New GL parallel ledgers in asset accounting

Parallel ledgers in Asset Accounting

New GL Code: FAGL_FLEXGL_IMG

Steps in parallel ledgers in asset accounting :

1. Define3 Depreciation Areas- 01(leading), 30(Non- leading), 55(delta dep) -OADB

2. Setup areas for parallel valuation-OADB_WZ

3. Determine Depreciation Areas in the Asset Class- oayz

4. Integration with the General Ledger -ao90

5. Specify Document Type for Periodic Posting of Asset Values- se38 -RAPERB2000

6. Scenario for parallel ledgers

Create an asset master for ‘Furniture’ with straight- line depreciation method with the following parameter controls:

Depreciation area Useful life Depreciation rate per year

01 (For US GAAP) 2 Years 50%

30 (Indian GAAP) 4 Years 25%



Depreciation calculation for asset value 2, 40,000/- for each depreciation area is as under:

Depreciation area Total Posting periods Depr amount per period

01 (For US GAAP) 2 x 12 = 24 2,40,000/24 = 10,000

30 (Indian GAAP) 4 x 12 = 48 2,40,000/48 = 5,000

Now, do the asset acquisition for above asset and then run depreciation for one period and finally

retirement of the asset and see the effect in parallel ledgers.

Testing Part:

7. Create asset master - as01

8. Asset acquisition -f-90

9. Display asset value in asset explorer-Aw01n

10. Display Asset APC general ledger line items- FAGLL03

11. Run periodic asset depreciation - AFAB

12. Display depreciation GL line items- FAGLL03

13. Asset retirement postings- ABAON

14. Periodic posting from fixed assets-ASKB

PARALLEL LEDGERS IN ASSET ACCOUNTING

We can use parallel ledgers in asset accounting for different valuations as per different accounting principles. In our scenario, company code AIPL (Hindustan Mills Ltd) follows two

accounting principles that is US GAAP and Indian GAAP. In General Ledger accounting we have created ledgers for each GAAP i.e. leading ledger ‘0L’ for US GAAP and Non-leading

ledger ‘X1’ for Indian GAAP. In asset accounting, we use master area i.e. area 01 for leading ledger valuation. For valuation of non-leading ledger, we create one separate real depreciation area and one derived depreciation area for each accounting principle so that the values of Asset

Accounting and General Ledger Accounting can be reconciled. The derived depreciation area



triggers adjustment postings to keep the general ledger and subsidiary ledgers in sync. We have

already created ledger group for each ledger in General Ledger accounting, the same ledger group will be assigned in depreciation area of each accounting principle in asset accounting. The following depreciation areas will be created:

1. Define Depreciation Areas

Define depreciation area 1 (book depreciation area ) and 30 (depreciation area for Indian GAAP). For depreciation area 1, system posts value in real time whereas for depreciation area

30, system posts only depreciation value. Use following menu path or transaction code:

Using above menu path or T.code we will assign the ledger groups in the respective depreciation

area i.e. ledger group '0L' in area 1 and ledger 'X1' in area 30:

Depr Area Description Posting in GL

1 Book depreciation area (Leading Ledger) Area posts in Real time

30 Valuation area for Indian GAAP (Non-Leading ledger) Area post depr only

55 Delta Depreciation Area Area Posts Only APC

Directly

SAP Menu SPRO-> IMG -> Financial Accounting (New) -> Asset Accounting -> Valuation -> Depreciation Area-> Define Depreciation Area

Transaction Code OADB



In the above step, we have specified ledger group ‘0L’ as target ledger group for master depreciation area 01 that means asset values of depreciation area 01 will be updated in leading

ledger ‘0L’ in General Ledger Accounting. The ledger group which we assign to master area must contain leading ledger. In the same way we will specify ledger group ‘X1’ for depreciation area 30 which we use for parallel valuation for Indian GAAP. The ledger group of the area for

parallel valuation is not allowed to contain the leading ledger. Asset values in area 30 will be posted to Non-Leading ledger X1, as shown in the below screen:

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Posting control in depreciation area 30 should be set as “Area posts Depreciation Only”.

We do not have to set up a separate set of GL accounts for this new depreciation areas 30. Instead we use the same set of GL accounts of the master depreciation area 01. In this scenario, we do not have to create any new GL accounts in the chart of accounts or in the company code.

We also do not have to create a new financial statement version for different parallel valuations and Ledgers. Depreciation area 30 uses the GL account set of depreciation area 01. Ledger group

‘X1’ is not allowed to contain the leading ledger when we specify X1 as target ledger group in depreciation area.

To enable this setting, we have to select 1 in the field “Different Depreciation Area” in depreciation area 30 as shown in the above picture.

2. Setup areas for parallel valuation

Using this wizard, system automatically creates a derived depreciation area that is used for updating the APC differences in the ledger group of parallel valuation. Posting control in the

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derived depreciation area is set as "Area posts only APC directly" while the real depreciation

area for parallel valuation posts only depreciation.

Real depreciation area 30 for parallel valuation use the GL accounts of the master depreciation area 01 for posting values. If the accounts of the master depreciation area are entered as cost

elements, then this also applies to parallel valuation, although there is no update to CO in this general ledger.

Follow the steps below:

Click on "Continue" button.

SAP Menu SPRO-> IMG -> Financial Accounting (New) -> Asset Accounting ->

Valuation -> Depreciation Area-> Set Up Areas for Parallel Valuation

Transaction Code OADB_WZ




Enter the real depreciation area 30 for parallel valuation and target ledger group X1 and click on

"Continue" button.

Since we have not created any derived or delta depreciation area in chart of depreciation ALTM for company code AIPL, here we will select option “Create New Depreciation Area” so that


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system automatically creates the delta depreciation area for parallel valuation. System shows the

difference between local and parallel valuation in this area and posts these differences in the ledger group for parallel valuation i.e. X1.






Click on "Continue" button and complete the setting.

Now see the depreciation area overview (Transaction code OADB)

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Notice that ledger group X1 has assigned in both depreciation area 30, which is for parallel

valuation and depreciation area 55 which is delta depreciation area for area 30 to post the difference between area 1 and 30.

3. Determine Depreciation Areas in the Asset Class

In this IMG activity, we determine the depreciation terms that are used in asset classes.

Select asset class 3000 ‘furniture and fittings’ and double click on “Depreciation areas” in dialog structure:

SAP Menu SPRO-> IMG -> Financial Accounting (New) -> Asset Accounting ->

Valuation -> Determine Depreciation Areas in the Asset Class

Transaction Code OAYZ




Deselect the check box ‘deactivate’ for depreciation area 30 so that all the depreciation areas will appear when we create an asset master under this asset class.

We have specified useful life 2 years for area 01 and 4 years for area 30.

4. Integration with the General Ledger

In this IMG activity, we specify the balance sheet accounts and the depreciation accounts for master depreciation area 01 and parallel depreciation area 30. For derived depreciation area 55, account assignment is not required.





SAP Menu SPRO-> IMG -> Financial Accounting (New) -> Asset Accounting -> Integration with the General Ledger -> Assign G/L Accounts

Transaction Code AO90

Assign balance sheet GL accounts to depreciation area 1 as follows:

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Similarly assign balance sheet GL accounts to depreciation area 30 and then assign depreciation

GL accounts for depreciation area 1 and 30 as follows:

Depreciation area 1:





Depreciation area 30:

5. Specify Document Type for Periodic Posting of Asset Values

In this IMG activity, we specify a default document type for periodic posting of asset balance sheet values (values other than depreciation). This document type is used only by the periodic posting program, RAPERB2000. We have created a separate document type ‘SX’ for this

purpose, the same will assign to company code AIPL in this step as follows:





We have completed the necessary configuration steps for parallel ledgers in asset accounting. Now we will test the same settings for the business scenario in the following steps:

6. Scenario for parallel ledgers

Create an asset master for ‘Furniture’ with straight- line depreciation method with the following

parameter controls:

Depreciation area Useful life Depreciation rate per year

01 (For US GAAP) 2 Years 50%

30 (Indian GAAP) 4 Years 25%

Depreciation calculation for asset value 2, 40,000/- for each depreciation area is as under:

Depreciation area Total Posting periods Depr amount per period

01 (For US GAAP) 2 x 12 = 24 2,40,000/24 = 10,000

30 (Indian GAAP) 4 x 12 = 48 2,40,000/48 = 5,000

Now, do the asset acquisition for above asset and then run depreciation for one period and finally retirement of the asset and see the effect in parallel ledgers.




7. Create asset master

Create an asset master for furniture.

SAP Menu SAP Easy Access-> Accounting -> Financial Accounting -> Fixed Asset -> Asset -> Create -> Asset

Transaction Code AS01

Click on “Deprec.Area” tab page and give useful life and depreciatoin key are 1 and 30 as follows:




Now save the data, system has created asset master number 300011 for furniture.

8. Asset acquisition

Do asset purchase on date 01.03.2013 for amount 240,000 using following menu path or transaction code:

SAP Menu SAP Easy Access-> Accounting -> Financial Accounting -> Fixed Asset -> Posting -> Acquisition -> External Acquisition -> With Vendor

Transaction Code F-90




Asset purchase document has posted as shown in above screen shot.

9. Display asset value in asset explorer

Use the following menu path or transaction code to display the asset value for all depreciation areas for the asset posted in earlier step:

SAP Menu SAP Easy Access-> Accounting -> Financial Accounting -> Fixed Asset -> Asset -> Asset Explorer

Transaction Code AW01N




In the above screenshot, we can see the value in depreciation area 01 (Leading ledger valuation

in local currency).

Now see the comparison value of depreciation area 30 as follows:

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In the above picture, for depreciation area 30 (Non-Leading ledger valuation in local currency),

system shows comparisons for four years (2013, 2014, 2015 & 2016) because we have given useful life four years in asset master 300011 for this depreciation area.

Note: System also shows value 10, 000 in fifth year i.e. 2017 this is because we have done asset

acquisition in third period of the current year 2013 so in current year system could calculate depreciation only for 10 months and for remaining 2 periods, depreciation will be posted in year 2017 (5, 000 x 2 = 10,000).

Now display the comparison value of delta depreciation area 55. Here we can see that system shows the difference value between area 01 and 30 under depreciation area 55.

Example: For the year 2013, ordinary depreciation is 1, 00,000 in depreciation area 01 and for area 30 ordinary depreciation is 50, 000 in the same year so difference 50,000 (area 01minus

area30) has shown under delta area 55. See the below picture:

10. Display Asset APC general ledger line items




The asset acquisition posting which is made in the leading ledger is automatically posted into the

non-leading ledger also. Display G/L line items for asset ‘Furniture’ APC account for ledger 01 and 30 and notice that system has updated the same value in both the ledgers.

Choose ledger ‘X1’ by clicking on "Choose Ledger" button.

Execute and see the balance:

SAP Menu SAP Easy Access-> Accounting -> Financial Accounting -> General Ledger -> Account -> Display/Change Items (New)

Transaction Code FAGLL03




Now choose ledger ‘0L’ by clicking on "Choose Ledger" button and execute:

11. Run periodic asset depreciation





When we run depreciation program using below menu path or transaction code, system posts separate

documents in each ledgers i.e. ledger ‘0L’ and ledger ‘X1’ with their respective depreciation amount

according to depreciation key assigned in asset master data for each depreciation area.

First execute test run and then update run as follows:

SAP Menu SAP Easy Access-> Accounting -> Financial Accounting -> Fixed Assets ->

Periodic processing -> Depreciation run -> Execute

Transaction Code AFAB

Execute:




Notice that system has created two separate depreciation documents with different values for each

depreciation area i.e. area 1 and area 30. Since area 1 is assigned to ledger ‘0L’ and area 30 is assigned

to ledger ‘X1’ in customizing so system will post separate depreciation values to each ledger.

12. Display depreciation GL line items

Display “book depreciation G/L account” line items for the each ledger using following menu path or

transaction code:

SAP Menu SAP Easy Access-> Accounting -> Financial Accounting -> General

Ledger -> Account -> Display/Change Items (New)

Transaction Code FAGLL03




Display balance for Leading Ledger – 0L

Display balance for Non-Leading Ledger –X1

Notice that system has posted depreciation value 10,000 for ledger "0L" and 5,000 for ledger "X1"

Thus depreciation amount of 10, 000 under US GAAP is posted in leading ledger ‘0L’ and the

depreciation amount of 5, 000 under Indian GAAP is posted in non-leading ledger ‘X1’





13. Asset retirement postings

We will retire the asset through sale for a value of Rs.2, 33,000 so that in US GAAP depreciation area,

there will be a gain of Rs.3, 000. On the other hand, there will be a loss of Rs. 2, 000 in the Indian GAAP.

The following are the accounting entries which should be updated in each ledger:

Asset Retirement Posting - 0L (Area 01)

Furniture & Fixture (APC A/c) 2,40,000.00 Cr

Clearing Asset disposal 2,33,000.00 Dr

Accm Depr-Furniture & Fixture 10,000.00 Dr

Profit on asset Sale 3,000.00 Cr

Asset Retirement Posting - X1 (Area30)

Furniture & Fixture (APC A/c) 2,40,000.00 Cr

Clearing Asset disposal 2,33,000.00 Dr


Loss on asset Sale 2,000.00 Dr

But when we do retirement postings in SAP, system does not post the separate values to each ledger i.e.

0L and X1 as explained in the above example rather the entries made in the leading ledger is duplicated

in the non-leading ledger. In this case, system will pass the following entry in area 30 (Ledger X1) which

is the same accounting entry updated in area 01 (Ledger 0L):



Asset Retirement Posting – X1 (Area 30)

Furniture & Fixture (APC A/c) 2,40,000.00 Cr Clearing Asset disposal 2,33,000.00 Dr



Due to this posting in Indian GAAP area, we can see the following mismatches in Indian GAAP ledger X1:

1. The reverse of accumulated depreciation is more by 5,000 because 10,000 has been reversed instead of 5,000

2. There is no posting for actual loss of 2,000 in this ledger

3. Instead a gain of 3,000 has been posted.

To correct all these mismatches, the system automatically posts the entries necessary to reflect the

correct position in Indian GAAP (Ledger X1) when we run the periodic asset posting program. This

adjustment is done using the Delta depreciation area.

The following entry will be passed for adjustment using periodic program run:

Asset Adjustment Posting - X1 (Area30)

Accm Depr-Furniture & Fixture 5,000.00 Cr

Profit on asset Sale 3,000.00 Dr




Lets see replicate the above scenario in SAP using the following menu path or transaction code to do

asset retirement posting:

SAP Menu SAP Easy Access-> Accounting -> Financial Accounting -> Fixed Asset ->

Posting -> Retirement -> Asset Sale Without Customer

Transaction Code ABAON

Click on "Simulate" button.




Post the document:

Note: Line item 2 is for accumulated depreciation account in the above screenshot.





Display asset values in asset explorer for each depreciation area after retirement as shown below:

Depreciation Area 01:

Display Depreciation Area 30:




Display delta depreciation area 55:




Now display balance for G/L account 30000004 (Profits on asset disposal / sale) after doing asset

retirement and notice that system has posted the same value to both ledger i.e. 0l and X1:

Transaction code: FAGLL03




Display balance for ledger X1:

In the above two screenshots, we can see that system has updated same value in both ledgers.

Now we need to correct these values and post the adjustment entry in non-leading ledgers using asset

periodic posting as explained earlier in the example, use the following menu path or transaction code:





14. Periodic posting from fixed assets

We use this step to post the adjustment entries to specific ledger since we cannot post directly to

reconciliation G/L. As per the retirement adjustment posting, we need to post to accumulated depreciation G/L account also which is reconciliation account.

Give the asset number 300011 in initial screen for which we want to post the adjustment entry.

First execute in test mode and then execute update run as follows:

SAP Menu SAP Easy Access-> Accounting -> Financial Accounting -> Fixed Asset -> Periodic processing -> APC Values Posting

Transaction Code ASKB




In the above screenshot, we can see that system posts this adjustment document to ledger group

X1 only. When we execute the update run, system creates the following document as per accounting entry explained in the example:





Note: Line item 3 is for accumulated depreciation account in the above screenshot.

Now after posting this adjustment document through periodic run, display balance for ledger

account 30000004 (Profit on disposal / sale of fixed assets) for Ledger – X1 and notice that system has posted one reverse entry for the amount 3,000 which was posted during asset

retirement:

This way system nullifies the balance of “Profit on sale” account for ledger X1 and posts to “Loss on sale” account, see the below picture:




Finally, after completing the above steps, we will find the GL balances for each ledger as per the accounting entries given in the example as mentioned below:

Asset Retirement Posting - 0L (Area 01) Furniture & Fixture (APC A/c) 2,40,000.00 Cr

Clearing Asset disposal 2,33,000.00 Dr Accm Depr-Furniture & Fixture 10,000.00 Dr


Asset Retirement Posting - X1 (Area30) Furniture & Fixture (APC A/c) 2,40,000.00 Cr

Clearing Asset disposal 2,33,000.00 Dr Accm Depr-Furniture & Fixture 5,000.00 Dr



New GL parallel ledgers in asset accounting

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