenue; sales allowance

0100 Cost of sales

0150 Period production costs (where required)

0300 Sales

0400 Administration

0500 Research and development

0600 Other revenue

0620 Other expenses

0640 Revenue from investments

0645 Revenue from investments from associated companies

0660 Revenue from other securities and borrowings

0665 Revenue from other securities and borrowings from associated companies

0680 Interest and similar revenue

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…

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…

0685 Interest and similar revenue from associated companies

0700 Depreciation of financial assets and current asset securities

0720 Interest and similar expenses

0725 Interest and similar expenses from associated companies

0740 Extraordinary revenue

0760 Extraordinary expenses

0800 Taxes from income and revenue

0820 Other taxes

0900 Accrued and allocated depreciation (balance 0) (where necessary)

0910 Accrued selections not identified with a specific period (where necessary)

0920 Non-capitalized costs from internal activities

0980 Other P&L accounts

0990 Error functional area (explain why the posting took place without a functional area)

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Reconciliation Between CO and FI

420000

500 500

113100

500500 500

420000

500

Reconciliation Posting

Functional Area 0300

420000

420000

500

- 500 420000 + 500Re-Posting

FIFI

COCO

Functional Area 0400

Cost Center 1000 Cost Center 2000

194500ClearingFunctional Area

194500ClearingFunctional Area

2

3

31

If settlement in Controlling leads to a change in the functional area, this leads to a shift between the affected items in the P&L statement.

These shifts between functional areas are logged in the reconciliation ledger. Reconciliation postings are generated for FI from the reconciliation ledger.

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Fixed assets

Current assets

Provisions


Cash flow / diverse reports / segment reportingConsolidation

Cash Flow / Diverse Reports / Segment Reporting

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Level 1

Level 2

Level 3

Balance Sheet / Profit & Loss Statement

Structure of IAS Balance Sheet / P&L Statement

Accounts Solution

Not AssignedLIABILITIES Local GAAP AccountsASSETS

Balance SheetStructure IAS

Current Assets

EquityCapital Portion

IntangibleAssets

LT Assets

FixedAssets

FinancialAssets

Shared Accounts

IASOnly

LocalGAAPOnly

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Direct methodIndirect determination

= Cashflow from business activity

= Cashflow from business activity

Customer Payments./. cash to vendors/employees+/./. other receipts and payments that are not to be assigned to investment and financing activities

Annual Net Profit / Loss+ expenses not affecting cash./. revenue not affecting cash+/./. changes affecting payment in the working capital area

+/./. cash receipts and payments from investment activities

= cashflow from investment activity

+/./. cash receipts and payments from financing activities

= cashflow from financing activity

+/./. exchange rate and other value-related influences affecting the fund

= extending cash balance

+/./. Opening cash balance

= ending cash balance

Cash Flow: Flow of Funds Analysis

Three categories:

Operations activity:Flow of capital from the usual business activity of a company, mainly from the sale and acquisition of products or services

Investment activity:Flow of capital from the sale and acquisition of fixed assets (tangible assets and financial assets); relates to the assets side of the balance sheet.

Financing activity:Flow of capital from the receipt and repayment of equity capital and outside capital; relates to the liability and equity side of the balance sheet

There are two ways of displaying the cashflow from business activities:

Direct method

Indirect method

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Cashflow Conversion

Characteristic

Characteristic

Key Figure:

800 000800 200800 300

Increase in receivables

Increase in down payments

Sales

165 000

Actual amount

Actual amount

Actual amount

175 000

FormulaCustomerpayments Total

Characteristic

Report PainterReport Writer

DrilldownReporting

BW Reporting

Query

Investment and financing processes: incoming/outgoing payments and their liquidity

IAS 7 Cashflow Statement – FAS 95 Statement of Cash Flows

Structured according to:

Sources and uses of funds

Business activity areas (activity format)

Presentation:

Direct method (figures reports)

Indirect method (reconciliation)

Determination:

Original determination (all payment processes - corresponding accounting organization)

Derivative determination (built on year-end closing - retrograde determination)

Additional items to consider:

Discontinued operations (result from business areas task)

Minority interest in income of consolidated subsidiaries

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Character

Character

Key figure:Actual costs Movement

type520

089000

Formula

Key figure:Actual costs

Movement type540

Key figure:Actual costs

Movement type560

Creation Actual use Adjustment

Difference

IAS Provision

Local GAAP Provision

9089000

5.000

20.000

25.000

0

5.000

5.000

12.000

8.000

20.000

Diverse Reports: Provisions Report

The EC-CS movement type is used here on the individual financial statement level.

This is set up as a mandatory field in the field status group of the provision accounts.

The field status group of the posting key is set to optional entry.

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Segment Reporting

Not required

• IAS 14 / FAS 131

• A segment must be reported on if:

• Sales to external customers and transactions with other segments make up 10% of total sales

-or-• Segment income makes up 10% of total sales

-or-• Segment assets that make up 10%of the total amount

• If the total of the segments that must be reported on comes to less than 75% of the total consolidated revenue, smaller segments must be added until this threshold is reached.

Segment report requirements:

Segment selection according to the company's internal organizational and reporting structures; this is called the management approach

The internal organizational structure at SAP is characterized by divisions according to geographical region. Since none of these divisions dominates, the selection of operational segments corresponding to SFAS 131 by activity area used

Objective: Clearly identify the opportunities and risks in the business areas

IAS: Two segment reporting formats:

Primary segment: Comprehensive reporting obligation, usually product-oriented

Secondary segment: Restricted reporting obligation, usually based on geographic region

Segment required if sales revenue, segment result, or segment assets make up at least 10 percent of the value

Information on significant customers (more than 10 percent of the total revenue with U.S.-GAAP) with amount and segment but without customer name

Table presentation

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Accounts in FI

Profitability segments in CO-PA

Business areas in FI

Profit centers in EC-PCA

Segment reporting in SAP R/3 uses

Segment Reporting Options

Profit.Seg. 1

BA 1

PCPC

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Possible to separate revenue accounts by business area

Further separation by region is more time-consuming

Separation of expenses and balance sheet items not possible

Using accounts in FI

Accounts Option

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Profitability Segments in CO-PA Option

Profit.Seg. 1

Profitability Segment

Reports available on revenue and sales costs of goods sold by customer and by product, as well as the values derived from them, such as business area and region.

Not possible to separate other expenses or report on balance sheet accounts.

Using profitability segments in CO-PA

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Business area determined independently of client company codes

Business area is in the FI document and is accessible directly in FI during posting

Zero balance per business area is automatic using adjustment postings

Business area allows only single-level valuations without elimination of intercompany sales

Business Areas in FI Option

1000 Test Inc.

2000 Example Ltd.

2100 Example Inc.

2200 IDES Inc.

2300 Example Corp.3000 Vehicles3000 Vehicles

2000 Eng.&Constr.2000 Eng.&Constr.

1000 Mech. Eng.1000 Mech. Eng.

BA 1

No further development of the BA (SAP Note 321190)

BA shows FI valuation

Subsequent posting of BA change by CO internal postings using the reconciliation ledger

Possible creation of BA according to fields of business and further divisions by multiplying out regions

Internal P&L statement according to BA using subsequent debiting of P&L statement to split up cash discount and exchange rate differences is possible

Internal balance sheet according to BA using subsequently debited balance sheet for periodic distribution of receivables, payables, taxes and the assignment of balance sheet items, work in progress, and assets is possible

Assignment of other P&L statement items or balance sheet items using manual assignment postings is possible

Clearings between BA are possible only using FI postings

BA master data can no longer be modified after posting

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Profit Centers in CO Option

1000 Test Inc.

2000 Example Ltd.

2100 Example Inc.

2200 IDES Inc.

2300 Example Corp.

PCPC

Profit centers determined in controlling area

Profit center shows CO valuation and also internal CO documents

Zero balances per profit center not automatic at the present time

Report Painter and queries evaluate profit center according to period accounting and cost-of-sales accounting in a variety of ways,using the standard hierarchy and alternative hierarchies, and with elimination of internal business volumesif required

1 2

Internal balance sheet according to PC using subsequent debiting of the balance sheet for the periodic distribution of receivables, payables and taxes and the assignment of balance sheet items and work in progress possible

PC data based on CO-documents is written to a separate PCA ledger. In FI, PC cannot be accessed directly during posting.

Creating PCs according to lines of business, and further division by multiplying out by region and other criteria

Internal P&L statement according to PC using subsequent posting in P&L statement to split up cash discount and exchange rate differences is possible

Internal balance sheet according to PC using subsequent posting on the balance sheet for the periodic distribution of receivables, payables and taxes, and the assignment of balance sheet items and work in progress is possible

Transfer of any P&L statement or balance sheet items to PCA using rules

Clearing between PC using assessment/distribution, as in CO

PC can be modified after the master data has been posted to: this may affect the consistency of the data

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Assessment Summary

Profit centers are the recommended option

Business areas are less flexible, but can be useful if zero balances are very important and only a few segments are required

Accounts and profitability segments are used for separating revenue, but not for expenses

BA 1

Profit. Seg. 1

PCPC

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Consolidation


Fixed assets

Current assets

Provisions


Cash flow / Diverse Reports / Segment Reporting

Consolidation

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Goodwill

Equity consolidation methodTranslation of foreign currency statements

Key Differences in Consolidation

Different financial reporting methods deal with the following issues in different ways:

Goodwill depreciation:

Local GAAP: Options: Capitalization or depreciation affecting the net income at least one-fourth in each subsequent year or planned depreciation using useful life. Or clearing with no effect on profit or loss with the proportions in an amount, or using a specific time frame.

US GAAP: Must be capitalized, but only unplanned depreciation after impairment test by WP.

IAS: Must be capitalized, but only unplanned depreciation after impairment test by WP. Exception IAS 37

Equity consolidation method:

Local GAAP: Purchase method (book value or new valuation method) and pooling of interest method where required.

US GAAP: Purchase method (book value method or new valuation method) and pooling of interest method where required (more restrictive prerequisites)

IAS: Purchase method (book value or new valuation method) and pooling of interest method where required (more restrictive prerequisites).

Translation of foreign currency statements:

Local GAAP: No specific procedures available

US GAAP/IAS = Functional currency concept

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USA

Germany Canada

USA

Germany Canada

Version 200 = U.S. GAAPVersion 100 = IAS

ECMCTTotals database

View View Company consolidation

Versions for Separating Valuation Methods

Ledger in Euro

Ledger in USD

Company consolidation

ECMCTtotals database

This overhead shows the option for consolidation in the R/3 System (=> EC-CS).

Various global parameters are available:

View: Contains one or more hierarchies of consolidation units

Version: Shows the different aspects of a view, for example, planned and actual data, local GAAP, and IAS / US GAAP valuations.

Consolidation chart of accounts: Account groups

You can use various views, versions, and consolidated charts of accounts to produce parallel consolidated financial statements.

Manual standardizing entries in consolidation are possible at all times.

The alternative to EC-CS is the BW-based SEM-BCS.

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Integration and Data Transfer: Direct Posting

EC-CS consolidation

Company consolidation

Business areaconsolidation

Profit centerconsolidation

SD FIFI

MMFI doc.

COCOCO doc.

Real time

Consolidation types:

Postings are transferred to exactly one item.

The legal requirements for consolidation charts of accounts and the way items are assigned depends on the accounting principles used.

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Integration and Data Transfer: Periodic Extract

EC-CS consolidation

Companyconsolidation


Profit center consolidation

FILedger

Cons.Prep.Ledger

Cost-of-SalesLedger

Customer-Specific

Profit CenterLedger

SD FIFI

MM

Extract

FI doc.COCO

CO doc.

...... GLPCTGLT0 GLT3 GLFUNCT ZZZZ

The extract transfers data from the table GLT3.

In addition to the fixed FI characteristics, table GLT3 contains the movement type and the trading partner, but does not contain the functional area.

The flexible additional fields from the General Ledger are also not available.

The profit center is not included. Therefore, periodic extracts can be used for company and business area consolidation.

The periodic extraction interprets the structure of the balance sheet and the P&L statement in FI.

Various balance sheet structures and P&L statement structures can be transferred.

The balance sheet/P&L statement structures are stored in different versions and different consolidated charts of accounts.

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Integration and Data Transfer: Rollup

EC-CS consolidation

Companyconsolidation


Profit center consolidation

FILedger

Cons.Prep.Ledger

Cost-of-SalesLedger

Customer-Specific

Profit CenterLedger

SD FIFI

MM

Rollup

FI doc.COCO

CO doc.

...... GLPCTGLT0 GLT3 GLFUNCT ZZZZ

Alternatives

Rollup

Fields from any source file are assigned to items/versions in CS.

Several rollups are carried out, to map different assignments.

A cost of sales accounting display in consolidated financial statements can be mapped using a rollup from the cost of sales accounting ledger.

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Integration and Data Transfer: Flexible Upload

EC-CS Consolidation

CompanyConsolidation

Business AreaConsolidation

Profit CenterConsolidation

SD

FIFIMM

FI Doc.FI Doc.

COCO

CO Doc.CO Doc.

Flexible Upload

MS Excel

The data is made available in an external application, such as Microsoft Excel (this is not an unusual practice).

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Each entity is mapped in a separate hierarchy

The role consolidation unit is assigned to the company and the business area

Process support for both entities in the complete consolidation process

Pharmaceuticals

Chemicals

BA World

Metals

Co. US

Co. CA

World

Co. MX

Co. USCo. CACo. MX

Pharmaceuticals Chemicals Metals

Matrix Organization

World by BA

US - Chemicals

MX - Pharmaceuticals

US - Pharmaceuticals

Pharmaceuticals

Chemicals

World by Co.

Co. US

... ... Traditional Approach: Combination

company/business area ? consolidation unit

Legal and management units are stored in different hierarchies

Consolidation Units

CA - Chemicals Co. CA

SEM-BCS – Integration of the Legal and Management View

EC-CS: SEM-BCS:

Previous Situation in EC-CS:

The consolidation unit was derived from a combination of a company and an internal account assignment object (profit center or business area) in the SAP R/3-based consolidation.

The unit is derived from the company for legal consolidation.

Both entities were stored in separate views and hierarchies and were therefore technically separated from each other.

There were problems with the reconciliation of the values of both views. This was especially apparent for the key figure calculation. “Which value do you want to use for the company?” In practice, both valuation approaches were often reconciled. The reconciliation process for both view is labor intensive and is more on the group level.

SEM-BCS Options:

A BW-based consolidation can work in a record with two consolidation units. As a result, the correct valuation approach must already be agreed upon when the data is passed. With this, the definition of the correct valuation approach is shifted to the reported unit.

Each record (financial reporting data or consolidation record) builds upon two consolidation units and channels them through the complete consolidation process in SEM-BCS.

Cost-accounting values can be stored in statistical items and are available for Reporting.

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Balance Sheet Items and Reporting: Unit Summary

List the different valuation approaches of individual Balance Sheet Items and explain how they can be implemented in SAP R/3

You are now able to:

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0.118Exercises

Unit: Balance Sheet Items and ReportingTopic: Parallel Financial Reporting and Asset Accounting

At the conclusion of these exercises, you will be able to:

Define a new (consolidated) depreciation area in the component FI-AA

Understand and create an entire business transaction with different valuation approaches/depreciation parameters (=> depreciation key and useful life) in the different areas

Post the new area periodically to the General Ledger, or periodically post the (consolidate) accounts of the new area.

In this exercise, you will prepare and configure the component FI-AA for one (or several) parallel financial reporting run(s). In this context, you will always assume that you have decided to use the account solution. The system settings and procedures for Exercise 4-1 are initially valid for all releases.

4-1 Exercises on Asset Accounting

4-1-1 As you are working with the account solution, you firstly need consolidated accounts that will be posted at a later stage. When you are creating a group account manually, note the following:=> As you already saw in the first exercise, you have decided to have your consolidated accounts start with a leading 8.=> Use With reference in each case to make your work as easy as possible.=> The texts of the new accounts can be the same as the texts in the references. You will be able to tell from the account number whether the account is an IAS or a local account. If necessary, you can of course, enter “group”, “IAS” or a similar text in G/L account long text.=> Always use your company code GR## as the reference company code.=> You can delete the alternative account number (=> Control Data tab) from the new consolidated accounts.=> You can assign the (new) P&L statement account type Y to the consolidated P&L statement account type. => Very important: Neither the new stock adjustment or value adjustment account (that is, accounts 8 011 000 and 8 011 010) must be a reconciliation account (Control Data tab).

© SAP AG AC206 4-120

Taking account of the points specified above, create the following sample accounts in your company code:

(Consolidated) Account to be

Created

Description Reference Account

8 011 000 Property, plant...... 011 000

8 011 010 VA property, pl.... 011 010

8 199 990 Clear. asset acquisition 199 990

8 210 000 Non-operating expense 210 000

8 211 100 Depreciation SA 211 100

8 825 000 Clear. fixed asset retirement

825 000

8 250 000 Gain asset retirement 250 000

8 200 000 Loss Gain 200 000

8 200 010 Losses from scrap 200 010

4-1-2

Before you do exercise 4-1-2, you require the following information: In the Customizing settings for asset accounting, the chart of depreciation BW## is assigned to your company code GR##. From now on, you will work with the chart of depreciation BW##, which is a copy of the sample chart of depreciation for Germany (=> 1DE). Therefore, enter the chart of depreciation BW## if the system prompts you for a chart of depreciation at the start of the exercise.

In the Customizing settings for asset accounting, create the new depreciation area 60 for your chart of depreciation BW## by copying the depreciation area 01 and changing it as follows:Depreciation area: 60Long text: Parallel valuation GR. ##Short text: GroupReal dep. area: Indicator should be selected (from reference) Posting in G/L: The new area will periodically post APC values to the General Ledger. Therefore, change the entry from 1 to 2. Leave all other entries unchanged. Save your entries.

4-1-3 Activate the new area 60, for example, in asset class 2100, by removing the deactivation indicator and selecting Enter. Change the default values so that the new area has a useful life of five years. As regards book valuation, the assets of this class will be depreciated over ten years.

© SAP AG AC206 4-121

4-1-4 Enter the (consolidated) accounts created in Exercise 4-1-1 for your new group depreciation area 60.To do this, go to account determination in the Customizing settings for Asset Accounting … and select the following data:

Chart of accounts: CA##Account determination: 20000 (=> as this is entered in class 2100)BALANCE SHEET ACCOUNTSEnter the following accounts for your new depreciation area 60:

Acquisition costs / manufacturing costs 8 011 000

Acquisition value of offsetting account acquisition 8 199 990

Loss on sale without revenue 8 200 010

Clearing revenue from sale of assets 8 825 000

Gain on sale 8 250 000

Loss on sale 8 200 000

Near the bottom: Capitalization differences/Non-operating expense

8 210 000

DEPRECIATION ACCOUNTS are now required.Enter the following accounts for your new depreciation area 60:

Value adjustment account normal depreciation 8 011 010

Expenses account normal depreciation 8 211 100

Save your entries.

In account determination, the local accounts of the depreciation area 01 (=> book depreciation), which are posted in real time in Asset Accounting, are also displayed of course. For account determination 20000 this would be the asset balance sheet account 11 000.

4-1-5 Now go to the application and create an asset master record in your company code. Use the following data:Asset class: 2100Company code: GR##Number of similar assets: 1Description (General tab): Equipment group ##Business area (Time-dependent tab): 9900Caution: You cannot enter a cost center, as no link to CO has been defined for your company code.

Before you save your master record, check that your new area 60 appears on the on the Deprec. areas tab and that the useful life is the same as that set in your Customizing settings.

Save your entries. Write down the asset number: ____________

© SAP AG AC206 4-122

4-1-6 Post a (non-integrated) acquisition (=> automatic offsetting entry) to your new asset with the following data:Document date: 14.01.current year Posting date: 14.01.current yearAmount posted: 40,000Simulate, and then post, the document.

You have used this transaction (=> ABZON) to post the same capitalization amount to all depreciation areas. In practice, this is the case 95% of the time. If you wish to create different acquisition and production costs for a purchase acquisition, you could use the “old” automatic offsetting entry (transaction ABZO) or the integrated acquisition posting (transaction F-90).

4-1-7 Display values for the asset in the Asset Accounting Asset Explorer. The acquisition values in area 01 and in the new area 60 are the same: € 40,000.00 in each case. The simulated annual depreciation and the simulated net book value for the fiscal year should differ, however, due to the different useful lives in areas 01 and 60:

Net book value/year end in area 01: _______________

Net book value/year end in area 60: ________________

4-1-8 What values are in FI G/L accounts? Check the balances of the balance sheet accounts 11 000 and 8 011 000 in your company code GR## and the current fiscal year.

4-1-9 You have no doubt noticed that account 11 000 was posted in real time, and has a balance (=> Acquisition) of € 40,000.00. No values are yet displayed in the consolidated asset balance sheet account. This is because the segment periodically posts the APC values to the General ledger. You must start the periodic APC values posting program RAPERB2000 (=> for example, account 8011000), to also maintain values in consolidated asset balance sheet accounts.

Caution: The old APC values posting program RAPERB00 is no longer in the SAP Easy Access Menu in ECC 5.0 and should not be started anymore (such as with SA38) – it is deprecated. It will be completely removed from the system in ECC6.0.

The new program RAPERB2000 has the advantage that batch input sessions are no longer created and thus a processing step is eliminated.

The current APC values posting program RAPERB2000 needs a few customizing settings before it can be used. To make these settings, go to the Customizing settings for Financial Accounting and create the new document type ## (=> ## corresponds to your group number). Use the document type SA as a reference.Otherwise, do not change any entries for now. Select Enter and change the name of your document type from G/L account document to APC values posting ##. Save your entries.

Then double-click to go to the detail screen for your new document type ##.

© SAP AG AC206 4-123

Go to the number range information. Create interval 21 as a new number range interval for your company code GR##.Make it valid to the year after next, and have it assign document numbers from 2 100 000 000 to 2 199 999 999.Extremely important: The new interval must have external numbering. Save your entries.

Go back to the detail screen for document type ## and in the input field Number range, create the new number range interval 21 (=> the interval 01 should still be displayed in the reference). Save your entries.

In the Customizing settings for Asset Accounting, enter your new document type ## for periodic APC values postings in your company code GR##.

4-1-10 Now you can start the APC values posting program in the Asset Accounting application. First, start a test run and then an immediate update run in the background with the following data:Company code: GR##You can deactivate the List Assests and List Direct Items indicators, then you will have a very nice results log.

The system displays a posting log. Here, you should be able to recognize that the system used your seven-digit consolidated accounts from account determination. From the log, you can go to the simulated postings (=> during the test run) or to the actual document (=> during the update run).

You must start the program in the background for the update run – Use the printer LP01.

You can view the update run log in the job overview (transaction SM37).

4-1-11 Check the balance of the consolidated account 8 011 000, your company code GR##, in the current fiscal year.

4-1-12 Post the different depreciation amounts on a group depreciation and book depreciation basis (and in the cost-accounting area). To do this, start the depreciation posting program RAPOST2000.

The program RAPOST2000 was developed for SAP R/3 Enterprise releases. Unlike its predecessor RABUCH00, RAPOST2000 does not create batch input sessions. Instead, it posts depreciation directly to the depreciation expense and value adjustment accounts for the different areas.

Start the depreciation posting program as a test run for the entire current year with the following data:Company code: GR##Fiscal year: Current year Posting period: 12Reason for posting run: Unplanned posting runTest run indicator: Activate

© SAP AG AC206 4-124

After you run the program, the different depreciation amounts appear in the test run log: € 4,000.00 and € 8,000.00 appear in the areas 01 and 60.

When you go to the simulated posting documents, you see that the system would post the local accounts in area 01 and the seven-digit consolidated accounts in the area 60. In the training system, a document is also generated in the cost-accounting area 20.

4-1-13 Using the same parameters as in exercise 4-1-12, execute the update run immediately in the background. Enter the printer LP01 as the output device.

4-1-14 Check the balances of your value adjustment accounts 11 010 und 8 011 010.

© SAP AG AC206 4-125

0.119Solutions


4-1 Solutions for exercises on Asset Accounting

4-1-1 As you are working with the account solution, you firstly need consolidated accounts that will be posted at a later stage. When you are creating a group account manually, note the following:=> As you already saw in the first exercise, you have decided to have your consolidated accounts start with a leading 8.=> Use With reference in each case to make your work as easy as possible.=> The texts of the new accounts can be the same as the texts in the references. You will be able to tell from the account number whether the account is an IAS or a local account. If necessary, you can of course, enter “group”, “IAS” or a similar text in G/L account long text.=> Always use your company code GR## as the reference company code.=> You can delete the alternative account number (=> Control Data tab) from the new consolidated accounts.=> You can assign the (new) P&L statement account type Y to the consolidated P&L statement account type. => Very important: Neither the new stock adjustment or value adjustment account (that is, accounts 8 011 000 and 8 011 010) must be a reconciliation account (Control Data tab).

Taking account of the points specified above, create the following sample accounts in your company code:

Path: In the SAP Easy Access menu, select Accounting Financial Accounting General Ledger Master Records Individual Processing Centrally.

(Consolidated) Account to be

Created

Description Reference Account

8 011 000 Property, plant...... 011 000

8 011 010 VA property, pl.... 011 010

8 199 990 Clear. asset acquisition 199 990

8 210 000 Non-operating expense 210 000

8 211 100 Depreciation SA 211 100

8 825 000 Clear. fixed asset retirement

825 000

8 250 000 Gain asset retirement 250 000

8 200 000 Loss Gain 200 000

8 200 010 Losses from scrap 200 010

© SAP AG AC206 4-126

4-1-2

Before you do exercise 4-1-2, you require the following information: In the Customizing settings for asset accounting, the chart of depreciation BW## is assigned to your company code GR##. From now on, you will work with the chart of depreciation BW##, which is a copy of the sample chart of depreciation for Germany (=> 1DE). Therefore, enter the chart of depreciation BW## if the system prompts you for a chart of depreciation at the start of the exercise.

In the Customizing settings for asset accounting, create the new depreciation area 60 for your chart of depreciation BW## …

In the Customizing settings for Financial Accounting, select Asset Accounting Valuation Depreciation Areas Define Depreciation Areas. In the Select Activity dialog box, choose Define Depreciation Areas.

… by copying the depreciation area 01 and changing it as follows:Depreciation area: 60Long text: Parallel valuation GR. ##Short text: GroupReal dep. area: Indicator should be selected (from reference) Posting in G/L: The new area will periodically post APC values to the General Ledger. Therefore, change the entry from 1 to 2. Leave all other entries unchanged. Save your entries.

4-1-3 Activate the new area 60, for example, in asset class 2100, by removing the deactivation indicator and selecting Enter. Change the default values so that the new area has a useful life of five years. As regards book valuation, the assets of this class will be depreciated over ten years.

In the Customizing settings for Financial Accounting, select Asset Accounting Valuation Determine Depreciation Areas in the Asset Class In the table on the right, select the class 2100. On the left of the dialog structure, double-click Depreciation areas.

4-1-4 Enter the (consolidated) accounts created in Exercise 4-1-1 for your new group depreciation area 60.To do this, go to account determination in the Customizing settings for Asset Accounting …

In the Customizing settings for Financial Accounting, select Asset Management Integration with the General Ledger Assign G/L Accounts

… and select the following data:

Chart of accounts: CA##Account determination: 20000 (=> as this is entered in class 2100)BALANCE SHEET ACCOUNTS

© SAP AG AC206 4-127

Enter the following accounts for your new depreciation area 60:

Acquisition costs / manufacturing costs 8 011 000

Acquisition value of offsetting account acquisition 8 199 990

Loss on sale without revenue 8 200 010

Clearing revenue from sale of assets 8 825 000

Gain on sale 8 250 000

Loss on sale 8 200 000

Near the bottom: Capitalization differences/Non-operating expense

8 210 000

DEPRECIATION ACCOUNTS are now required.Enter the following accounts for your new depreciation area 60:

Value adjustment account normal depreciation 8 011 010

Expenses account normal depreciation 8 211 100

Save your entries.

In account determination, the local accounts of the depreciation area 01 (=> book depreciation), which are posted in real time in Asset Accounting, are also displayed of course. For account determination 20000 this would be the asset balance sheet account 11 000.

4-1-5 Now go to the application and create an asset master record in your company code.

In the SAP Easy Access menu, select Accounting Financial Accounting Fixed Assets Asset Create Asset.

Use the following data:Asset class: 2100Company code: GR##Number of similar assets: 1Description (General tab): Equipment group ##Business area (Time-dependent tab): 9900Caution: You cannot enter a cost center, as no link to CO has been defined for your company code.

Before you save your master record, check that your new area 60 appears on the on the Deprec. areas tab and that the useful life is the same as that set in your Customizing settings.

Save your entries. Write down the asset number: ____________

© SAP AG AC206 4-128

4-1-6 Post a (non-integrated) acquisition (=> automatic offsetting entry) to your new asset …

In the SAP Easy Access menu, select Accounting Financial Accounting Fixed Assets Posting Acquisition External Acquisition Acquis. W/Autom.Offsetting Entry

… with the following data:Document date: 14.01.current year Posting date: 14.01.current yearAmount posted: 40,000Simulate, and then post, the document.

You have used this transaction (=> ABZON) to post the same capitalization amount to all depreciation areas. In practice, this is the case 95% of the time. If you wish to create different acquisition and production costs for a purchase acquisition, you could use the “old” automatic offsetting entry (transaction ABZO) or the integrated acquisition posting (transaction F-90).

4-1-7 Display values for the asset in the Asset Accounting Asset Explorer.

In the SAP Easy Access menu, select Accounting Financial Accounting Fixed Assets Asset Display Asset Explorer.

The acquisition values in area 01 and in the new area 60 are the same: € 40,000.00 in each case. The simulated annual depreciation and the simulated net book value for the fiscal year should differ, however, due to the different useful lives in areas 01 and 60:

Net book value/year end in area 01: 36,000 €

Net book value/year end in area 60: 3,000- €

4-1-8 What values are in FI G/L accounts? Check the balances of the balance sheet accounts 11 000 and 8 011 000 in your company code GR## and the current fiscal year.

In the SAP Easy Access menu, select Accounting Financial Accounting General Ledger Account Display Balances.

© SAP AG AC206 4-129

4-1-9 You have no doubt noticed that account 11 000 was posted in real time, and has a balance (=> Acquisition) of € 40,000.00. No values are yet displayed in the consolidated asset balance sheet account. This is because the segment periodically posts the APC values to the General ledger. You must start the periodic APC values posting program RAPERB2000 (=> for example, account 8011000), to also maintain values in consolidated asset balance sheet accounts.

Caution: The old APC values posting program RAPERB00 is no longer in the SAP Easy Access Menu in ECC 5.0 and should not be started anymore (such as with SA38) – it is deprecated. It will be completely removed from the system in ECC6.0.

The new program RAPERB2000 has the advantage that batch input sessions are no longer created and thus a processing step is eliminated.

The current APC values posting program RAPERB2000 needs a few customizing settings before it can be used. To make these settings, go to the Customizing settings for Financial Accounting and create the new document type ## (=> ## corresponds to your group number).

In the Customizing settings for Financial Accounting, select Financial Accounting Global Settings Document Document Header Define Document Types.

Use the document type SA as a reference.Otherwise, do not change any entries for now. Select Enter and change the name of your document type from G/L account document to APC values posting ##. Save your entries.

Then double-click to go to the detail screen for your new document type ##.

In the Customizing settings for Financial Accounting, select Financial Accounting Global Settings Document Document Header Define Document Types.

Go to the number range information. Create interval 21 as a new number range interval for your company code GR##.Make it valid to the year after next, and have it assign document numbers from 2 100 000 000 to 2 199 999 999.Extremely important: The new interval must have external numbering. Save your entries.

Go back to the detail screen for document type ## and in the input field Number range, create the new number range interval 21 (=> the interval 01 should still be displayed in the reference). Save your entries.

In the Customizing settings for Asset Accounting, enter your new document type ## for periodic APC values postings in your company code GR##.

In the Customizing settings for Financial Accounting, select Asset Accounting Integration with the General Ledger Post APC Values Periodically to the General Ledger Specify Document type for Periodic Posting of Asset Values.

© SAP AG AC206 4-130

4-1-10 Now you can start the APC values posting program in the Asset Accounting application.

In the SAP Easy Access menu, select Accounting Financial Accounting Fixed Assets Periodic Processing APC Values Posting.

First, start a test run and then an immediate update run in the background with the following data:Company code: GR##You can deactivate the List Assests and List Direct Items indicators, then you will have a very nice results log.

The system displays a posting log. Here, you should be able to recognize that the system used your seven-digit consolidated accounts from account determination. From the log, you can go to the simulated postings (=> during the test run) or to the actual document (=> during the update run).

Just select the displayed document number (=> 21000...).

You must start the program in the background for the update run – Use the printer LP01.

You can view the update run log in the job overview (transaction SM37).

To view the job overview via the Menu: System Services Jobs Job Overview

4-1-11 Check the balance of the consolidated account 8 011 000, your company code GR##, in the current fiscal year.


4-1-12 Post the different depreciation amounts on a group depreciation and book depreciation basis (and in the cost-accounting area). To do this, start the depreciation posting program RAPOST2000.

The program RAPOST2000 was developed for SAP R/3 Enterprise releases. Unlike its predecessor RABUCH00, RAPOST2000 does not create batch input sessions. Instead, it posts depreciation directly to the depreciation expense and value adjustment accounts for the different areas.

In the SAP Easy Access menu, select Accounting Financial Accounting Fixed Assets Periodic Processing Depreciation Run Execute.

© SAP AG AC206 4-131

Start the depreciation posting program as a test run for the entire current year with the following data:Company code: GR##Fiscal year: Current year Posting period: 12Reason for posting run: Unplanned posting runTest run indicator: Activate

After you run the program, the different depreciation amounts appear in the test run log: € 4,000.00 and € 8,000.00 appear in the areas 01 and 60.

When you go to the simulated posting documents, you see that the system would post the local accounts in area 01 and the seven-digit consolidated accounts in the area 60. In the training system, a document is also generated in the cost-accounting area 20.

4-1-13 Using the same parameters as in exercise 4-1-12, execute the update run immediately in the background. Enter the printer LP01 as the output device.

In the SAP Easy Access menu, select Accounting Financial Accounting Fixed Assets Periodic Processing Depreciation Run Execute.

4-1-14 Check the balances of your value adjustment accounts 11 010 und 8 011 010.


© SAP AG AC206 4-132

© SAP AG AC206 4-133

0.120Exercises



Directly post a periodically posting area (for example, a segment) to the General Ledger

Caution: The following (short) Exercise 4-2 follows directly on from Exercise 4-1.

4-2 Setting “direct posting” and checking the settings by posting an asset retirement.

As of SAP R/3 Enterprise releases, you can control a periodically posting area so that a “direct” document is posted for each movement. Do not confuse this posting with the real-posting in area 01. The direct document is also generated for the real-time document.

The system configuration for this is very easy and fast.

4-2-1 If you want to use the direct posting function, you must simply change the posting configuration settings of your new Area 60 again. To do this, open the definition of the depreciation areas in the Customizing settings for Asset Accounting and change the entry for Area 60 in the Posting in G/L column from 2 (=> area posts APC values and depreciation) to 4 (=> Area posts APC values directly and depreciation).

4-2-2 Carry out an unintegrated fixed asset retirement for your Equipment group ## – that is, an asset sale without customer. You receive € 35,000.00 for the asset (net). Enter the following data in the posting mask:Company code: GR##Asset: Asset number from exercise 4-1-5Document date: 28.12.Current year Posting date: 28.12.Current year Asset value date: 28.12.Current year Specifications for revenue: Manual value of 35,000.00

Simulate the retirement document. The system displays the accounts of depreciation area 01. In book depreciation, you must have incurred a loss as a result of the sale as the person purchasing the asset pays less than the asset is worth from an accounting viewpoint at the end of the year. Save your data and write down the FI document number: ______________________This is the number of the real-time document.

© SAP AG AC206 4-134

4-2-3 You would now like to view the document that was directly posted for depreciation area 60 because it should show a gain. To do this, start the APC values posting program RAPERB2000 in Asset Accounting periodic processing.

On the initial screen of RAPERB2000, maintain the following data:Company code: GR##List assets indicator: SelectList Direct Items: Select – these are the items you would like to viewTest Run indicator: Select

Run the program. In the results log, a reference number is displayed in one of the columns (to the right). Select this: A dialog box appears, displaying an accounting document. This is the directly posted document. The FI document number should be the number of the document from Exercise 4-2-2 + 1.When you select it by double-clicking, the consolidated account numbers from account assignment should be displayed in the posting lines of the document and you should recognize that a gain has been entered.

If a reference document was not generated and is not displayed, check that you have removed the reconciliation indicator in your consolidated asset balance sheet account 8 011 000. If you forgot to remove this indicator, you can subsequently post the consolidated values in an update run of RAPERB2000.

4-2-4 You can open the direct document with ECC 5.0 from the Asset Explorer as well: Just double-click on the retirement transaction in Area 60.If you do the same thing in Area 01, the system will jump to the real-time document.

4-2-5 Now, check the balances of accounts 11 000 and 8 011 000 again, and see whether the retirement is displayed (in the amount of € 40,000) in period 12. This should be the case, without having to start the periodic APC values posting program. In other words, by creating the retirement, you have fulfilled both accounting principles in one step.

© SAP AG AC206 4-135

0.121Solutions


Caution: The following (short) Exercise 4-2 follows directly on from Exercise 4-1.

4-2 Setting “direct posting” and checking the settings by posting an asset retirement.

As of SAP R/3 Enterprise releases, you can control a periodically posting area so that a “direct” document is posted for each movement. Do not confuse this posting with the real-posting in area 01. The direct document is also generated for the real-time document.

The system configuration for this is very easy and fast.

4-2-1 If you want to use the “direct posting” function, you must simply change the configuration settings of your new Area 60 again. To do this, open the definition of the depreciation areas in the Customizing settings for Asset Accounting and change the entry for Area 60 in the Posting in G/L column from 2 (=> area posts APC values and depreciation) to 4 (=> Area posts APC values directly and depreciation).

In Asset Accounting Customizing settings, select Valuation Depreciation Areas Define Depreciation Areas.

4-2-2 Carry out an unintegrated fixed asset retirement for your Equipment group ##– that is, an asset sale without customer. You receive € 35,000.00 for the asset (net).

In the SAP Easy Access menu, select Accounting Financial Accounting Fixed Assets Posting Retirement Retirement with Revenue Asset Sale Without Customer.

Enter the following data in the posting mask:Company code: GR##Asset: Asset number from exercise 4-1-5Document date: 28.12.Current year Posting date: 28.12.Current year Asset value date: 28.12.Current year Specifications for revenue: Manual value of 35,000.00

Simulate the retirement document. The system displays the accounts of depreciation area 01. In book depreciation, you must have incurred a loss as a result of the sale as the person purchasing the asset pays less than the asset is worth from an accounting viewpoint at the end of the year. Save your data and write down the FI document number: ______________________This is the number of the real-time document.

© SAP AG AC206 4-136

4-2-3 You would now like to view the document that was directly posted for depreciation area 60 because it should show a gain. To do this, start the APC values posting program RAPERB2000 in Asset Accounting periodic processing.

In the SAP Easy Access menu, select Accounting Financial Accounting Fixed Assets Periodic Processing APC Values Posting.

On the initial screen of RAPERB2000, maintain the following data:Company code: GR##List assets indicator: SelectList Direct Items: Select – these are the items you would like to viewTest Run indicator: Select

Run the program. In the results log, a reference number is displayed in one of the columns (to the right). Select this: A dialog box appears, displaying an accounting document. This is the directly posted document. The FI document number should be the number of the document from Exercise 4-2-2 + 1.When you select it by double-clicking, the consolidated account numbers from account assignment should be displayed in the posting lines of the document and you should recognize that a gain has been entered.

If a reference document was not generated and is not displayed, check that you have removed the reconciliation indicator in your consolidated asset balance sheet account 8 011 000. If you forgot to remove this indicator, you can subsequently post the consolidated values in an update run of RAPERB2000.

4-2-4 You can open the direct document with ECC 5.0 from the Asset Explorer as well: Just double-click on the retirement transaction in Area 60.

In the SAP Easy Access menu, select Accounting Financial Accounting Fixed Assets Asset Display Asset Explorer.

If you do the same thing in Area 01, the system will jump to the real-time document.

4-2-5 Now, check the balances of accounts 11 000 and 8 011 000 again, and see whether the retirement is displayed (in the amount of € 40,000) in period 12. This should be the case, without having to start the periodic APC values posting program. In other works, by creating the retirement, you have fulfilled both accounting principles in one step.


© SAP AG AC206 4-137

0.122Exercises

Unit: Balance Sheet Items and ReportingTopic: Settlement of an Investment Measure


Debit an investment measure and credit/settle it “externally” in Asset Accounting. It is crucial that you learn how to map different valuation approaches in the asset (under construction). This exercise will demonstrate the integration options between the components Controlling (CO), Asset Accounting (FI-AA) and Investment Management (IM).

Exercise scenario:

In this exercise you will create an asset as an internal activity. A few employees in the assembly department will put together a shelf for the warehouse.The entire procedure will be processed using an investment order. The individual components (parts, construction and other materials) required are obtained from a supplier, for whom you will create an invoice and enter an account assignment in the order.You also want to take account of the employee’s working time/activity during the subsequent capitalization of the asset.The Controlling department will also debit the shelf with an overhead rate.During the settlement of the investment order, that is, during the capitalization of the asset (under construction), the minimum approach will be adopted from a book-/group-depreciation point of view. This means that the overhead costs will not be capitalized from a book depreciation point of view (=> election), but must be capitalized from a group depreciation point of view.

4-3 Exercise on handling an investment measure

Caution: All groups will carry out the following exercise using company code 1000, as the company codes GR## have no Controlling functions / CO integration. This also means that the chart of depreciation 1DE must be used as this is assigned to company code 1000. The controlling area is 1000.

4-3-1 Have you read through the scenario for this exercise? This is important, in order that you understand how this exercise is laid out.

Caution: As all groups are working with company code 1000 in the exercise scenario, you must first ensure that you are working with the chart of depreciation 1DE:In the command field, call transaction OAPL and enter 1DE in the Chart of Depreciation Selection dialog box. Confirm your entries.

© SAP AG AC206 4-138

A capitalization key is required, to record different valuation approaches/capitalization values (at a later stage) in different depreciation areas of an AuC, when settling an investment measure. This must be defined in several steps in the Customizing settings for Investment Management.

First, check whether at least the capitalization versions book depreciation (=> capitalization version 1) and group depreciation (=> capitalization version 3) are defined for chart of depreciation 1DE. You must make this setting, as these versions are automatically created by the system.

You must then assign these capitalization versions to the corresponding depreciation areas (of the chart of depreciation 1DE). As all groups use the same chart of depreciation, this assignment should already have been made. Check that the following assignments have been made:=> Book depreciation area (=> area 01) is assigned the capitalization version 1=> Group depreciation area (=> area 30) is assigned the capitalization version 3.You do not need to make any assignment for the other areas (=> areas 10 and 15), as they play no role in this context.

4-3-2 You will now define the actual capitalization key and record the capitalization percentages. In the corresponding transaction, create the capitalization key Z## called Capitalization key group ##.

Define the capitalization percentages for company code 1000 and your capitalization key Z## so that the overhead cost elements 655 000 to 655 999 are not activated in book depreciation.Enter the cost elements so that they are right justified. Apply this definition as of January of the current year.

Caution: In the capitalization key, enter all fields, particularly those not used for selection (=> the fields Origin, Cost center, Activity type), generically that is, with a “+”. (=> For more information, see SAP note 46697).

Can you do this without any help? Try it.

To double-check, compare your entry with this data and change any variances. Otherwise, the settlement will not work as desired:Company code: 1000Capitalization key: Z##Capitalization version: 1Cost element: 0000655+++ or ++++655+++ (the plus sign represents the [generic] placeholder for any digit).Origin: ++++Cost Center: ++++++++++Activity Type: ++++++Valid from Period: Period 01 current year (=> for example: 001.2004)Required Capitalization Percentage: 0/No entry

Save the new table row.

© SAP AG AC206 4-139

Caution: Do not assign the new capitalization key to an asset class in Customizing as all groups will use the same asset class. You can also assign the key to the AuC at a later stage in the application.

4-3-3 Create an investment order with the following data in the IM (or CO) application:Order type: IM01 (=> controlling area 1000)Short text: Shelf for warehouse group ##

All of the assignments (for example, the company code and business area) are taken from a reference order that is assigned to the order type in Customizing. The order also has an investment profile. This is located on the Investments tab.

This profile (=> 000003) ensures that an asset under construction is automatically created in the background for your order.

Go from the order to this AuC and record the capitalization key Z## that you defined previously in the exercise.

Outlook: At a later stage during settlement, the AuC will be the default recipient, that is, the recipient that will be used if nothing else was defined.

In order that you can carry out an overhead costing for the order at a later stage, go to the Period-End Closing tab and enter the overhead structure AC206 in the Costing sheet input field.

Save the order and write down:

The order number: __________________

The asset number of the AuC: _____________

4-3-4 Create/post the invoice for the shelf components in accounts payable including account assignment of the investment order, and using the following data:Company Code: 1000Vendor: 1000Invoice Date: 03rd of the current month Posting Date: 04th of the current month Amount: € 23,200.00 Calculate Tax Indicator: SelectTax key: VNText: Shelf components gr. ##

Maintain the following data for the debit item of the posting:G/L Account column: 415 000 (Costs external procurement)Amount in Doc. Curr. column: * (or 23,200)Order column: Order number from exercise 4-3-3

Simulate and save your entries.

© SAP AG AC206 4-140

4-3-5 Staff in the assembly department (=> cost center 4210) need a total of 300 hours to put up the shelves. Enter the account assignment for this activity in your investment order in the corresponding transaction in Controlling. Use the activity type 1421 (=> labor hours), and the following additional data:Sender Cost Center: 4210Document and Posting Date: 25th of the current month Screen Variant: Order (=> 02SAP)Input Type: Individual TypeText: Assembly of a shelf group ##

The sender (=> cost center), the activity type, the recipient (=> investment order) and the total quantity of hours to be posted are specified in the exercises.

Confirm your entries and find out:The price used (in this case, the total price per hour: ___________The cost element used to debit the order: ___________

Save the document.

4-3-6 In a suitable standard report (for example, a actual/plan/variance report), view the actual debit for your order.

Debits with the cost elements 415000 and 619000 should appear.

4-3-7 Use an overhead costing to calculate a material overhead for your investment order.Recap: You defined costing sheet AC206 in the master data for your order. Are you sure that you have entered the data or would you like to double-check your order master data?The calculation procedure ensures that a specific percentage overhead is applied to the material costs (=> shelf components).

If you like, you can try to determine the overhead percentage before the overhead calculation is actually carried out.What is the percentage?: ________ %

In the CO (or IM) application, carry out overhead calculation for your investment order. Use the following data:Order: Your order number from Exercise 4-3-3Period: Current periodFiscal year: Current year You can carry out a test run first (with dialog display) and then implement an update run.

4-3-8 In reporting, check whether the overhead with the cost category 655100 has arrived in the order. See Exercise 4-3-6 as well.

© SAP AG AC206 4-141

4-3-9 The shelf has now been assembled, and can be settled at month’s end.

Caution: In practice, the values must land on an asset of the asset class Fixtures and fittings, in which you have written off depreciation over the useful life. This is carried out in a final settlement.

In this exercise, however, we will only see the preliminary settlement of the measure on the AuC. However, this is enough, as you only want to establish that different valuation approaches can be posted in different depreciation areas. As you can see, this is indeed the case.

Now, carry out (preliminary) settlement for the investment order. Start the corresponding transaction with the following data:Order: Your order number from Exercise 4-3-3Settlement Period: Current periodFiscal Year: Current yearProcessing Type: AutomaticHere too you can carry out a test run before an update run.

Note the following:

Caution: In the detail list, you see that all debits of the order on the asset under construction appear to be settled. This is the case although you have not defined a settlement rule for the order. This means that the AuC that is automatically created is the default recipient for the settlement.

What about the overhead rate? Is this now also capitalized in book depreciation? Was the capitalization key not used? This appears to be the case. However, as you still see the CO view in settlement, and this only displays that the measure (the order) was completely settled, this is satisfactory for the time being.

4-3-10 The best way of viewing the actual capitalization amount of the AuC for each depreciation area is to use the Asset Explorer. Call the corresponding Asset Accounting transaction for the asset under construction.

If you have used the amounts specified in the exercises, the AuC in area 01 should have a capitalization amount of € 35,000.00 and a capitalization amount of € 39,000.00 in area 30.

Display the capitalization accounting document and try to explain the accounts used by the system. You can go directly from the Asset Explorer to the document.

4-3-11 As described in Exercise 4-3-9, after settlement, a credit posting is always made for the entire amount of the order in your example. Display this in CO reporting – the balance of the order should be zero in the actual/plan/variance report.

© SAP AG AC206 4-142

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0.123Solutions

Unit: Balance Sheet Items and ReportingTopic: Settlement of an Investment Measure

4-3 Solution for the exercise on handling an investment measure

Caution: All groups will carry out the following exercise using company code 1000, as the company codes GR## have no Controlling functions / CO integration. This also means that the chart of depreciation 1DE must be used as this is assigned to company code 1000. The controlling area is 1000.

4-3-1 Have you read through the scenario for this exercise? This is important, in order that you understand how this exercise is laid out.

The exercise scenario is described on the first page of exercise 4-3.

Caution: As all groups are working with company code 1000 in the exercise scenario, you must first ensure that you are working with the chart of depreciation 1DE:In the command field, call transaction OAPL and enter 1DE in the Chart of Depreciation Selection dialog box. Confirm your entries.

The command field is the input field on the top left of the R/3 screen. Enter /noapl in this field and confirm your entries.

A capitalization key is required, to record different valuation approaches/capitalization values (at a later stage) in different depreciation areas of an AuC, when settling an investment measure. This must be defined in several steps in the Customizing settings for Investment Management.

First, check whether at least the capitalization versions book depreciation (=> capitalization version 1) and group depreciation (=> capitalization version 3) are defined for chart of depreciation 1DE.

In the Customizing settings for Investment Management, select Internal Orders as Investment Measures Capitalization Values per Depreciation Area Define Capitalization Versions In the Choose Activity dialog box, select Define Capitalization Versions.

You must make this setting, as these versions are automatically created by the system.

You must then assign these capitalization versions to the corresponding depreciation areas (of the chart of depreciation 1DE). As all groups use the same chart of depreciation, this assignment should already have been made. Check that the following assignments have been made:

In the Customizing settings for Investment Management, select Internal Orders as Investment Measures Capitalization Values per Depreciation Area Define Capitalization Versions. In the Choose Activity dialog box, select Assign Capitalization Version to Depreciation Area.

© SAP AG AC206 4-144

=> Book depreciation area (=> area 01) is assigned the capitalization version 1=> Group depreciation area (=> area 30) is assigned the capitalization version 3.You do not need to make any assignment for the other areas (=> areas 10 and 15), as they play no role in this context.

4-3-2 You will now define the actual capitalization key and record the capitalization percentages. In the corresponding transaction, create the capitalization key Z## called Capitalization key group ##.

In the Customizing settings for Investment Management, select Internal Orders as Investment Measures Capitalization Values per Depreciation Area Maintain Capitalization Keys. In the Choose Activity dialog box, select Create Capitalization Key.

Define the capitalization percentages for company code 1000 and your capitalization key Z## so that the overhead cost elements 655 000 to 655 999 are not activated in book depreciation. Enter the cost elements so that they are right justified. Apply this definition as of January of the current year.

In the Customizing settings for Investment Management, select Internal Orders as Investment Measures Capitalization Values per Depreciation Area Maintain Capitalization Keys. In the Choose Activity dialog box, select Define Capitalization Percentages.

Caution: In the capitalization key, enter all fields, particularly those not used for selection (=> the fields Origin, Cost center, Activity type), generically that is, with a “+”. (=> For more information, see SAP note 46697).

Can you do this without any help? Try it.

Select New Entries and enter the following data in the new line:

Company code: 1000Capitalization Key: Z##Capitalization Version: 1Cost Element: 0000655+++ or ++++655+++ (the plus stands for a [generic] placeholder for any digit)Origin: ++++Cost Center: ++++++++++Activity Type: ++++++Valid from Period: Period 01 current year (=> for example: 001.2004)Required Capitalization Percentage: 0/No entry

Save the new table row.

© SAP AG AC206 4-145

Caution: Do not assign the new capitalization key to an asset class in Customizing as all groups will use the same asset class. You can also assign the key to the AuC at a later stage in the application.

4-3-3 Create an investment order in the IM (or CO) application.

In the SAP Easy Access menu, select Accounting Investment Management (or Controlling) Internal Orders Master Data Order Manager.

Use the following data:Order type: IM01 (=> Controlling area 1000)Short text: Shelf for warehouse gr. ##

All of the assignments (for example, the company code and business area) are taken from a reference order that is assigned to the order type in Customizing. The order also has an investment profile. This is located on the Investments tab.

This profile (=> 000003) ensures that an asset under construction is automatically created in the background for your order.

Go from the order to this AuC and record the capitalization key Z## that you defined previously in the exercise.

Stay in the Order Manager and from the menu, select Extras Asset under Construction.

Outlook: At a later stage during settlement, the AuC will be the default recipient, that is, the recipient that will be used if nothing else was defined.

In order that you can carry out an overhead costing for the order at a later stage, go to the Period-End Closing tab and enter the overhead structure AC206 in the Costing sheet input field.

Save the order and write down:

The order number: __________________

The asset number of the AuC: _____________

© SAP AG AC206 4-146

4-3-4 Create/post the invoice for the shelf components in accounts payable…

In the SAP Easy Access menu, select Accounting Financial Accounting Vendors Document Entry Invoice.

… including account assignment of the investment order, and using the following data:Company Code: 1000Vendor: 1000Invoice Date: 03rd of the current month Posting Date: 04th of the current month Amount: € 23,200.00 Calculate Tax Indicator: SelectTax key: VNText: Shelf components gr. ##

Maintain the following data for the debit item of the posting:G/L Account column: 415 000 (Costs external procurement)Amount in Doc. Curr. column: * (or 23,200)Order column: Order number from exercise 4-3-3

Simulate and save your entries.

4-3-5 Staff in the assembly department (=> cost center 4210) need a total of 300 hours to put up the shelves. Enter the account assignment for this activity in your investment order in the corresponding transaction in Controlling.

In the SAP Easy Access menu, select Controlling Internal Orders Actual Postings Activity Allocation Enter

Use the activity type 1421 (=> labor hours), and the following additional data:Sender Cost Center: 4210Document and Posting Date: 25th of the current month Screen Variant: Order (=> 02SAP)Input Type: Individual TypeText: Assembly of a shelf group ##

The sender (=> cost center), the activity type, the recipient (=> investment order) and the total quantity of hours to be posted are specified in the exercises.

Confirm your entries and find out:The price used (in this case, the total price per hour: ___________

Answer: A price of 50.00 is used

The cost element used to debit the order: ___________

Answer: The debit cost element is 619000.

Save the document.

© SAP AG AC206 4-147

4-3-6 In a suitable standard report (for example, a actual/plan/variance report), view the actual debit for your order.

In the SAP Easy Access menu, select Accounting Investment Management (or Controlling) Internal Orders Information System Reports for Internal Orders Plan/Actual Comparisons Orders: Actual/Plan/VarianceEnter the following data on the entry screen:

Field Name Value

Controlling Area 1000

Fiscal year Current year

From Period Current period

To Period Current period

Plan Version 0

Or Value(s) Your order number

Debits with the cost elements 415000 and 619000 should appear.

4-3-7 Use an overhead costing to calculate a material overhead for your investment order.Recap: You defined costing sheet AC206 in the master data for your order. Are you sure that you have entered the data or would you like to double-check your order master data?

In the SAP Easy Access menu, select Accounting Investment Management (or Controlling) Internal Orders Master Data Order Manager.

The calculation procedure ensures that a specific percentage overhead is applied to the material costs (=> shelf components).

If you like, you can try to determine the overhead percentage before the overhead calculation is actually carried out.

In the Customizing settings for Controlling, select Internal Orders Actual Postings Overhead Rates Maintain Calculation Procedures. In the right table, select the calculation procedure AC206. Double-click the Costing sheet folder in the dialog structure on the left. In the table on the right, select row 20. In the dialog structure on the left, double-click the Overhead folder.

What is the percentage?: ________ %

Answer: 20 %

In the CO (or IM) application, carry out overhead calculation for your investment order.

In the SAP Easy Access menu, select Accounting Investment Management (or Controlling) Internal Orders Period-End Closing Single Functions Overhead Rates Actuals: Individual Processing.

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Use the following data:Order: Your order number from Exercise 4-3-3Period: Current periodFiscal year: Current year You can carry out a test run first (with dialog display) and then implement an update run.

4-3-8 In reporting, check whether the overhead with the cost category 655100 has arrived in the order. See Exercise 4-3-6 as well.


Field Name Value





Plan Version 0


4-3-9 The shelf has now been assembled, and can be settled at month’s end.

Caution: In practice, the values must land on an asset of the asset class Fixtures and fittings, in which you have written off depreciation over the useful life. This is carried out in a final settlement.

In this exercise, however, we will only see the preliminary settlement of the measure on the AuC. However, this is enough, as you only want to establish that different valuation approaches can be posted in different depreciation areas. As you can see, this is indeed the case.

Now, carry out (preliminary) settlement for the investment order. Start the corresponding transaction…

In the SAP Easy Access menu, select Accounting Investment Management (or Controlling) Internal Orders Period-End Closing Single Functions Settlement Individual Processing.

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… with the following data:Order: Your order number from Exercise 4-3-3Settlement Period: Current periodFiscal Year: Current yearProcessing Type: AutomaticHere too you can carry out a test run before an update run.

Note the following:

Caution: In the detail list, you see that all debits of the order on the asset under construction appear to be settled. This is the case although you have not defined a settlement rule for the order. This means that the AuC that is automatically created is the default recipient for the settlement.

What about the overhead rate? Is this now also capitalized in book depreciation? Was the capitalization key not used? This appears to be the case. However, as you still see the CO view in settlement, and this only displays that the measure (the order) was completely settled, this is satisfactory for the time being.

4-3-10 The best way of viewing the actual capitalization amount of the AuC for each depreciation area is to use the Asset Explorer. Call the corresponding Asset Accounting transaction for the asset under construction.

In the SAP Easy Access menu, select Accounting Investment Management Fixed Assets Asset Asset Explorer.

If you have used the amounts specified in the exercises, the AuC in area 01 should have a capitalization amount of € 35,000.00 and a capitalization amount of € 39,000.00 in area 30.

Display the capitalization accounting document and try to explain the accounts used by the system. You can go directly from the Asset Explorer to the document.

In the Asset Explorer, double-click the transaction line item.

© SAP AG AC206 4-150

4-3-11 As described in Exercise 4-3-9, after settlement, a credit posting is always made for the entire amount of the order in your example. Display this in CO reporting – the balance of the order should be zero in the actual/plan/variance report.


Field Name Value





Plan Version 0


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0.124Exercises

Unit: Balance Sheet Items and ReportingTopic: Valuation of Current Assets


Carry out lowest value determination at market prices for materials, and compare the value determined with the current balance sheet value.

4-4 Exercise on material valuation:

Context: In this exercise, you will determine a valuation approach (=> for example, the local approach) for a current asset (=> for a material). For other valuation approaches (for example, using IAS or US-GAAP), however, you could use other/additional value determination methods.

Caution: In this exercise you will also use company code 1000 instead of your own company code GR##.

4-4-1 In the relevant Materials Management transaction, create your own material master record with the following data:Material: MAT##Industry Sector: Mechanical EngineeringMaterial Type: Raw MaterialA Copy from... material is not required in this exercise.

When you confirm your entries, the system displays the views available in a dialog box. Select the following views:- Basic Data 1- Purchasing- MRP 1- MRP 2- Accounting 1- Accounting 2

The system now queries which organizational levels you would like to use:Plant: 1000 (Hamburg) Storage Location: 0001 (Material storage).

After you confirm the values, the system prompts you for the following additional data:Basic Data 1 tab:Material Long Text: Steel / Group ##Base Unit of Measure: TO (Ton) Material Group: 00101 (Steels)

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Purchasing tab:In General Data, Purchasing Group is a required field and a value must be entered, e.g. 000. On MRP2 tab, Planned Delivery Time requires an entry.

MRP 1 tab:MRP Type: ND (No planning)

MRP 2 tab:Here, you can see a material’s procurement type. Your material MAT## is procured externally. The system controls the default setting for the field based on the material type.

Accounting 1 tab:Valuation class: 3000 (Raw materials 1)Price Control: V (Moving average price/periodic unit price)Moving Price: 200 (=> in this case, in Euro. The currency is displayed in the logical field group General data.)Price Unit: 1 (=> This means that one ton of steel costs 200 monetary units.)

Accounting 2 tab:Do not enter any data here either. The system displays the six price fields of the material master, which can be used to determine the lowest value.

Save your entries.

4-4-2 Assume that you already have 10 tons of steel in your warehouse, and you now need to post these to the R/3 System. Now, record your stock balances by posting a miscellaneous goods receipt for the raw material MAT##.

In the corresponding input screen, select the following combination from the upper drop down fields:Goods Receipt OthersSelect the following movement type: 561

In the header data screen area, maintain the following data:Material: MAT##Quantity: 10 (=> The unit of entry “tons” should be retrieved from the master data.)Storage location: 0001Plant: 1000

Post the goods receipt document and write down the document number: _________________

4-4-3 In the material master record, check whether the APC value of 10 (tons) and the total material value of 2000 (€) is displayed.

4-4-4 In addition to the goods receipt document in Logistics, the system also generated an FI document. What is the corresponding posting record? Try to determine the posting record using the goods receipt transaction (=> MIGO). You can use the transaction MIGO to display material documents as well as to post goods receipts and issues. From here, you can go directly to the FI document.

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4-4-5

Context: You will now create a purchase order in the system, to have a comparison value for valuation runs.

Caution: To add an element of surprise, instead of generating a purchase order for your own material MAT##, create a purchase order for the material created by the group next to you.

For example: You are in group 03 and have created the material MAT03 in a previous exercise. The two positions next to you (=> positions 04 and 05) are not occupied. There is a group in position 06.

In this exercise, you will therefore create a purchase order for the material MAT06.The group with the last PC number (=> for example, group 18) will create a purchase order for the group with the lowest PC number (=> for example, group 02, if there is no one sitting in position 01).

Call the purchase order transaction and enter vendor 1000 in the top line of the input screen. Confirm your entries, and maintain the following data in the header data screen area:Purchasing Org.: 1000Purch. Group: 000Company Code: 1000

Confirm your entries.

In the Item overview screen area, enter the following data:A = Account assignment category: Do not fill Material: MAT?? – "??" represents the relevant group number, as explained at the top of this exercise.PO Quantity: 2 (The order unit is automatically retrieved.)Deliv. Date: End of month (=> if this is not a working day, go back one or two days).Net Price: Choose a price between € 190.00 and € 205.00Plant: 1000 (Hamburg)

Confirm your entries and save your purchase order.

Caution: If the material for which you are creating a purchase order does not already exist, wait until the relevant group has created the material, and then try to create the purchase order again.

© SAP AG AC206 4-154

4-4-6 Check the APC value for your material MAT## using a lowest value determination for market prices. Is the approach used in the balance sheet (=> based on the previous exercises, € 2,000.00 for 10 tons) still justified?

To establish this, start the determination of lowest value function in the Logistics application and enter the following data on the program screen:Company Code: 1000Key Date: End of monthMaterial: MAT##Plant: 1000

Select the Market Price button to run the price comparison.

In the exercise scenario, the purchase order prices are sufficient as price sources. For all other price sources, you can delete the selection. Ensure that all purchase orders from the start of the year to the end of the current month are incorporated.

Then select the Comparison Price button, and only select the Current Moving Average Price (=> current MAP) to determine the lowest value on the Phys. Inventory tab. Do not run the program yet.

4-4-7 To save your entries, save all input as a variant. Otherwise you must enter several values again after the test run. Create a variant with the following data:Variant Name: VAR##Meaning: Variant MRN0 /group ##

4-4-8 Start a test run, that is, a run without a database update. If there is a purchase order for your material that is under € 200/ton, the system will display the new, lower prices, and the corresponding change percentage. If there is only one purchase order over € 200/ton, this is displayed, and the system will not display a new valuation price in this case.

4-4-9 The market price determined will now be updated using an update run on one of the six price fields of the material master (=>Accounting 2 tab). To do this, select the Database Update indicator in the Update Material Master logical field group.

Caution: You do not want to change the material price (=> Change Material Prices button), as this would change the valid valuation price, that is, the moving average price in this case.

Select the Update Prices button, and select Tax-Based Price 1, for example. It makes sense to log the run using a change document.

Start the update run.

4-4-10 Call your material master MAT## and check whether the market price was updated.

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4-4-11 Have the system display the amount for which you should run a value adjustment. The list will of course only display a write-down amount if the market price determined in the previous exercise was under the moving average price.

To do this, in the Logistics application, select the transaction that lists the balance sheet value for each account. On the program screen, enter the following data:Company Code: 1000Key Date: End of monthMaterial: MAT##Plant: 1000

In the Balance Sheet Value logical field group, select the Prices/Levels button.On the upper screen area, select the price field in which you have updated the market price. You can deactivate all other fields. If not already set by default, the selected price field will be assigned Level 1.On the lower screen area, describe level 1 as “market price”, for example.The system should display the minimum of the value of level 1 and the APC value as the balance sheet value. You can define this by selecting the Bal.Sh.Val button.Do not run the program yet.

4-4-12 To save your entries, save all input as a variant. Otherwise you must enter several values again when you recall the program. Create a variant with the following data:Variant Name: VAR##Meaning: Variant MRN9/group ##

4-4-13 Start the (test) run and analyze the list of results.How high is the actual balance sheet value?How high is the write-down value to be posted manually?

Caution: It is not particularly useful to implement an update run in this case, and it does not have to be carried out.

Context: You would use a G/L account posting (=> transaction FB50) to record the write-down amount determined. The posting record would be the following:Expense from write-down raw materials (local)tovalue adjustment raw materials (local)

Using another method (for example, lowest value determination using the movement rate or the range of coverage of a material or the FIFO method) you would receive another balance sheet value, which can be written down in another accounting view. The accounts that are posted in manual posting are the corresponding international expense account and the international asset balance sheet account.

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0.125Solutions

Unit: Balance Sheet Items and ReportingTopic: Valuation of Current Assets

4-4 Solution for the exercise on material valuation:

Context: In this exercise, you will determine a valuation approach (=> for example, the local approach) for a current asset (=> for a material). For other valuation approaches (for example, using IAS or US-GAAP), however, you could use other/additional value determination methods.

Caution: In this exercise you will also use company code 1000 instead of your own company code GR##.

4-4-1 In the relevant Materials Management transaction, create your own material master record with the following data:

Path: In the SAP Easy Access menu, select Logistics Materials Management Material Master Material Create (General) Immediately.

Material: MAT##Industry Sector: Mechanical EngineeringMaterial Type: Raw MaterialA Copy from... material is not required in this exercise.

When you confirm your entries, the system displays the views available in a dialog box. Select the following views:- Basic Data 1- Purchasing- MRP 1- MRP 2- Accounting 1- Accounting 2

The system now queries which organizational levels you would like to use:Plant: 1000 (Hamburg) Storage Location: 0001 (Material storage).

After you confirm the values, the system prompts you for the following additional data:Basic Data 1 tab:Material Long Text: Steel / Group ##Base Unit of Measure: TO (Ton) Material Group: 00101 (Steels)

Purchasing tab:In General Data, Purchasing Group is a required field and a value must be entered, e.g. 000. In MRP2 tab, Planned Delivery Time requires an entry.

© SAP AG AC206 4-158

MRP 1 tab:MRP Type: ND (No planning)

MRP 2 tab:Here, you can see a material’s procurement type. Your material MAT## is procured externally. The system controls the default setting for the field based on the material type.

Accounting 1 tab:Valuation class: 3000 (Raw materials 1)Price Control: V (Moving average price/periodic unit price)Moving Price: 200 (=> in this case, in Euro. The currency is displayed in the logical field group General data.)Price Unit: 1 (=> This means that one ton of steel costs 200 monetary units.)

Accounting 2 tab:Do not enter any data here either. The system displays the six price fields of the material master, which can be used to determine the lowest value.

Save your entries.

4-4-2 Assume that you already have 10 tons of steel in your warehouse, and you now need to post these to the R/3 System. Now, record your stock balances by posting a miscellaneous goods receipt for the raw material MAT##.

Path: In the SAP Easy Access menu, select Logistics Materials Management Inventory Management Goods Movement Goods Receipt Other (MIGO).

In the corresponding input screen, select the following combination from the upper drop down fields:Goods ReceiptOthersSelect the following movement type: 561

In the header data screen area, maintain the following data:Material: MAT##Quantity: 10 (=> The unit of entry “tons” should be retrieved from the master data.)Storage location: 0001Plant: 1000

Post the goods receipt document and write down the document number: _________________

4-4-3 In the material master record, check whether the APC value of 10 (tons) and the total material value of 2000 (€) is displayed.

In the SAP Easy Access menu, select Logistics Materials Management Material Master Material Display Display Current Enter MAT##. Call the view Accounting 1 and enter Plant 1000.

© SAP AG AC206 4-159

4-4-4 In addition to the goods receipt document in Logistics, the system also generated an FI document. What is the corresponding posting record? Try to determine the posting record using the goods receipt transaction (=> MIGO). You can use the transaction MIGO to display material documents as well as to post goods receipts and issues. From here, you can go directly to the FI document.

In the SAP Easy Access menu, select Logistics Materials Management Inventory Management Goods Movement Goods Receipt Other (MIGO). In the top dropdown boxes, select the following combination:Display Material Document In the field directly on the right you can enter your goods receipt document number (and the fiscal year) from one of the previous exercises, if these do not appear automatically. Confirm your entries. In the header data screen area, select the Doc. Info tab and choose the Accounting Documents. The system displays the FI document number, and shows the following posting record when you double-click the accounting document:Raw materialstoRecord APC values.

4-4-5

Context: You will now create a purchase order in the system, to have a comparison value for valuation runs.

Caution: To add an element of surprise, instead of generating a purchase order for your own material MAT##, create a purchase order for the material created by the group next to you.

For example: You are in group 03 and have created the material MAT03 in a previous exercise. The two positions next to you (=> positions 04 and 05) are not occupied. There is a group in position 06.

In this exercise, you will therefore create a purchase order for the material MAT06.The group with the last PC number (=> for example, group 18) will create a purchase order for the group with the lowest PC number (=> for example, group 02, if there is no one sitting in position 01).

Call the purchase order transaction …

In the SAP Easy Access menu, call Logistics Materials Management Purchasing Purchase Order Create Vendor/Supplying Plant Known

… and enter vendor 1000 in the top line of the input screen. Confirm your entries, and maintain the following data in the header data screen area:Purchasing Org.: 1000Purch. Group: 000Company Code: 1000

Confirm your entries.

© SAP AG AC206 4-160

In the Item overview screen area, enter the following data:A = Account assignment category: Do not fill Material: MAT?? – "??" represents the relevant group number, as explained at the top of this exercise.PO Quantity: 2 (The order unit is automatically retrieved.)Deliv. Date: End of month (=> if this is not a working day, go back one or two days).Net Price: Choose a price between € 190.00 and € 205.00Plant: 1000 (Hamburg)

Confirm your entries and save your purchase order.

Caution: If the material for which you are creating a purchase order does not already exist, wait until the relevant group has created the material, and then try to create the purchase order again.

4-4-6 Check the APC value for your material MAT## using a lowest value determination for market prices. Is the approach used in the balance sheet (=> based on the previous exercises, € 2,000.00 for 10 tons) still justified?

To establish this, start the determination of lowest value function in the Logistics application …

In the SAP Easy Access menu, select Logistics Material Management Valuation Determination of Lowest Value Market Prices

… and enter the following data on the program screen:Company Code: 1000Key Date: End of monthMaterial: MAT##Plant: 1000

Select the Market Price button to run the price comparison.

In the exercise scenario, the purchase order prices are sufficient as price sources. For all other price sources, you can delete the selection. Ensure that all purchase orders from the start of the year to the end of the current month are incorporated.

Then select the Comparison Price button, and only select the Current Moving Average Price (=> current MAP) to determine the lowest value on the Phys. Inventory tab. Do not run the program yet.

4-4-7 To save your entries, save all input as a variant. Otherwise you must enter several values again after the test run.

From the menu, select Go to Variants Save as Variant …

Create a variant with the following data:Variant Name: VAR##Meaning: Variant MRN0 /group ##

© SAP AG AC206 4-161

4-4-8 Start a test run, that is, a run without a database update.

From the menu, select Program Execute

If there is a purchase order for your material that is under € 200/ton, the system will display the new, lower prices, and the corresponding change percentage. If there is only one purchase order over € 200/ton, this is displayed, and the system will not display a new valuation price in this case.

4-4-9 The market price determined will now be updated using an update run on one of the six price fields of the material master (=>Accounting 2 tab). To do this, select the Database Update indicator in the Update Material Master logical field group.

Caution: You do not want to change the material price (=> Change Material Prices button), as this would change the valid valuation price, that is, the moving average price in this case.

Select the Update Prices button, and select Tax-Based Price 1, for example. It makes sense to log the run using a change document.

Start the update run.

From the menu, select Program Execute.

4-4-10 Call your material master MAT## and check whether the market price was updated.

In the SAP Easy Access menu, select Logistics Materials Management Material Master Material Display Display Current Enter MAT##. Call the view Accounting 2 at least.

4-4-11 Have the system display the amount for which you should run a value adjustment. The list will of course only display a write-down amount if the market price determined in the previous exercise was under the moving average price.

To do this, in the Logistics application, select the transaction that lists the balance sheet value for each account.

In the SAP Easy Access menu, select Logistics Materials Management Valuation Balance Sheet Valuation Results Balance Sheet Value per Account

On the program screen, enter the following data:Company Code: 1000Key Date: End of monthMaterial: MAT##Plant: 1000

In the Balance Sheet Value logical field group, select the Prices/Levels button.On the upper screen area, select the price field in which you have updated the market price. You can deactivate all other fields. If not already set by default, the selected price field will be assigned Level 1.

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On the lower screen area, describe level 1 as “market price”, for example.The system should display the minimum of the value of level 1 and the APC value as the balance sheet value. You can define this by selecting the Bal.Sh.Val button.Do not run the program yet.

4-4-12 To save your entries, save all input as a variant. Otherwise you must enter several values again when you recall the program.

From the menu, select Go to Variants Save as Variant …

Create a variant with the following data:Variant Name: VAR##Meaning: Variant MRN9/group ##

4-4-13 Start the (test) run and analyze the list of results.

From the menu, select Program Execute

How high is the actual balance sheet value?

The actual balance sheet value is displayed in the list of results in the column on the very right.

How high is the write-down value to be posted manually?

The write-down value is displayed in the same column, four rows lower.

Caution: It is not particularly useful to implement an update run in this case, and it does not have to be carried out.

Context: You would use a G/L account posting (=> transaction FB50) to record the write-down amount determined. The posting record would be the following:Expense from write-down raw materials (local)tovalue adjustment raw materials (local)

Using another method (for example, lowest value determination using the movement rate or the range of coverage of a material or the FIFO method) you would receive another balance sheet value, which can be written down in another accounting view. The accounts that are posted in manual posting are the corresponding international expense account and the international asset balance sheet account.

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0.126Exercises

Unit: Balance Sheet Items and ReportingTopic: Foreign Currency Valuation

(of Accounts Receivable)At the conclusion of these exercises, you will be able to:

Understand and start the program for implementing foreign currency valuation. You can then implement the foreign currency valuation for several valuation areas, and will get to know the account solution and the ledger solution.

4-5 Exercise for foreign currency valuation (of accounts receivable)

4-5-1 In your company code GR##, create customer 206##. Select the account group Sold-to party. Use customer 1000 in company code 1000 as a reference.Caution: If the customer number begins with a letter (=> You get the error message: “Enter a number between A and ZZZZZZZZ”), name your customer Z206##. You must also note these changes in the subsequent exercises.

4-5-2 Create a customer invoice for US$ 5,000.00 for your customer 206##. In other words, create an invoice for a (large-scale) foreign customer in the customer’s currency.Assume that the $ rate on the posting day was 0.83333. This corresponds to a € rate of 1.20 as 1/1.20 = 0.8333. The Euro is relatively strong compared with the dollar, or in other words, the dollar is relatively weak.

In the corresponding posting transaction, enter the following data:Customer: 206##Invoice Date: 07.07.previous yearReference: 1##Posting date: 17.07.previous yearAmount: 5,000Currency key: USDCalculate tax: Select the indicator. For simplicity’s sake however, you can still create the document without tax (=> tax key A0). If you want to create the document with tax, select the tax key AN (16% domestic output tax).

Confirm your entries and go to the Local Currency tab. Change the (current) exchange rate (=> taken from the table TCURR) manually in line with the above-mentioned assumption to /1.20 or 0.83333.

See the notes specified below.

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Caution: Ignore the warning messages regarding the deviation from the table rate by selecting Enter, as our objective in this exercise is to use a different exchange rate.

Caution: If the exchange rate input field is not ready for input, you can also enter the € amount of 4,166.67 on the same tab in the input field Amount Local Currency.

There is no revenue account/credit item for the posting:On the bottom of the input screen, enter the G/L account 800200 and adopt the amount of $ 5,000.00 by selecting *.

Simulate and save the document.

4-5-3 Check the statement that will be made in exercise 4-5-3 – If your document is already shown in a suitable layout, there is no need for action.Display the document again from the posting transaction. Do you notice anything?In the training system, the actual/original posting amounts are displayed in the local currency and not in the document currency (=> US$). This is not how we want the amounts to be displayed.

Therefore, change the display variant so that in addition to the first five fields (=> fields item – calculate tax) , items 6 to 9 are displayed as follows:

Item 6: Amount in local currency Technical field name: XBSEG-DMBTRItem 7: Local currency Technical field name: XBSEG-HWAERItem 8: Amount in local currency Technical field name: XBSEG-WRBTRItem 9: Document currency Technical field name: XBSEG-WAERS

Save the new layout in your own, user-specific display variant Z## (=> name: Document layout gr. ##).

If you like, you can save your layout Z## as a default setting so that it will immediately be used for document display.

4-5-4 Create a second invoice for the same customer. We will assume that this invoice will be posted at a time when the dollar will be relatively strong (compared with the Euro). Therefore, use the $ rate of 1.25. This implies a (relatively weak) € rate of 0.8, as 1/1.25 = 0.8.

Otherwise, proceed as described in Exercise 4-5-2. Use the following data:Customer: 206##Invoice date: 08.01. of the current yearReference: 2##Posting date: 10.01. of the current yearAmount: 4,000Currency: USDCalculate tax: Select the indicator. For simplicity’s sake however, you can still create the document without tax (=> tax key A0). If you want to create the document with tax, select the tax key AN (16% domestic output tax).

Confirm your entries and go to the Local Currency tab. Change the exchange rate displayed manually in line with the above-mentioned assumption to /0.8 or to 1.25.

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Caution: If the exchange rate input field is not ready for input, you can also enter the € amount of 5,000 on the same tab in the input field Amount Local Currency.

There is no revenue account/credit item for the posting:On the bottom of the input screen, enter the G/L account 800200 and adopt the amount of $ 4,000 by selecting *.


4-5-5 In this exercise, start a customer line item list for customer 206## to view posted, open customer invoices.

Optional: If you like, you can change the layout of the list so that it also displays the effective exchange rate (=> technical field name: 1-KURSE) and the reference field (=> technical field name: 1-XBLNR).

4-5-6 To carry out a foreign currency valuation for several accounting principles in the R/3 System, you need corresponding consolidated accounts, provided you are implementing the account solution.

Therefore, using suitable reference accounts, create the following consolidated accounts in the corresponding General Ledger transaction:

Caution: As was the case in the previous Asset Accounting exercises, you have decided to start the consolidated accounts with a leading 8.

To save the new accounts, you must also delete the alternative account number from the new accounts.

Accounts to be created and corresponding reference accounts:

New Account Reference Account

New G/L Account Long Text

8 230 010 230,010 (CC: GR##)

Expend. from currency valuation/group

8 280 010 280,010 (CC: GR##)

Revenue from currency valuation/group

8 141 099 141 099 (CC: GR##)

Adjustment account cust. receivables/group

Caution: To be able to valuate foreign currency payables in practice at the local and international levels, you also have to create a consolidated adjustment account for payables from accounts payable (=> for example, account 160 000). The consolidated adjustment account could have the account number 8 161 099, for example.

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4-5-7

Note: The original FI also uses valuation areas to mark valuation differences. Do not confuse these valuation areas with the valuation areas used in Asset Accounting.

In the Customizing settings for Financial Accounting, create your own valuation area called ##. The new area ## represents the international approach. This means that in the exercise scenario, you are assuming that the valuation area Blank (=> the empty valuation area) represents local GAAP. In other words, in this case, the local valuation would be the main valuation.Use the following data to define the new area:Area: ##Crcy Type: Company code currencyLong Text: International valuation group ##

4-5-8 Create the following two valuation methods in Customizing:First, create the valuation method L## with the following data:Description: Local valuation for average rate group ##Valuation Procedure: Lowest value principleDocument type: SADebit/Credit Balance Exchange Rate Type: M

Then, create the valuation method I## with the following data:Description: International valuation for average rate M group ##Valuation Procedure: Always valuate Document type: SADebit/Credit Balance Exchange Rate Type: M

4-5-9 To ensure that the actual valuation run finds the corresponding accounts, you must now enter these accounts in Customizing.

Recap: In the exercise scenario, you decided to map local GAAP to the valuation area Blank. In your new area ##, you want to display the international approach.

Select the corresponding transaction in Customizing and carry out the following activities:=> Select transaction KDF => Choose chart of accounts CA## (without valuation area) => General Ledger/Reconciliation Account 140000 (accounts receivable) => Take a look at the logical field group Valuation and check whether the following accounts have been created:Expense account: Account 230 010Revenue account: Account 280 010Balance sheet adjustment account: Account 140 099Save your entries.

Return to the initial screen where you can choose transactions. For the same transaction (=> transaction KDF), maintain the corresponding consolidated accounts in your valuation area ##.Can you remember how to select the valuation area?

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Create the consolidated accounts for transaction KDF, your chart of accounts CA##, in the valuation area ## and for the G/L account 140 000 as follows:=> Select New Entries and enter the following data:G/L Account: Account 140 000Currency: If you leave this field blank, the settings apply for all currencies, or enter the currency US$ (=> USD).Balance sheet adjustment account: Account 8 141 099Expense account: Account 8 230 010Revenue account: Account 8 280 010

Save your entries.

Caution: If you also have foreign currency payables to valuate, you would assign an expense, a revenue, and an adjustment account to the payables account (for example, 160 000).

4-5-10 You have now made all the settings required for foreign currency valuation. Start the valuation run in the accounts receivable. Implement a test run first, and then implement an update run.Implement the run for area ## and enter the following data on the program’s input screen:Company Code: GR##Evaluation Key Date: Last day of the previous monthValuation Method: I## Valuation Area: ## Set the Creating Postings indicator: Set after the test run, if you are implementing an update run.Do not enter a session name, you are working without a session.

Now, tell the program which objects will be edited:Select Open Items tab:Select the Valuate Customer Open Items indicator.

Now execute the program.

From the list of results, you can go to the simulated postings (=> during the test run) or to the actual postings/posting documents (=> during the update run). Check that the system is using the consolidated accounts you entered.

Note: As everything was valuated for this run, each open item should also trigger an adjustment posting, which will either be an expense or a revenue posting.

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Then start the foreign currency valuation for the area Blank, with the following data:Company code: GR##Evaluation Key Date: Last day of the previous month Valuation Method: L## Valuation Area: Leave blank Bal. Sheet Preparation Valuation: Do not set for test run. Set it for the update run, otherwise the valuation difference will not be noted in the item, in other words, it will not be updated in the original document.Creating Postings indicator: Set after the test run if an update run is being implemented.You do not need to enter a session name here either, as you are working without a session.Here too, the program needs to know which objects will be edited. On the Open Items tab, check whether the customers are still selected.


From the list of results, you can go to the simulated postings (=> during the test run) or to the actual postings/posting documents (=> during the update run). Are the local accounts used?

Note: As a lowest value determination is used during the local valuation run, the item for which the original Euro rate (=> 0.8000) was lower than the current rate (=> 1.0000) will be adjusted. This means of course, that you will receive less Euro for the foreign currency.

4-5-11 Start the line item list for your customer 206## again. Use the layout to select the field with the valuation difference for the local valuation area.The additional field is called:Valuation difference Technical field name: 1-U_BDIFF

Caution: Unfortunately for technical reasons, you cannot display the valuation differences of your area ##, as each group has defined its own area. In Customizing, it is only possible to assign the field with the valuation difference of the/an international area to a valuation area across a client, and not for example, for each company code.

The additional fields would have the following names:

Valuation difference/technical field name: 1-U_BWSHB1

Valuation difference/technical field name: 1-U_BWSHB2 …..

Note too that the fields with the valuation differences are special fields that you may have to initially display in your company’s system using the transaction OBVU.

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0.127Solutions

Unit: Balance Sheet Items and ReportingTopic: Foreign Currency Valuation

(of Accounts Receivable)

4-5 Solutions for foreign currency valuation (of accounts receivable)

4-5-1 In your company code GR##, create customer 206##. Select the account group Sold-to party. Use customer 1000 in company code 1000 as a reference.

In the SAP Easy Access menu, select Accounting Financial Accounting Customers Master Records Create. Enter the data specified in the exercise. Fill in all the required fields on the Address tab and save your entries.

Caution: If the customer number begins with a letter (=> You get the error message: “Enter a number between A and ZZZZZZZZ”), name your customer Z206##. You must also note these changes in the subsequent exercises.

4-5-2 Create a customer invoice for US$ 5,000.00 for your customer 206##. In other words, create an invoice for a (large-scale) foreign customer in the customer’s currency.Assume that the $ rate on the posting day was 0.83333. This corresponds to a € rate of 1.20 as 1/1.20 = 0.8333. The Euro is relatively strong compared with the dollar, or in other words, the dollar is relatively weak.

In the corresponding posting transaction …

In the SAP Easy Access menu, select Accounting Financial Accounting Customers Document Entry Invoice.

… enter the following data:Customer: 206##Invoice Date: 07.07.previous yearReference: 1##Posting date: 17.07.previous yearAmount: 5,000Currency key: USDCalculate tax: Select the indicator. For simplicity’s sake however, you can still create the document without tax (=> tax key A0). If you want to create the document with tax, select the tax key AN (16% domestic output tax).

Confirm your entries and go to the Local Currency tab. Change the (current) exchange rate (=> taken from the table TCURR) manually in line with the above-mentioned assumption to /1.20 or 0.83333.

=> See the notes specified below.

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Caution: If the exchange rate input field is not ready for input, you can also enter the € amount of 4,166.67 on the same tab in the input field Amount Local Currency.

There is no revenue account/credit item for the posting:On the bottom of the input screen, enter the G/L account 800200 and adopt the amount of $ 5,000.00 by selecting *.


4-5-3 Check the statement that will be made in exercise 4-5-3 – If your document is already shown in a suitable layout, there is no need for action.

Display the document again from the posting transaction.

Stay in the posting transaction from Exercise 4-5-2 and select Document Display from the menu.

Do you notice anything?In the training system, the actual/original posting amounts are displayed in the local currency and not in the document currency (=> US$). This is not how we want the amounts to be displayed.

Therefore, change the display variant so that in addition to the first five fields (=> fields item – calculate tax) , items 6 to 9 are displayed as follows:

Item 6: Amount in local currency Technical field name: XBSEG-DMBTRItem 7: Local currency Technical field name: XBSEG-HWAERItem 8: Amount in local currency Technical field name: XBSEG-WRBTRItem 9: Document currency Technical field name: XBSEG-WAERS

In the menu, select Settings Layout Current … Change the current display variant using the arrow Display Selected Fields and Hide Selected Fields in the middle of the Change Layout dialog box (in line with the exercises) as follows: Hide columns 8 and 9. In the table, sort the hidden fields in ascending order (or in descending order). Select and display the fields Amount Local Currency and Currency. Display the technical names of the fields as an extra measure, by clicking the Change Layout dialog box with the right mouse button, and selecting Techn. Field Names. Sort the fields into the required sequence by moving around the numbers (in the order specified above). Apply your settings.

Save the new layout in your own, user-specific display variant Z## (=> name: Document layout gr. ##).

From the menu, select Settings Display Variant Save.

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If you like, you can save your layout Z## as a default setting so that it will immediately be used for document display.

Stay in the document display function. Select Settings Display Variant Administration … Select the table column Default Save your entries.

4-5-4 Create a second invoice for the same customer. We will assume that this invoice will be posted at a time when the dollar will be relatively strong (compared with the Euro). Therefore, use the $ rate of 1.25. This implies a (relatively weak) € rate of 0.8, as 1/1.25 = 0.8.

Otherwise, proceed as described in Exercise 4-5-2.

In the SAP Easy Access menu, select Accounting Financial Accounting Customers Document Entry Invoice.

Use the following data:Customer: 206##Invoice date: 08.01. of the current yearReference: 2##Posting date: 10.01. of the current yearAmount: 4,000Currency: USDCalculate tax: Select the indicator. For simplicity’s sake however, you can still create the document without tax (=> tax key A0). If you want to create the document with tax, select the tax key AN (16% domestic output tax).

Confirm your entries and go to the Local Currency tab. Change the exchange rate displayed manually in line with the above-mentioned assumption to /0.8 or to 1.25.


Caution: If the exchange rate input field is not ready for input, you can also enter the € amount of 5,000 on the same tab in the input field Amount Local Currency.

There is no revenue account/credit item for the posting:On the bottom of the input screen, enter the G/L account 800200 and adopt the amount of $ 4,000 by selecting *.


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4-5-5 In this exercise, start a customer line item list for customer 206## to view posted, open customer invoices.

In the SAP Easy Access menu, select Accounting Financial Accounting Customers Account Display/Change Line Items.

Optional: If you like, you can change the layout of the list so that it also displays the effective exchange rate (=> technical field name: 1-KURSE) and the reference field (=> technical field name: 1-XBLNR).

In the menu, select Settings Layout Current … Change the current display variant using the Display Selected Fields and Hide Selected Fields arrows in the middle of the Change Layout dialog box. Use the clearing data specified in the exercise. See the solution for Exercise 4-5-3.

4-5-6 To carry out a foreign currency valuation for several accounting principles in the R/3 System, you need corresponding consolidated accounts, provided you are implementing the account solution.

Therefore, using suitable reference accounts, in the corresponding General Ledger transaction …

In the SAP Easy Access menu, select Accounting Financial Accounting General Ledger Master Records Individual Processing Centrally. Enter the new account to be created in the G/L Account No. field and select the W. Template button.

… create the following consolidated accounts for your company code GR##:

Caution: As was the case in the previous Asset Accounting exercises, you have decided to start the consolidated accounts with a leading 8.

To save the new accounts, you must also delete the alternative account number from the new accounts.

Accounts to be created and corresponding reference accounts:

New Account Reference Account New G/L Account Long Text

8 230 010 230,010 (CC: GR##) Expend. from currency valuation/group

8 280 010 280,010 (CC: GR##) Revenue from currency valuation/group

8 141 099 141 099 (CC: GR##) Adjustment account cust. receivables/group

Caution: To be able to valuate foreign currency payables in practice at the local and international levels, you also have to create a consolidated adjustment account for payables from accounts payable (=> for example, account 160 000). The consolidated adjustment account could have the account number 8 161 099, for example.

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4-5-7

Note: The original FI also uses depreciation areas to mark valuation differences. Do not confuse these depreciation areas with the depreciation areas used in Asset Accounting.

In the Customizing settings for Financial Accounting, create your own depreciation area called ##. The new area ## represents the international approach. This means that in the exercise scenario, you are assuming that the depreciation area Blank (=> the empty depreciation area) represents local GAAP. In other words, in this case, the local valuation would be the main valuation.

In the Customizing settings for Financial Accounting, select General Ledger Accounting Business Transaction Closing Valuate Define Depreciation Areas. Select Edit New Entries.

Use the following data to define the new area:Area: ##Crcy Type: Company code currencyLong Text: International valuation group ##

4-5-8 Create the following two valuation methods in Customizing:

In the Customizing settings for Financial Accountings, select General Ledger Accounting Business Transactions Closing Valuate Foreign Currency Valuation Define Valuation Methods.

First, create the valuation method L## with the following data:Description: Local valuation for average rate group ##Valuation Procedure: Lowest value principleDocument type: SADebit/Credit Balance Exchange Rate Type: M

Then, create the valuation method I## with the following data:Description: International valuation for average rate M group ##Valuation Procedure: Always valuate Document type: SADebit/Credit Balance Exchange Rate Type: M

4-5-9 To ensure that the actual valuation run finds the corresponding accounts, you must now enter these accounts in Customizing.

Recap: In the exercise scenario, you decided to map local GAAP to the depreciation area Blank. In your new area ##, you want to display the international approach.

Start the corresponding Customizing transaction …

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In the Customizing settings for Financial Accountings, select Accounts Receivable and Accounts Payable Business Transactions Closing Valuate Foreign Currency Valuation Prepare Automatic Posting for Foreign Currency Valuation.

… and carry out the following activities:=> Select transaction KDF => Choose chart of accounts CA## (without depreciation area) => General Ledger/Reconciliation Account 140000 (accounts receivable) => Take a look at the logical field group Valuation and check whether the following accounts have been created:Expense account: Account 230 010Revenue account: Account 280 010Balance sheet adjustment account: Account 140 099Save your entries.

Return to the initial screen where you can choose transactions. For the same transaction (=> transaction KDF), maintain the corresponding consolidated accounts in your depreciation area ##.Can you remember how to select the depreciation area?

On the initial screen for the transaction, select Edit Change Chart/Acct from the menu… On the Change Chart of Accounts dialog box, enter your chart of accounts CA##. Select Change Valuation Area. & enter the Valuation area ##.

Create the consolidated accounts for transaction KDF, your chart of accounts CA##, in the depreciation area ## and for the G/L account 140 000 as follows:=> Select New Entries and enter the following data:G/L Account: Account 140 000Currency: If you leave this field blank, the settings apply for all currencies, or enter the currency US$ (=> USD).Balance sheet adjustment account: Account 8 141 099Expense account: Account 8 230 010Revenue account: Account 8 280 010

Save your entries.

Caution: If you also have foreign currency payables to valuate, you would assign an expense, a revenue, and an adjustment account to the payables account (for example, 160 000).

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4-5-10 You have now made all the settings required for foreign currency valuation. Start the valuation run in the accounts receivable.

In the SAP Easy Access menu, select Accounting Financial Accounting Customers Periodic Processing Closing Valuate Open Items in Foreign Currency

Implement a test run first, and then implement an update run.Implement the run for area ## and enter the following data on the program’s input screen:Company Code: GR##Evaluation Key Date: Last day of the previous monthValuation Method: I## Valuation Area: ## Set the Creating Postings indicator: Set after the test run, if you are implementing an update run.Do not enter a session name, you are working without a session.

Now, tell the program which objects will be edited:Select Open Items tab:Select the Valuate Customer Open Items indicator.


From the list of results, you can go to the simulated postings (=> during the test run) or to the actual postings/posting documents (=> during the update run). Check that the system is using the consolidated accounts you entered.

Note: As everything was valuated for this run, each open item should also trigger an adjustment posting, which will either be an expense or a revenue posting.

Then start the foreign currency valuation for the area Blank, with the following data:Company code: GR##Evaluation Key Date: Last day of the previous month Valuation Method: L## Valuation Area: Leave blank Bal. Sheet Preparation Valuation: Do not set for test run. Set it for the update run, otherwise the valuation difference will not be noted in the item, in other words, it will not be updated in the original document.Creating Postings indicator: Set after the test run if an update run is being implemented.You do not need to enter a session name here either, as you are working without a session.Here too, the program needs to know which objects will be edited. On the Open Items tab, check whether the customers are still selected.


From the list of results, you can go to the simulated postings (=> during the test run) or to the actual postings/posting documents (=> during the update run). Are the local accounts used?

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Note: As a lowest value determination is used during the local valuation run, the item for which the original Euro rate (=> 0.8000) was lower than the current rate (=> 1.0000) will be adjusted. This means of course, that you will receive less Euro for the foreign currency.

4-5-11 Start the line item list for your customer 206## again.

In the SAP Easy Access menu, select Accounting Financial Accounting Customers Account Display/Change Line Items.

Use the layout to select the field with the valuation difference for the local depreciation area.

In the menu, select Settings Layout Current … See the solution for exercise 4-5-3.

The additional field is called:Valuation difference Technical field name: 1-U_BDIFF

Caution: Unfortunately for technical reasons, you cannot display the valuation differences of your area ##, as each group has defined its own area. In Customizing, it is only possible to assign the field with the valuation difference of the/an international area to a depreciation area across a client, and not for example, for each company code.

The additional fields would have the following names:

Valuation difference/technical field name: 1-U_BWSHB1

Valuation difference/technical field name: 1-U_BWSHB2 …..

Note too that the fields with the valuation differences are special fields that you may have to initially display in your company’s system using the transaction OBVU.

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0.128Exercises

Unit: Balance Sheet Items and ReportingTopic: Provisions Report


Define system-enabled evaluations on the setting up, reversal, usage, and balance of your provisions.

In this exercise, you will try to generate a system-enabled provisions report. In many companies, the provisions report is created outside of the R/3 System. In other words, data is exported from the R/3 System and formatted using other programs. Other companies write their own (short) ABAP program for drawing up provisions reports.

However, you can also compile the report using standard R/3 objects.

You define the provisions report itself using the Tool Report Painter.

Furthermore, the objects Consolidation transaction type and Field status group are also accessed.

4-6 Defining a provisions report/history sheetStart by defining a history sheet. This sheet will become a type of table, which will contain (at least) the consolidated provisions account and the different (consolidation) transaction types (=> provisions allocations, usages, and adjustments.

In addition to the transactions, remember to use the provisions opening or closing balances for a specific year.

First of all, you will create a library. Here, you specify the table from which the provisions history sheet will retrieve data. Of course it would be optimal if you could use the table of the General Ledger (=> table GLT0). Unfortunately, you cannot do this as this table does not contain the Consolidation transaction type field.

One option is to use the table GLFUNCT, which contains the fields Transaction type and Account number. This table is used/described by the cost-of-sales ledger 0F.

Caution: This means, of course, that you can only map a history sheet as described in the exercise if you have activated the cost-of-sales ledger 0F. You activate this ledger, which is delivered in the standard version, in the component FI-SL (=> Special Ledger).

Your company code GR## has an assignment to the ledger 0F. This means that the cost-of-sales ledger is active in our exercise.

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4-6-1 In the Special Ledger application, define the library Z##, which references the table GLFUNCT. Confirm your data. Go to the header, and enter the description Library group ##.From the library header, you can go to the Characteristics. Here, you see all table fields that can be used in future library reports. Six of these are selected by default. In addition, however, you need, as already mentioned, the table fields Account number and Transaction type . Therefore, select the following two fields as well:=> RACCT (account number)=> RMVCT (transaction type)

Save the data in your new library.

4-6-2 Now, define a report in the Report Painter (in your new library). Go to the corresponding transaction and maintain the following data:Library: Z##Report: Z##Long Text: Provisions report gr. ##=> Select Create.

Caution: As this part of the exercise is relatively difficult, and not very intuitive, the exercises also contain the solutions.

First, define the general data selections in the menu by selecting Edit => Gen. Data Selection.Select the following characteristics and transfer them into the list of selected characteristics:- Ledger- Record Type- Fiscal Year - Company Code

Context: You defined the list of available characteristics in your library Z##.

For the (selected) characteristic Record Type, you can enter the value 0 in the From column. The value 0 corresponds to the actual values.This is a little more difficult for the other characteristics: Here, set the indicator for the ON/OFF variable (=> second column with indicators) and use the possible entries help (F4) to enter the following values in the From column:For the Ledger characteristic: The variable 0FRLDNR (Ledger)For the Fiscal Year characteristic: The variable 0F-RY00 (Fiscal year)For the Company Code characteristic: The variable 0FRBUKR (company code)Select Confirm.

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Now, define the columns of the future provisions report. Start with the column that will display the opening balance:Double-click the field called Column 1. In the dialog box that appears, select the element type Key figure with characteristics.The cursor goes to the Basic Key Figure input field. Select the entry Local Currency (Caution: Do not use Doc. Local Currency (Actual)).

From the Available Characteristics, select the entry Period and the entry Transaction Type and transfer both of these to the Selected Characteristics list.The “value” for the characteristic Period in the column From is: 0(=> 0 represents the balance carryforward).The “value” for the characteristic Transactn Type in the From column is: * The asterisk represents all transaction types.

Context: As already mentioned, the selected characteristic Transaction Type represents the consolidation transaction types. These were/are defined in the Customizing settings for Enterprise Controlling. Choose Enterprise Controlling => Consolidation => Integration: Preparation for Consolidation => Preparation in the Sender System => Preparations Related to All Consolidation Types => Transaction Type Account Assignment => Maintain Transaction Types for Consolidation.

On the bottom of the same dialog box, select the Change short, middle and long texts icon, and maintain the following data:Short: OBMedium: Opening BalanceLong: Opening BalanceAdopt and confirm your entries.

The second column will contain the provisions allocations:Double-click the field Column 2 and choose the element type Key figure with characteristics.Again, change the basic key figure to Local currency.The characteristics Period and Transaction type, which have already been selected, are assigned the following values:The “value” for the Period characteristic in the From column is: 1The “value” for the Period characteristic in the To column is: 12(=> or 16 for 4 special periods).The value for the Transaction Type characteristic in the From column is: 520(=> Allocation)

On the bottom of the same dialog box, select the Change short, middle and long texts icon, and maintain the following data:Short: AllocationMedium: Allocation Long: Allocation Adopt and confirm your entries.

Caution: Define the columns for Usage and Reversal of provisions in the same way as you defined the Allocations column.

For your last entry, create the Closing balance column. It can be calculated using existing data. Double-click the next empty column and select the element type Formula, instead of the element type Key figure with characteristics:

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Closing balance column = Opening balance column + Allocations column In the Enter Formula dialog box, select the buttons: X001 + X002 and adopt your entries.

The Text Maintenance dialog box appears. Here, enter the following data:Short: Closing balanceMedium: Closing balanceLong: Closing balance

If you have not entered a column for usage and reversal of provisions, you can simply delete column 4: Place the cursor on the Column 4 field => Select the right mouse button, and choose Delete.However, you can also leave the undefined columns. They will disappear when the report is saved.

Now, define the rows of the report: Double-click the field Row 1. Select and transfer the Account number characteristic to the selected characteristics.

The value for the Account number characteristic in the From column is then the account number of the consolidated provisions account, in this case, account 8 089 000.

On the bottom of the same dialog box, select the Change short, middle and long texts icon, and maintain the following data:Short: 8 089 000Medium: Provisions IAS Long: Provisions IAS Adopt and confirm your entries.

If you like, you can list the local provisions in row 2, for subsequent comparison. These are then displayed using account 89 000. You could use the following texts:Short: 89 000Medium: Local provisions Long: Local provisions

To improve the layout, insert a blank row between rows 1 and 2: Place the cursor on line 2 (=> Local provisions) => In the menu, select Edit, Rows, Insert Blank Line.

Save your report.

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4-6-3 To ensure that your report will display values at a later stage, post a provisions allocation. To create consolidated provisions amounts, create the following consolidated accounts in your company code GR##. Select W. Template:8 479 900 (G/L account long text: Consolidated provisions expense) – Reference: 479 900 / CC: GR##Caution: The correct P&L statement account type would be “Y” for this expense account according to the exercise from the first day.8 089 000 (G/L account long text: Consolidated provisions) –Reference: 89 000 / CC: GR##

After you create the accounts, open the new account 8 089 000 in change mode. You must also ensure that this account can only be posted if a (consolidation) transaction type is entered for the posting.This is important, as the provisions history sheet that you created previously evaluates these transaction types.You can make this a required entry by using the account’s field status group. The field status group is located on the Create/Bank/Interest tab. Change the field status group displayed, G001, to the field status group RST.

If the field status group RST is not available, consult your trainer.

The decisive aspect of group RST is that the consolidation transaction type is a required field.Field status groups are defined in the Customizing settings of FI. You can also display the configuration settings for a group from the G/L account: Double-click the entry RST => select the Consolidation group.

Go back to the account and save the field status group change.Caution: If you have defined a row for local provisions in your report Z## (=> account 89 000), use the same steps to also change the field status group of the account 89 000 in your company code GR##.

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4-6-4 Use a G/L account posting to create a provisions allocation.In your company code GR##, post a consolidated allocation for € 100,000, for today’s date, using the tax code V0. The posting record to be generated is:Consolidation provisions expense (8 479 900)forConsolidated provisions (8 089 000)

The system should prompt you for a transaction type when you create credit items. Enter the transaction type 520.

If you assign the local provisions in a line in your provisions history sheet report Z##, you can also create a local provisions allocation for € 120,000.00.

4-6-5 Now, evaluate and check the postings using your new report Z##, to ensure that the provisions history sheet displays the values correctly.

To this end, open your report Z## in change mode, using the Report Painter.Try to run the report. The system will then allow you to insert the report in a (new) report group: Create a new report group Z0##.

As soon as the system generates the group Z0##, a selection screen appears. Enter the following data:Ledger: 0FFiscal year: Current year Company code: GR##

Run the report, and see whether the provisions expenses are posted and the correct closing balance are displayed. Caution: The Opening balance column cannot contain any values, as you did not post any values to the previous year.

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0.129Solutions

Unit: Balance Sheet Items and ReportingTopic: Provisions Report

4-6 Solutions – Defining a provisions report/history sheetStart by defining a history sheet. This sheet will become a type of table, which will contain (at least) the consolidated provisions account and the different (consolidation) transaction types (=> provisions allocations, usages, and adjustments.

In addition to the transactions, remember to use the provisions opening or closing balances for a specific year.

First of all, you will create a library. Here, you specify the table from which the provisions history sheet will retrieve data. Of course it would be optimal if you could use the table of the General Ledger (=> table GLT0). Unfortunately, you cannot do this as this table does not contain the Consolidation transaction type field.

One option is to use the table GLFUNCT, which contains the fields Transaction type and Account number. This table is used/described by the cost-of-sales ledger 0F.

Caution: This means, of course, that you can only map a history sheet as described in the exercise if you have activated the cost-of-sales ledger 0F. You activate this ledger, which is delivered in the standard version, in the component FI-SL (=> Special Ledger).

Your company code GR## has an assignment to the ledger 0F. This means that the cost-of-sales ledger is active in our exercise.

4-6-1 In the Special Ledger application, define the library Z##, which references the table GLFUNCT.

In the SAP Easy Access menu, select Accounting Financial Accounting Special Purpose Ledger Tools Report Painter Report Writer Library Create. Library: Z## Table: From the possible entries help (F4), select the table GLFUNCT.

Confirm your data. Go to the header, and enter the description Library group ##.From the library header, you can go to the Characteristics. Here, you see all table fields that can be used in future library reports. Six of these are selected by default. In addition, however, you need, as already mentioned, the table fields Account number and Transaction type . Therefore, select the following two fields as well:=> RACCT (account number)=> RMVCT (transaction type)

Confirm and save the data in your new library.

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4-6-2 Now, define a report in the Report Painter (in your new library). Go to the corresponding transaction …

In the SAP Easy Access menu, select Accounting Financial Accounting Special Purpose Ledger Tools Report Painter Report Create

… and maintain the following data:Library: Z##Report: Z##Long Text: Provisions report gr. ##=> Select Create.

Caution: As this part of the exercise is relatively difficult, and not very intuitive, the exercises also contain the solutions.

First, define the general data selections:

In the Edit menu, select Gen. Data Selection

Select the following characteristics and transfer them to the list of selected characteristics:- Ledger- Record Type- Fiscal Year - Company Code

Context: You defined the list of available characteristics in your library Z##.

For the (selected) characteristic Record Type, you can enter the value 0 in the From column. The value 0 corresponds to the actual values.This is a little more difficult for the other characteristics: Here, set the indicator for the ON/OFF variable (=> second column with indicators) and use the possible entries help (F4) to enter the following values in the From column:For the Ledger characteristic: The variable 0FRLDNR (Ledger)For the Fiscal Year characteristic: The variable 0F-RY00 (Fiscal year)For the Company Code characteristic: The variable 0FRBUKR (company code)Select Confirm.

Now, define the columns of the future provisions report. Start with the column that will display the opening balance:Double-click the field called Column 1. In the dialog box that appears, select the element type Key figure with characteristics.The cursor goes to the Basic Key Figure input field. Select the entry Local Currency (Caution: Do not use Doc. Local Currency (Actual)).

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From the Available Characteristics, select the entry Period and the entry Transaction Type and transfer both of these to the Selected Characteristics list.The “value” for the characteristic Period in the column From is: 0(=> 0 represents the balance carryforward).The “value” for the characteristic Transactn Type in the From column is: * The asterisk represents all transaction types.

Context: As already mentioned, the selected characteristic Transaction Type represents the consolidation transaction types. These were/are defined in the Customizing settings for Enterprise Controlling. Choose Enterprise Controlling => Consolidation => Integration: Preparation for Consolidation => Preparation in the Sender System => Preparations Related to All Consolidation Types => Transaction Type Account Assignment => Maintain Transaction Types for Consolidation.

On the bottom of the same dialog box, select the Change short, middle and long texts icon, and maintain the following data:Short: OBMedium: Opening BalanceLong: Opening BalanceAdopt and confirm your entries.

The second column will contain the provisions allocations:Double-click the field Column 2 and choose the element type Key figure with characteristics.Again, change the basic key figure to Local currency.The characteristics Period and Transaction type, which have already been selected, are assigned the following values:The “value” for the Period characteristic in the From column is: 1The “value” for the Period characteristic in the To column is: 12(=> or 16 for 4 special periods).The value for the Transaction Type characteristic in the From column is: 520(=> Allocation)

On the bottom of the same dialog box, select the Change short, middle and long texts icon, and maintain the following data:Short: AllocationMedium: Allocation Long: Allocation Adopt and confirm your entries.

Caution: Define the columns for Usage and Reversal of provisions in the same way as you defined the Allocations column.

For your last entry, create the Closing balance column. It can be calculated using existing data. Double-click the next empty column and select the element type Formula, instead of the element type Key figure with characteristics:Use the following formula: Closing balance column = Opening balance column + Allocations column. In the Enter Formula dialog box, select the buttons: X001 + X002 and accept your entries.

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The Text Maintenance dialog box appears. Here, enter the following data:Short: Closing balanceMedium: Closing balanceLong: Closing balance

If you have not entered a column for usage and reversal of provisions, you can simply delete column 4: Place the cursor on the Column 4 field => Select the right mouse button, and choose Delete.However, you can also leave the undefined columns. They will disappear when the report is saved.

Now, define the rows of the report: Double-click the field Row 1. Select and transfer the Account number characteristic to the selected characteristics.

The value for the Account number characteristic in the From column is then the account number of the consolidated provisions account, in this case, account 8 089 000.

On the bottom of the same dialog box, select the Change short, middle and long texts icon, and maintain the following data:Short: 8 089 000Medium: Provisions IAS Long: Provisions IAS Adopt and confirm your entries.

If you like, you can list the local provisions in row 2, for subsequent comparison. These are then displayed using account 89 000. You could use the following texts:Short: 89 000Medium: Local provisions Long: Local provisions

To improve the layout, insert a blank row between rows 1 and 2: Place the cursor on line 2 (=> Local provisions) => In the menu, select Edit, Rows, Insert Blank Line.

Save your report.

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4-6-3 To ensure that your report will display values at a later stage, post a provisions allocation. To create consolidated provisions amounts, create the following consolidated accounts in your company code GR##.

In the SAP Easy Access menu, select Accounting Financial Accounting General Ledger Master Records Individual Processing Centrally.

Select W. Template:8 479 900 (G/L account long text: Consolidated provisions expense) – Reference: 479 900 / CC: GR##The correct P&L statement account type would be “Y” for this expense account according to the exercise from the first day.8 089 000 (G/L account long text: Consolidated provisions)–Reference: 89 000 / CC: GR##

After you create the accounts, open the new account 8 089 000 in change mode.

In the SAP Easy Access menu, select Accounting Financial Accounting General Ledger Master Records Individual Processing Centrally. Call the new account 8 089 000. From the menu, select G/L Account Change.

You must also ensure that this account can only be posted if a (consolidation) transaction type is entered for the posting.This is important, as the provisions history sheet that you created previously evaluates these transaction types.You can make this a required entry by using the account’s field status group. The field status group is located on the Create/Bank/Interest tab. Change the field status group displayed, G001, to the field status group RST.

If the field status group RST is not available, consult your trainer.

The decisive aspect of group RST is that the consolidation transaction type is a required field.Field status groups are defined in the Customizing settings of FI. You can also display the configuration settings for a group from the G/L account: Double-click the entry RST => select the Consolidation group.

Go back to the account and save the field status group change.Caution: If you have defined a row for local provisions in your report Z## (=> account 89 000), use the same steps to also change the field status group of the account 89 000 in your company code GR##.

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4-6-4 Use a G/L account posting to create a provisions allocation.

In the SAP Easy Access menu, select Accounting Financial Accounting General Ledger Posting Create G/L Account Document.

In your company code GR##, post a consolidated allocation for € 100,000, for today’s date, using the tax code V0. The posting record to be generated is:Consolidation provisions expense (8 479 900)forConsolidated provisions (8 089 000)

The system should prompt you for a transaction type when you create credit items.

Enter the transaction type 520.

If you assign the local provisions in a line in your provisions history sheet report Z##, you can also create a local provisions allocation for € 120,000.00.

4-6-5 Now, evaluate and check the postings using your new report Z##, to ensure that the provisions history sheet displays the values correctly.

To this end, open your report Z## in change mode, using the Report Painter.

In the SAP Easy Access menu, select Accounting Financial Accounting Special Purpose Ledger Tools Report Painter Report Change. Select your report Z## in the library Z## and double-click the report to select it.

Try to run the report. The system will then allow you to insert the report in a (new) report group: Create a new report group Z0##.

As soon as the system generates the group Z0##, a selection screen appears. Enter the following data:Ledger: 0FFiscal year: Current year Company code: GR##

Run the report, and see whether the provisions expenses are posted and the correct closing balance are displayed. Caution: The Opening balance column cannot contain any values, as you did not post any values to the previous year.

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