SAP FIAA Overview of New Depreciation Calculation in ECC 6.0

SAP’s New SAP s New Depreciation

Calculation in ERP 6.0

Nathan Genez & Eric BarlowManaging Partners

Serio Consulting LLC

Contents

New Depreciation Calculation in ERP 6.0

Upgrade Considerations

Wrap-Up

Who is Serio Consulting?

f f SFounded by a group of former SAP America Platinum Consultants with over 40 years combined SAP experienceFocused on the Capital Management area of SAP across both SAP ERP and SAP BW

Project Systems (PS)Investment Management (IM)Asset Accounting (FI-AA)

Professional Service Offering:SAP Implementations and UpgradesSAP Implementations and UpgradesQuality Assurance and Configuration ReviewsAdvanced Capital Management reporting solutions including BWAdvanced Tax solutionsAdvanced Tax solutionsRemote On-Demand consulting

http://www SerioConsulting com/

Source: Nathan Genez & Eric Barlow, New DCP Overview, slide #4

• http://www.SerioConsulting.com/

Scope of New Depreciation Calculation (New DCP)

• What does the New Depreciation Calculation refer to? How depreciation amounts are calculated / planned

• It does not refer to…How depreciation is posted

The process to gather depreciation figures and post them to the G/L is covered by the depreciation posting program RAPOST2000


What Values Are Affected?

• All planned values including:Planned ordinary depreciationPlanned special depreciationPlanned special depreciationInterestInflationRevaluation


Why Was the Calculation Changed?

A period interval-based calculation is more intuitive and easier to understandSupport of time-dependent depreciation parametersSupport of method changeover and base value determination on a period levelMore flexibility to support customer and country specificMore flexibility to support customer and country specific requirements via Business Add-Ins (BAdIs)Potentially greater performanceBetter handling of rounding accuracy issues related to large amounts with no decimals (e.g., currency JPY)… and many other reasons (mostly country specific)y ( y y p )


Technical Requirements

• Delivered in SAP ERP 6.0 as part of the Enterprise AddOn for Financials (EA-FIN)

Not possible to release for earlier SAP ERP or SAP R/3 versionsNot possible to release for earlier SAP ERP or SAP R/3 versionsEA-FIN must be activeThe new calculation cannot be disabled using standard methods other than deactivating EA-FIN


Old: Transaction-Based Calculation

• Prior to SAP ERP 6.0, depreciation was always calculated in detail on every transaction line item

Whenever a transaction is posted a depreciation amount wasWhenever a transaction is posted, a depreciation amount was calculatedThe asset line item table contained fields for:

O di d i ti t tiOrdinary depreciation on transactionSpecial depreciation on transaction


Old: Transaction-Based Calculation (cont.)

• All transactions were interpreted sequentiallyFirst posting served as the “baseline” calculationAll subsequent postings were adjustments to theAll subsequent postings were adjustments to the original posting

• Annual depreciation = sum of the depreciation of the p pindividual transactions

This approach could make the verification of depreciation figures difficultfigures difficult


Example of Transaction-Based Calculation

• ScenarioStraight line depreciationTotal Acquisition Cost (APC) / Total Useful Life (UL)Total Acquisition Cost (APC) / Total Useful Life (UL)Useful life = 10 years12 period calendar fiscal year: January – December (e.g., K4)Period control = pro rata determination

• The following two transactions are posted:g p

Transaction Amount / Percentage TimeI iti l A i iti $12 000 J 1Initial Acquisition $12,000 January 1Partial Retirement (current year) $3,000 October 1


Example of Transaction-Based Calculation (cont.)

Date Transaction Type Transaction Amount

Period Factor

Rate Base Value Calculated Depreciation

Jan 1 Initial Acquisition $12,000 12 / 12 10% $12,000 - $1,200

Total - $1,200



Date Transaction Type Transaction Amount

Period Factor

Rate Base Value Calculated Depreciation

Jan 1 Initial Acquisition $12,000 12 / 12 10% $12,000 - $1,200

Oct 1 Partial Retirement - $3,000 3 / 12 10% - $3,000 $75

Total - $1,125



•R/3 4.7


Asset Explorer

•R/3 4.7

displayed the depreciation amounts calculated for each line item



• Asset Line Item table displayed the amounts in additional detail

•R/3 4.7


New: Period Interval-Based Calculation

• Depreciation calculation is based on period intervals (time segments)

All transactions in the same period interval are aggregated andAll transactions in the same period interval are aggregated and used to calculate depreciation as a single numberAll line items are aggregated by their appropriate periodAll periods are aggregated to get an annual value

• Annual depreciation = sum of the depreciation of the period inter alsperiod intervals


New: Period Interval-Based Calculation (cont.)

• SAP ERP 6.0 no longer calculates depreciation or interest on asset line items

•ERP 6.0


What Is a Period Interval?

• Initially, there is just one time interval per year, depreciation area, and amount type

N t t d h t h• New segments are created whenever an event changes the asset’s value, such as:

Transactions within fiscal yearTransactions within fiscal yearTime-dependent master data changes

Shutdown or multiple shift intervalsD i ti t hDepreciation parameter changes

Changes to depreciation methodMultilevel method changes within a fiscal yearMethod changeover occurs at the end or within the UL


More Information on Period Intervals

• The number of period intervals depends on the number of fiscal periods with changes that affect the asset’s depreciation calculationp

The more transactions posted …Or the more depreciation parameter changes …Made across more periods will yield more depreciation period intervals

The ma im m n mber of depreciation period inter als is• The maximum number of depreciation period intervals is the same as the number of normal fiscal periods


Example of Period Interval-Based Calculation

121110987654321

Period Interval 1

Date Transaction Type

Transaction Amount

Prd Int

Prd IntervalDuration

Rate Base Value Depreciation Per Interval

Jan 1 Initial Acquisition

$12,000 1 12 months 10% $12,000 - $1,200Acquisition

Total - $1,200


Example of Period Interval-Based Calculation (cont.)

121110987654321

Period Interval 1 Period Interval 2

Date Transaction Type

Transaction Amount

Prd Int

Prd IntervalDuration

Rate Base Value Depreciation Per Interval

Jan 1 Initial Acquisition

$12,000 1 9 months 10% $12,000 - $900Acquisition

Oct 1 Partial Retirement

- $3,000 2 3 months 10% $9,000 - $225

Total - $1,125



•ERP 6.0

Period Interval = 1 - 12

Percentage


Period FactorBase Value Percentage

Final Annual Depreciation


•ERP 6.0

Final Annual

Base Value

Final Annual Depreciation

Period Interval 1 = 1 - 9


Period Interval 2 = 10 - 12

Period Factor

Percentage

Comparison of Old vs. New Calculations

• Is there a difference in the final calculated amount between these two approaches?

NONO• The annual depreciation amount is identical between both approaches for most all scenarios.both approaches for most all scenarios.


Contents



Wrap-Up

Configuration Requirements

• No configuration is required as part of the new calculation

No changes are necessary to the depreciation areas orNo changes are necessary to the depreciation areas or depreciation keys

• No migration of data is requiredg q

• The final depreciation amounts calculated by SAP should be the same before and after the upgrade *

Small amount differences might occur in some situations


Process

• SAP recommends that all customers recalculate values (RAAFAR00) immediately after the technical upgrade

Also consider recalculating prior to the upgrade as part of aAlso consider recalculating prior to the upgrade as part of a formal system close process


Enhancements

• Existing user exits are no longer processed by the new depreciation calculation

SAP d li d BAdI i li t ith th• SAP-delivered new BAdI is compliant with the new calculation

BAdI FAA EE CUSTOMERBAdI FAA_EE_CUSTOMERMethod SET_BASE_VALUE replaces AFAR0001Method SET_PERCENT_AMOUNT replaces AFAR0002Method DEFINE CHANGEOVER YR replaces AFAR0003Method DEFINE_CHANGEOVER_YR replaces AFAR0003

• A migration of the business logic must be made to these new BAdIs if the new calculation is usednew BAdIs if the new calculation is used


Reporting

• Since depreciation is no longer calculated on a line item basis, all asset transaction reports will show $0.00 as the depreciation amountp

SAP Note 949701 will hide the depreciation figures so that the report is not misleadingC id ti t hi t h t i th t b k tConsider creating an asset history sheet version that breaks out depreciation by type for each period


Asset Explorer

• In addition to the normal Asset Explorer, there is an alternative version that always uses the old depreciation calculationp

Allows you to compare the calculations between the old and new depreciation calculations without deactivating the Enterprise AddOnEnterprise AddOn

Transaction Description

AW01N Current Depreciation Calculation (New)

AW01 AFAR Old Depreciation CalculationAW01_AFAR Old Depreciation Calculation


Asset Explorer — AW01N “New Depreciation Calc”

ERP 6 0•ERP 6.0


Asset Explorer — AW01_AFAR “Old Deprec Calc”

ERP 6 0•ERP 6.0


Contents



Wrap-Up

Resources

• Relevant SAP Notes949701 — Fix for asset line item reports965032 Explanation of small differences post upgrade965032 — Explanation of small differences post upgrade988238 — Information related to new calculation’s impacts on year end closing


Resources (cont.)

• SAP ERP 6.0 Documentation on New DCPhttp://help.sap.com/saphelp_erp2005vp/helpdata/en/44/07e6a80f2e5920e10000000a155369/frameset.htm

• SAP ERP 6.0 release noteshttp://help.sap.com/erp2005 ehp 02/helpdata/en/43/68805bb88f2http://help.sap.com/erp2005_ehp_02/helpdata/en/43/68805bb88f297ee10000000a422035/frameset.htm

• Information for Enterprise AddOn EA-FINhttp://help.sap.com/erp2005_ehp_02/helpdata/en/44/558b1099c93672e10000000a114a6b/frameset.htm


Resources (cont.)

• SAP Developer Network (SDN) – Wikiwww.sdn.sap.com/irj/sdn/wiki > ERP Financials > Financial Accounting > Asset Accounting


Resources (cont.)

• SAP Developer Network (SDN) – Blog Serieswww.sdn.sap.com/irj/sdn/wiki > ERP Financials > Financial Accounting > Asset Accounting


Resources (cont.)

• SAP Financials Expert“Discover the Logic and Parameter Changes in the New Depreciation Calculation” (January 2007)p ( y )


Thank you for your attention

Nathan GenezManaging Partner

Serio Consulting LLCg227 Sandy Springs PlaceSuite D238Atlanta, GA 30328

T 1-713-240-0421E [email protected]

http://www SerioConsulting comhttp://www.SerioConsulting.com

Eric BarlowManaging Partner

Serio Consulting LLC227 S d S i Pl227 Sandy Springs PlaceSuite D238Atlanta, GA 30328

T 1-404-667-0447E [email protected]

http://www.SerioConsulting.com


http://www.SerioConsulting.com

SAP FIAA Overview of New Depreciation Calculation in ECC 6.0

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