Asset Impairment

1. PURPOSE:

An asset that is worth less on the market than the value listed on the company’s balance sheet due to an unexpected or sudden decline or antiquity innovation change, this could be the result of physical demage to the asset.

2. REQUIREMENT:

IFRS requirement, Impairment of some Asset could be carried out.

3. CONFIGURATION STEP:

3.1. Go to tcode OABW to check revalue APC in the depreciation area where you want to post. This would help in identifying the area where the Impairment will have to posted.

3.2. Go to tcode OAYR and select your company code. Then click on the posting rule.

In the book depreciation area, go to Other posting settings. Check on “Post revaluation”.

This setting is required for posting the impairment amount.

3.3. Go to tcode AO90 and create a revaluation APC for each fixed asset class and clearing account Revalutaion APC.

The revaluation APC has to be a reconciliation account and the revaluation clearing is P/L account.

3.4. Go to tcode AO84 to create Transaction type, example “Z80”, “Z81”, “Z82”, “Z83”

– Z80: Impairment Loss (Prior-Yr acq.)

– Z81: Impairment Loss (Curr-Yr acq.)

– Z82: Reversing an Impairment Loss (Prior-Yr acq.)

– Z83: Reversing an Impairment Loss (Curr-Yr acq.)

3.5. Go to tcode ACSET and select the company code, then choose Book depreciation area, add account assignment object “KOSTL” – cost center and account assignment type “Depreciation Run”.

This setting is required cost center for posting the impairment GL account when Depreciation Run.

4. BUSINESS SCENARIO:

– Post impairment asset: Tcode ABAW:

Now, go to tcode ABAW, select the asset to be impaired. Put the transaction type as Z81, press Enter.

In the next screen give an asset value date, amount to be posted as Impairment. Now, click Save.

An asset accounting document will be generated.

NOTE: This impairment amount will NOT be posted automatically. Once depreciation run takes place then only the amount gets posted to GL account.

a. Impair loss

b. Reverse Impair loss

– Run depreciation: for a period in tcode AFAB:

a. Impair loss

b. Reverse Impair loss:

End