SAP FICO Interview Questions and Answers - 11

Asset Accounting

237. Explain ‘Asset Accounting’ (FI-AA).

The ‘Asset Accounting’ (FI-AA) submodule in SAP manages a company’s fixed assets, right

from acquisition to retirement/scrapping. All accounting transactions relating to depreciation,

insurance, etc., of assets are taken care of through this module, and all the accounting

information from this module flows to FI-GL on a real-time basis.

Figure 57: FI-AA integration with other modules

You will be able to directly post (the goods receipt (GR), invoice receipt (IR), or any withdrawal

from a warehouse to a fixed asset) from MM or PP to FI-AA. The integration with FI-AR helps in

direct posting of sales to the customer account. Similarly, integration with FI-AP helps in posting

an asset directly to FI-AA and the relevant vendor account in cases where the purchase is not

routed through the MM module. You may capitalize the maintenance activities to an asset using

settlements through the PM module. FI-AA and FI-GL has real-time integration where all the

transactions such as asset acquisition, retirement, transfer, etc., are recorded simultaneously in

both the modules. However, batch processing is required to transfer the depreciation values,

interest, etc., to the FI module.

The FI-AA and CO integration helps in:

􀂃 Assigning an asset to any of the Controlling Objects such as cost center, internal

order/maintenance order, or an activity type. Internal Orders act as a two-way link to the FIAA:

(i) they help to collect and pass on the capital expenditure to assets, and (ii) they collect

the depreciation/interest from FI-AA to controlling objects. (Note that when there is a

situation where the asset master record contains an internal order and a cost center, the

depreciation is always posted to the internal order and not to the cost center.)

􀂃 The depreciation and the interest are passed on to the cost/profit centers.

238. What is a ‘Lean Implementation’ in FI-AA?

A ‘Lean Implementation’ is the scaled-down version of the regular FI-AA configuration in IMG,

with minimal configuration required to enable asset accounting. This is suitable for small

companies using the standard functionalities of asset accounting, and also in situations where the

Asset Catalog is not that large.

Figure 58: Lean implementation in FI-AA

You should not opt for lean implementation if:

􀂃 You need more than Depreciation Areas

􀂃 You need to Depreciate In Foreign Currencies as well

􀂃 You have Group Assets

􀂃 You need to define your own Depreciation Keys/Transaction Types/ Reports

􀂃 You need a Group Consolidation

T Code OASI

239. What are the kinds of ‘Assets’ in SAP?

An asset can be a Simple Asset or Complex Asset. Depending on the requirement, assets are

maintained with Asset Main Numbers and Asset Subnumbers. A complex asset consists of

many Sub-Assets; each of them identified using an asset subnumber. You may also use the

concept Group Asset in SAP.

240. Explain ‘Complex Assets’ and ‘Asset Subnumbers.’

A ‘Complex Asset’ in SAP is made up of many master records each of which is denoted by an

‘Asset Subnumber.’ It is prudent to use asset subnumbers if:

􀂃 You need to manage the ‘subsequent acquisitions’ separately from the initial one (for

example, your initial acquisition was a PC, and you are adding a printer later).

􀂃 You want to manage the various parts of an asset separately even at the time of ‘initial

acquisition’ (for example, an initial purchase of a PC where you create separate asset master

records for the monitor, CPU, etc.).

􀂃 You need to divide the assets based on certain technical qualities (keyboard, mouse,

etc.).

When you manage a complex asset, the system enables you to evaluate the asset in all possible

ways such as (i) for a single subnumber, (if) for all subnumbers, and (iii) for select subnumbers.

241. What is a ‘Group asset’ in SAP? When You will use This?

A ‘Group Asset’ in SAP is almost like a normal asset except that it can have (any number of)

sub-assets denoted by Asset Subnumbers. The concept of group asset becomes necessary

when you need to carry out depreciation at a group level, for some special purposes such as tax

reporting. Remember that SAP’s way of depreciation is always at the individual asset level.

Hence, to manage at the group level, you need the group asset. Once you decide to have group

assets, you also need to have ‘special depreciation areas’ meant for group assets; you will not be

able depreciate a group asset using a normal depreciation area.

Unlike Complex Assets, you can delete a group asset only when all the associated subnumbers

have been marked for deletion.

242. What is a ‘Asset Super Number’ in SAP?

The concept of ‘Asset Super Number,’ in FI-AA, is used only for reporting purposes. Here, you

will assign a number of individual assets to a single asset number. By using this methodology,

you will be able to see all the associated assets with the asset super number as a single asset

(for example, brake assembly line) or as individual assets (for example, machinery, equipment in

the brake assembly line).

243. What is a ‘Chart of Depreciation’? How does it differ from a

‘Chart of Accounts’?

A ‘Chart of Depreciation’ contains a list of country-specific depreciation areas. It provides the

rules for the evaluation of assets that are valid in a given country or economic area. SAP comes

supplied with default charts of depreciation that are based on the requirements of each country.

These default charts of depreciation also serve as the ‘reference charts’ from which you can

create a new chart of depreciation by copying one of the relevant charts. After copying, you may

delete the depreciation areas you do not need. However, note that the deletion must be done

before any assets are created.

You are required to assign a chart of depreciation to your Company Code. Remember that one

Company Code can have only one chart of depreciation assigned to it, even though multiple

Company Codes can use a single chart of depreciation.

The chart of accounts can be global, country specific, and industry specific based on the needs of

the business. The chart of depreciation is only country specific. The charts are independent of

each other.

Open table as spreadsheet Chart of Depreciation Chart of Accounts

Established by FI-AA. Established by FI.

A chart of depreciation is a collection of country

specific depreciation areas.

The chart of accounts is a list of GL

accounts used in a Company Code.

The chart of accounts contains the

chart of accounts area and the

Company Code area.

The chart of depreciation is country specific. Usually

you will not require more than one chart of account.

SAP comes delivered with many country specific

charts of depreciation as ‘reference charts’ which can

be copied to create your own chart of depreciation.

Depending on the requirement you

may have an ‘operating chart of

accounts,’ ‘country specific chart of

accounts,’ ‘global chart of accounts,’

etc.

One Company Code uses only one chart of

depreciation.

One Company Code uses only one

chart of accounts.

Many Company Codes, in the same country, can use

the same chart of depreciation.

Several Company Codes within the

same country can use the same

chart of accounts.

244. How do You Create an ‘Asset Accounting Company Code’?

i. Define the Company Code in FI configuration, and assign a chart of accounts to this

Company Code.

ii. Assign a chart of depreciation to this Company Code in FI-AA configuration.

iii. Add necessary data for the Company Code for use in FI-AA, and your ‘asset accounting

Company Code’ is now ready for use.

245. What is ‘Depreciation’? Explain the Various Types.

‘Depreciation’ is the reduction in the book value of an asset due to its use over time (‘decline in

economic usefulness’) or due to legal framework for taxation reporting. The depreciation is

usually calculated taking into account the economic life of the asset, expected value of the

asset at the end of its economic life (junk/ scrap value), method of depreciation calculation

(straight line method, declining balance, sum of year digits, double declining, etc.), and the

defined percentage decline in the value of the asset every year (20%, or 15%, and so on).

The depreciation can either be planned or unplanned.

Planned depreciation is one which brings down the value of the asset after every planned

period; say every month, until the asset value is fully depreciated over its life period. With this

method, you will know what the value of the asset at any point of time in its active life.

On the contrary, unplanned depreciation is a sudden happening of an event or occurrence not

foreseen (there could be a sudden break out of a fire damaging an asset, which forces you to

depreciate fully as it is no longer useful economically) resulting in a permanent reduction of the

value of the asset.

In SAP, you will come across three types of depreciation:

1. Ordinary depreciation, which is nothing but ‘planned depreciation.’

2. Special depreciation, which is over and above ‘ordinary depreciation,’ used normally for

taxation purposes.

3. Unplanned depreciation, which is the result of reducing the asset value due to the

sudden occurrence of certain events.

246. Define ‘Depreciation Areas.’

Fixed assets are valued differently for different purposes (business, legal, etc.). SAP manages

these different valuations by means of ‘Depreciation Areas.’ There are various depreciation

areas such as book depreciation, tax depreciation, depreciation for cost-accounting purposes, etc.

Figure 59: Depreciation Area

A depreciation area decides how and for what purpose an asset is evaluated. The depreciation

area can be ‘real’ or a ‘derived one.’ You may need to use several depreciation areas for a single

asset depending on the valuation and reporting requirements.

The depreciation areas are denoted by a 2-character code in the system. The depreciation areas

contain the depreciation terms that are required to be entered in the asset master records or

asset classes. SAP comes delivered with many depreciation areas; however, the depreciation

area 01—Book Depreciation is the major one.

Figure 60: Details of 01-Book Depreciation

The other depreciation areas are:

􀂃 Book depreciation in group currency

􀂃 Consolidated versions in local/group currency

􀂃 Tax balance sheet depreciation

􀂃 Special tax depreciation

􀂃 Country-specific valuation (e.g., net-worth tax or state calculation)

􀂃 Values/depreciations that differ from depreciation area 01 (for example, cost-accounting

reasons)

􀂃 Derived depreciation area (the difference between book depreciation and country-specific

tax depreciation)

247. How do You Set up ‘Depreciation Area postings’ to FI from FIAA?

You need to define how the various depreciation areas need to post to FI-GL. It can be any one

of the following scenarios:

􀂃 Post depreciation through ‘periodic processing.’

􀂃 Post both the APC (Acquisition and Production Costs) and depreciation through periodic

processing.

􀂃 Post the APC in ‘real time’ but depreciation through periodic processing.

􀂃 No values are posted.

However, you need to ensure that at least one depreciation area is configured to post values

automatically to the FI-GL. Normally, this depreciation area will be 01 (book depreciation). For the

rest of the depreciation areas, it may be configured that they derive their values from this area

and the difference thus calculated is automatically posted to FI-GL. There may also be situations

where you may define depreciation areas just for reporting purposes, and these areas need not

post to the GL.

248. What is an ‘Asset Class?

An ‘Asset Class’ in SAP is the basis for classifying an asset based on business and legal

requirements. It is essentially a grouping of assets having certain common characteristics. Each

asset in the system needs to be associated with an asset class.

Figure 61: Asset Class

An asset class is the most important configuration element that decides the type of asset (such as

land, buildings, furniture and fixtures, equipment, assets under construction, leased assets, lowvalue

assets, etc.), the document number range, data entry screen layout for asset master

creation, GL account assignments, depreciation areas, depreciation terms, etc. An asset class is

defined at the Client level and is available to all the Company Codes of that Client.

The asset class consists of:

􀂃 A header section—control parameters for master data maintenance and account

determination.

􀂃 A master data section—default values for administrative data in the asset master record.

􀂃 A valuation section—control parameters for valuation and depreciation terms.

The asset class can be:

􀂃 Buildings

􀂃 Technical assets

􀂃 Financial assets

􀂃 Leased assets

􀂃 AuC (assets under construction)

􀂃 Low value assets

249. Why do You need ‘Asset Classes’?

An ‘Asset Class’ is the link between the asset master records and the relevant accounts in the

GL. The account determination in the asset class enables you to post to the relevant GL

accounts. Several asset classes can use the same account determination provided all these

asset classes use the same chart of accounts and post to the same GL accounts.

250. What is an ‘Asset Class Catalog’?

An ‘Asset Class Catalog’ contains all the asset classes in an enterprise and is therefore valid

across the Client. Since an asset class is valid across the Client, most of the characteristics of the

asset class are defined at the Client level; however, there are certain characteristics (such as the

depreciation key, for example), which can be defined at the chart of depreciation level.__