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Most everyone in the SAP industry is expecting a wave of upgrades to ERP 6.0 over the next several years.  As part of these expected upgrades I’m going to start a multi-part blog on some new developments that are coming in the Asset Accounting (FI-AA) subledger of ERP Financials.  The first topic will be to introduce the New Depreciation Calculation.

What do you mean by “New Depreciation Calculation”?

As of ERP 6.0, there is an entirely new technique used in Asset Accounting to calculate planned depreciation amounts.  This affects all planned amounts such as Ordinary Depreciation, Special Depreciation, Interest, and Inflation/Revaluation adjustments.

Unplanned Depreciation and Write-Ups are not affected.  These two depreciation types are transactional in nature and require no amount determination.

 
What else has been changed?

There are numerous changes and new items that are delivered but the change that is broadest in nature and will have the greatest impact on SAP fixed asset users is the shift from a transaction based calculation to a period interval based one.  I’ll go into more detail on this change in a later blog posting.

Some of the other items that have been changed are…

  • Time-dependent depreciation changes can now be made to the asset master record
  • Depreciation methods can now be changed on a period level
  • Base Values can be determined on a period level
  • New transaction type groups have been delivered.  This also includes the introduction of new Period Control groups as well.
  • New BAdIs for easier enhancement of the depreciation calculation
  • … and several other fixes that are mostly country specific.

Who does this affect?

Anyone who works with fixed assets and regularly has to troubleshoot issues with how ERP calculates depreciation will have to understand these new concepts and how they work.

All customers upgrading to ERP 6.0 will also have to be aware of a few items as part of the upgrade.

Do I have a choice; Old versus New?

Both the old and the new depreciation calculation are delivered in the ERP 6.0 release.  Every customer can choose which to use.

By default, the new depreciation calculation is active once the technical upgrade is complete (or after the initial installation in the case of new customers).  One way to check which calculation technique is being used is to review the status of the Extensions for the ERP system.  This can be done in the IMG using the very first step “Activate SAP ECC Extensions”.  If the Enterprise AddOn EA-FIN is active then the new calculation is in effect.

 

Enterprise AddOn step in the IMG

 

EA-FIN status

 

However, I’d be surprised if anyone chooses to revert back to the previous calculation for a number of reasons.  First of all, there are other items included in EA-FIN such as some Treasury improvements that might prove useful.  Deactivating the extension will deactivate those functionalities as well as the New Depreciation Calculation.

Secondly, and more importantly, reverting back to the older calculation means that you’ll miss out on any future enhancements.  As with other areas of ERP (or any SAP application for that matter), SAP will continue to support the older calculation but won’t be improving on it.  Unless there is a new legal requirement, I doubt that we’ll see any changes in functionality with the older calculation.

What is the Upgrade Process for this new calculation?

SAP recommends that the Recalculate Values program be executed immediately after the technical upgrade is complete.  You’ll also want to take a look at a few OSS Notes as well (949701 and 965032).  Review note 988238 before you execute your first year-end closing after the upgrade.

There is no data migration nor is there any configuration to change or update.  If EA-FIN is active, then the new calculation is immediately available and in use by all reports.

The only item that may require some work is if the system previously had used any of the user exits dedicated to depreciation calculation (AFAR0001-AFAR0004).  These are not compatible with the new calculation technique and have been replaced by a series of BAdIs.  Any logic contained in these user exits will have to be re-coded in the BAdIs.

What’s next?

In the next blog I’ll go into more detail about the period interval based depreciation calculation.

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14 Comments

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  1. Johannes Lombard
    Great posting Nathan – but as an accountant I need to know whether this new method complies to the latest GAAP? How would this apply to GASB Higher ed financial statements? Also in line with GASB rules?

    So does the new plans per the upgraded release follow new published rules?

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    1. Nathan Genez Post author
      Mr. Lombard

      One of the drivers of this change was to account for different accounting policies around the world.  Some examples are the accuonting for impairments here in the US as well as several country specific changes for Japan. 

      As far as the specifics of GASB requirements in the US…  I’m not sure.  Feel free to send me a detailed question if you want.

      -nathan

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  2. Theo Immelman
    1) When is the best time to activate this change?
    2) What must I do and check to avoid data inconsistencies?
    3) Apart from the depreciation calculation in FI-AA and bank statement
    display (FEBAN) what other functionalities will be affected?
    4) What other modules (CO, SD, MM etc) does it have an impact on?

    Kind Regards
    Theo

    (0) 
    1. Nathan Genez Post author
      1. I would definitely approach that decision during the upgrade project.

      2. I’ll answer that in a follow up blog.

      3. As far as I can tell SAP has not published a comprehensive document on any of the enterprise add-ons.  The contents of the add-on are addressed within the release notes of each module…  so you would have to scan all of the release notes to get a full understanding of it.  I’ve found a single page in the online documentation that references the broad areas that are affected but nothing specific (http://help.sap.com/erp2005_ehp_01/helpdata/en/44/558b1099c93672e10000000a114a6b/frameset.htm).

      4. lots…  reference the link above.

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  3. Javier Reviriego
    Hello

    As a small contribution I would like to mention the new available BAdIs that replace former enhancements (AFAR0001-AFAR0004):

    BAdI FAA_DC_CUSTOMER
    BAdI FAA_EE_CUSTOMER

    Regards
    Javier

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  4. Prakash Shahi
    Hello Nathan,
    I read your article and its enlightening. However, i would like to know how we can deactivate this extension set once it has been activated. You have mentioned about deactivating in your blog but i have a done a lot of research in sap library and notes but nowhere i found a topic on deactivating EA-FIN. We are preparing to activate this extension set and i would like to know how to deactivate it just in case something unintentional happens. Thanks in advance.
    (0) 
  5. Jiraiya Sama

    HI Nathan,

    Thanks a lot. Just wondering, I have enabled the Financial Extension, but now the system doesn’t allow me to dispose asset when the scrap value is equal to NBV like it used to…

    Any ideas? Thanks in advanced.

    Regards, Jiraiya    

    (0) 
  6. Lakshmi Sama

    Hello Nathan,

    You did an excellent job. Thanks for sharing your well written document and expecting mroe contributions from your end.

    Thanks & Regards,

    Lakshmi S

    (0) 

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