Last Updated on May 16, 2023 by Pradeep
What is New Asset Accounting in SAP S/4HANA?
New Asset Accounting is SAP’s latest version of Asset Accounting. SAP introduced this module in ERP 6.0 enhancement pack 7. It has since been fully optimized for SAP S/4 HANA with more added features.
Prerequisite for New Asset Accounting
We need Enterprise activation EA-FIN for FI-AA. Refer to OSS note 1121965.
For every additional accounting principle & ledger, we define currency type on the company code and need to set up a corresponding depreciation area.
New Asset Accounting Organization Structure and Master Data
The organizational structure and master data in New Asset Accounting in SAP S4 HANA Finance consist of the same key elements which were there as before.
These are:-
- Chart of Depreciation
- Depreciation Areas
- Asset Classes.
Key Elements of New Asset Accounting
Chart of Depreciation, Depreciation Areas and Asset Classes are some of the major elements of New Asset Accounting.
1st. Chart of Depreciation
In SAP S/4 HANA’s new asset accounting, the different accounting principles, methods of depreciation, legal requirements, etc. for a particular country continue to be grouped under the umbrella of one chart of depreciation. SAP supplies a template chart of depreciation for most countries based on their legal requirements. However, you can create more than one chart of depreciation for a country if its business requirements are different. Consequently, each company code with fixed assets is then linked to its local chart of depreciation.
2nd. Depreciation Areas
A depreciation area typically corresponds to a specific reporting requirement or accounting principles such as local GAAP or IFRS. The chart of depreciation will contain one or more depreciation areas. This is to say, you can have additional depreciation areas for cost accounting, insurance, investment support and various tax calculations.
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What’s new about Depreciation areas?
We have some features of Depreciation Areas in S4 HANA Finance that make it desirable and relevant. These inclusions have increased new asset accounting flexibility and usability. These are the following:-
1) Different values for Capitalization cost
In the new asset accounting, you can include different values for the cost of asset capitalization or depreciation. Furthermore, you can also capitalize on different rules. For one accounting principle, you may be able to include certain fees in the total cost of the asset. Such as dismantling costs of the previous asset, which is not allowed for another accounting principle.
2) Fiscal Periods handling
Fiscal periods in SAP New Asset Accounting can be calendar or non-calendar. Also, they can slightly differ between FI and New Asset Accounting. However, the year-end date must be identical. While you can set this at the company code level or the depreciation area level, there are some restrictions.
Many companies simply have one depreciation area for Local GAAP with perhaps an additional IFRS or group accounting to mirror the structure they have for their financial reporting.
3) Depreciation Area -1 can be linked to any ledger
You can link the accounting principles to ledger groups, namely 0L, which represents the leading Ledger and N1 which represents the non-leading ledger. These are then called Parallel Ledgers.
The leading ledger is certainly the main or default ledger. Noteworthy, before New Asset Accounting, you always have to link Depreciation Area-1 to the leading Ledger and that too only while posting in real-time. Now, this is no longer required. You can now link Depreciation area -1 to any ledger. Furthermore, you can post more than one depreciation in real-time.
Also, read related: Document Splitting in SAP New GL
3rd. Asset Class
An asset class in SAP is a group of fixed assets that share similar properties, such as account determination, depreciation, depreciation rules and master data.
All fixed assets must belong to an asset class. You can create Asset Class at the global level so that all the companies of one SAP client can share the same configuration and categorize their assets in the same way. Although, users will only see the active asset classes for their country’s chart of depreciation.
Because the account determination is done at the asset class level, you normally need at least one asset class for each line. This is what you need to show separately on the balance sheet.
Benefits of New Asset Accounting
The benefits of New Asset Accounting are enormous. Here is a list of its top benefits that make the SAP S/4HANA Finance configuration and usage more worthwhile.
Instant Access to Correct Up-to-Date Values
All depreciation areas in New Asset Accounting are now equal and posted in real-time. Not just those in the main depreciation area, you can also navigate and drill down to most financial documents in the Asset Explorer.
When we make a change to an asset, the system immediately updates its planned depreciation and all reports show up-to-date values.
Single Source of Truth
The reconciliation between FI & Asset Accounting is assured by design. For example, reconciliation accounts, that don’t allow manual postings, now we use it in all depreciation areas. It helps preserve the integrity of postings.
Cost elements integration
Cost Elements are now integrated into the chart of account master records. It ensures that SAP ERP Controlling is aligned with FI. Likewise Posting to another ledger no longer take place separately at the period end. Thus, we can’t omit the postings accidentally. Also, we have access to up-to-date figures all through a period not just at the month-end.
Read related: Month-end activities in SAP FICO
Simplification of Posting Logic
Now we have transactions and accounts features in New Asset Accounting. It allows us to post independently to individual depreciation areas, accounting principles or ledger groups.
Also Read: Simplifications in SAP S/4HANA Finance
Transparency
now we also have a separate line item for each asset posting. It includes the acquisition and retirement values, the depreciation P/L and accumulated depreciation. This provides us full visibility in FI.
No Redundancy of Data
New Asset Accounting no longer requires the use of delta depreciation areas in addition to normal depreciation areas.
Smooth Period-End
The period-end procedure is simpler and faster with up-to-date data available all through the month. Postings are direct or in the background so there are no more batch postings. The depreciation posting at month-end is faster. This is because we don’t have to recalculate the values. We simply post the planned value directly, with which we do not require any additional batch postings.
Posting each ledger to different periods is possible as long as the year start and end dates are the same. For example, having calendar months for local GAAP but Non-Calendar for IFRS.
Some more benefits of New Asset Accounting are:-
- Detailed depreciation postings will happen each asset-wise.
- Now ACDOCA has replaced the traditional asset tables like ANEK, ANEP, ANEA, ANLP & ANLC. Likewise, the BKPF table has replaced the ANEK table data.
- Due to compatibility views, we will get the old year reports in the new asset accounting.
- In new Asset accounting, a technical clearing account acts as a zero-balance clearing account in new G/L and it is an offsetting account.
A Scenario.
Follow the below picture.
Assume that if you are procuring 10000 INR assets and in local GAAP you have to capitalize 500 INR freight charges. Here we have IFRS and LGAAP as two different accounting principles.
The new Asset Accounting technical clearing account acts as a zero-balance clearing account in the new GL and it is an offsetting account. After posting the document, the displayed document contains the special tab of Asset accounting display, once you will on this it will give you the accounting principle-wise posting accounting document.
A technical clearing account will act as an offsetting account in both accounting principles.
Features of New Asset Accounting in S4HANA Finance
Let us understand New Asset Accounting features in brief:-
Parallel Valuation, Ledgers, and Currencies
Companies often draw up a set of statutory accounts in their local currency. However, they need to adjust those statutory accounts when reporting to the head office which requires consistency in the report globally or for IFRS. Alternatively, their main books may be set up according to group practices, and they need to adjust for local GAAP or report in different currencies.
Earlier, if you wanted to record and report the data for more than one accounting principle in SAP, the only way to do this was by using a different area of the Chart of Accounts.
Parallel Ledgers
The new SAP General Ledger brought in the technology for parallel ledgers to enable you to keep two sets of books simultaneously. However, not all companies want to set up parallel ledgers, especially if they have only a few differences between accounting principles. New Asset Accounting with SAP S/4 HANA still allows the choice of the two methods.
Account Approach vs. Ledger Approach in New Asset Accounting
Account Approach
If you choose not to set up any parallel ledgers in FI, you can continue to use the chart of accounts to post different accounting principles to different areas. This is called the account approach and can be set by the company code.
Length of Chart of Accounts
Some companies keep the chart of account length the same and use a completely separate range of accounts. However, you can also add digits to your existing accounts.
Let us understand this with an example.
Suppose we use 123456 for the book or local GAAP. As explained, you can add a prefix to create 8123456 to post to groups or IFRS accounts. This has just made it easier to understand, compare and reconcile the two values. Consequently, your report then accesses the different accounts accordingly.
Although there are no additional physical ledgers set up in FI with the account approach. Still, there are many new transactions in new Asset Accounting on SAP S/4 HANA that allow you to choose the accounting principle that you want to post.
Ledger Approach
With the ledger approach, you need to have a depreciation area set up in New Asset Accounting for each additional ledger that you are posting to FI and for each currency. The ledger approach excludes Extension Ledgers.
Having a separate ledger means that although you may be posting different amounts for different accounting principles, you can use the same chart of account codes in each ledger.
To summarize, with the ledger approach, you post to the same accounts in different ledgers whereas, with the account approach, you post to different accounts in the same ledger.
Introduction of Key Changes with New Asset Accounting
Universal Journal – ACDOCA
With the introduction of the Universal Journal or ACDOCA Table, now we have everything in one place.
You no longer need to post the additional accounting principles periodically; instead, now you post all accounting principles in real-time. Because the accounts are reconciliation accounts in all ledgers, you can post them only to the general ledger and not to the asset.
In addition, you can transfer the asset postings to finance at the asset level and more asset information is now available in finance. Thus, you can run financial reports by asset number for example in the general ledger line item display transaction. Furthermore, you also do not need to wait until the period ends to see values in the parallel ledgers, and even the planned depreciation is always up to date.
Old T Codes vs. New T Codes
As the asset and general ledger values are now in the same table (ACDOCA), the consistency and reconciliation transactions have now become obsolete. They do not even exist in S/4HANA. Since you post all ledgers in real-time, so the periodic posting transaction has also now become obsolete.
Related Post: List of Most Imp. SAP FICO TCodes
Integrated Asset Postings and the Universal Journal
With integrated Asset Posting, now you can store the actual data from the various asset value tables in the single finance table ACDOCA. Here you store the header data in BKPF, and the statistical planned and year-dependent data in the other tables like FAAT_PLAN_VALUES.
Compatibility Views of Tables
Although the old tables no longer exist, the programs will still work, as long as you are just reading the tables and not writing directly to them. This is because of something called Compatibility Views. These are views, which you recreate from the new tables such as ACDOCA, but are linked to the old table names such as ANEP, ANEK and so on. Thus, you can still read the data.
Also read: List of Important Tables in SAP FI and CO
Technical Clearing Account
The Technical Clearing Account is a new account that you introduce for accounts, and cannot post to a single ledger only.
If you have set up parallel ledgers in the New General Ledger, you should know that there are certain accounts that the system will let you post in one ledger but not in another. Let us take an example.
An Example of Integrated Asset Posting
Suppose you receive an invoice from a supplier for USD 1000. You cannot record it against that supplier. The reason is, that anything other than 1000 USD in all ledgers and the amount you pay against it will be the same in all ledgers along with any related taxes. By the same logic, you need to post the GR/IR accounts (where you post the goods receipts and invoices received) and the customer accounts to all ledgers at the same time as well.
Also Read: SAP FICO Interview Questions on Asset Accounting
Integrated Asset Accounting in S/4HANA Vs. Non-integrated
In S/4HANA, when you have an integrated posting in asset accounting, you have to post the supplier or GR/IR side the same to all ledgers. This may be the case during an asset acquisition with a posting between the asset and the supplier or between the asset and the GR/IR. However, you may want to post the asset side, differently, to a different account.
Document # 19000 posts all ledgers, credit vendor and debit Technical clearing account # 2015.
Document # 10009 posts to Ledger “0L” and document # 81000 posts to Ledger “N1” credit technical clearing account and debit asset in each.
Learn SAP FICO Interview Questions on GR/IR
The Technical clearing account is a reconciliation account
It works in the same way for both account and ledger approaches. Furthermore, you can also have more than one technical clearing account. You define it in the configuration by the chart of accounts and account determination. Thus, you could have a different account by asset class assuming that your account determination is mapped with your asset class.
An example of a Non-Integrated Asset Posting
Here the technical clearing account is not used in the settlement of line items from an asset under construction to the final asset.
You can set different settlement rules. Settling to an asset in the Leading Ledger “0L” but settling to an Asset, Cost Center and GL for Parallel Ledger “N1”.
Conclusion
In this blog, my primary focus was on Accounting Approach vs. Ledger Approach. Secondarily, I targeted the Technical Clearing account in Asset, New Transaction codes for Asset Accounting and more. I hope this would help you to understand the new features of New Asset Accounting deeply.
Also read: 3 New features of New Asset accounting
