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1. Introduction:

Earlier for generating Financial Statement below company code level required manual effort and usually done as month end activity. With New GL, SAP provide a feature name Document Splitting, document splitting provide balance line value for given characteristics (e.g. Profit Center or Segment)

It is also required as Requirement of International Accounting Standards (IAS)

IAS mandate to provide financial Statement Segment wise as in report financial information by lines of business or geographic area.

For e.g. suppose there is a Vendor Invoice of USD 11000 for two purchases

The transaction is taxable (@10%)

GL Account

Dr

Cr

Profit Center

Vendor

11000

  1. Pur. 1

8000

PC 1

  1. Pur. 2

2000

PC 2

Tax

1000

Now this document is balanced at Co Code level. But as Purchases belong to different profit center PC1 and PC2, hence document is not balance at Profit Center level.

Now we have to find a base splitting logic to split vendor amount and tax for PC 1 and PC 2.Here it is observed that Purchases are in the ratio of 80% and 20% and also allocated for PC1 and PC 2

So Total Purchases is USD 10000i

For PC 1 = 80% of 10000 = USD 2000, For PC 2 = 20% of 10000 = USD 8000

Same as Tax can also be split

Total Tax amount is USD 1000

For PC 1 = 80% of 1000 = USD 800, For PC 2 = 20% of 1000 = USD 200

We can use the same ratio to split vendor amount and Tax amount.

GL item

Amount

Profit Center

Vendor

USD 8000

PC 1

Vendor

USD 2000

PC 2

Tax

USD 800

PC 1

Tax

USD 200

PC 2

So now document will be posted as

GL Account

Dr

Cr

Profit Center

Vendor

8800

PC 1

  1. Pur. 1

8000

PC 1

Tax

800

PC 1

GL Account

Dr

Cr

Profit Center

Vendor

2200

PC 2

  1. Pur. 2

2000

PC 2

Tax

200

PC 2

Now both the documents are balanced at Co Code level also at Profit Center level. Document is balanced with specific characteristics also.

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Now with above example we can make two statements:

1.    Line item for Vendor and tax are split on the base of Pre-Defined criteria

2.    The Pre-Defined criteria here is Purchase Amount

So splitting Accounting line item on the basis of Pre-Defined Criteria is Document Splitting


1.2. Example in SAP:

Now New GL do this activity automatically once configuration is done. For user (Entry Ledger view) only single entry required, SAP will create separate line item based on the pre-defined criteria (General Ledger View)

Here the example is based on splitting of Vendor amount based on Profit Center:


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Here Vendor 9001 got credited for expense for Postage and Purchased services 

So Accounting Entry Would be:

GL Account

Dr

Cr

Profit Center

Vendor (9001)

12000

Expense (Postage)

8000

1402

Expense (Purchased Services

4000

9990

Now as mention above the document is balanced on co code level but not at Profit Center level

Now before Document Splitting:

Even if we look at general ledger view document is not balanced at profit center level




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After Document Splitting:

In case Document Splitting configured for Profit Center level then General Ledger view should be look like below:


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Now the document is balanced on both Co Code level and Profit Center level and User need not to manual adjust this, SAP does it automatically as per configuration.

If we look at the accounting Entry:

GL Account

Dr

Cr

Profit Center

Vendor (9001)

8000

1402

Expense (Postage)

8000

1402

Vendor (9001)

4000

9990

Expense (Purchased Services

4000

9990

2.    Type of Document Splitting:

Now Document Splitting can be divided into three parts:

2.1. Passive Split

Passive Split is used when SAP spilt a document line item based on split took place in previous process (While Payment of Vendor, splitting will be done as logic used in vendor invoicing)

For e.g. if a payment is made for earlier discuss example

            GL Account

Dr

Cr

Profit Center

Vendor Amount

11000

Bank

11000

Now we know for Profit Center Level vendor Amount has been already split, so Bank Amount (Payment) will also split as same pre-defined criteria used for Vendor Invoicing

GL Account

Dr

Cr

Profit Center

Vendor Amount

8800

PC 1

Vendor Amount

2200

PC 2

Bank

8800

PC 1

Bank

2200

PC 2

                  

Now the clearing transaction is also balanced on profit Center level.

This SAP do automatically as per configuration (* the rule for Passive Splitting are already defined in System and cannot be changed)

Example of Passive Splitting:

Now if we make a payment for invoice created earlier

Accounting Entry:

GL accounting

Amount

Profit Center

Bank (Deustche Bank) Cr

12000

To Vendor (9001) Dr

12000

     

Now from User Perspective (Entry View) it looks normal payment:


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But if we look the same document in General Ledger view


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SAP automatically split the payment as per ratio of vendor invoice and this is example of Passive Split.

2.2. Active Splitting

SAP split the line items of some pre-defined splitting rules.

In above example vendor and tax amount is split according to expense (purchase) amount across profit center. SAP provide various standard Splitting rules for various business transaction, if required customization can be done for new splitting rules.

Example for active splitting discussed earlier. (Under Basic Concept)


2.3. Splitting for Zero Balancing:

Zero balancing is taking care of document should be balanced also it should be balanced for specific characteristics (e.g. Profit Center)

Characteristics for which Zero Balancing required can be define

GL Account

Dr

Cr

Profit Center

GL 1

1000

PC 1

GL 2

1000

PC 2

Document is balanced but not specific to profit center. Hence an offsetting account defined which is used to make document zero balancing for specific characteristics.

GL Account

Dr

Cr

Profit Center

GL 1

1000

PC 1

GL 1 – Offsetting

1000

PC 1

GL 2

1000

PC 2

GL 2 – Offsetting

1000

PC 2

Example:


Screen7.jpg

Now this a normal FI document which is balanced for Co Code level but both balancing line item belongs to different Profit Center.

Now if we draw document on profit center level, it is not balanced. Under Zero balancing account we configure an offset account which generate automatically line item to balance the document for specific characteristics (e.g. Here profit Center)


Screen8.jpg

Now in this example document is balanced from Co Code and Profit Center. As mention in the screen shot Account 194500 Clearing w/ BA 0000 is configured Offset GL account.

3.    Important Element of Document Splitting:

3.1. Splitting Rules

Splitting rules define which line item need to be split and which logic need to be used. For e.g. in above example Vendor line item need to be split with Ratio of Expense item ( 80 % and 20%)

3.2. Item Categories

Item Category is grouping relevant GL account which need to be split, it helps to assign the splitting rule to complete set of GL rather individual one. Item Categories are pre-defined in system.

In order to manage easily, system can apply splitting rule for a Group of Expense Account instead of assigning individually. Item categories are pre-defined in system.

Some of Pre-defined Item categories are below:

Category

Expense Account

3000

Vendor Account

2000

Customer

1000

Balance Sheet Account

4000

Cash Account

7000

Asset Account

3.3. Business Transaction and Variant

Business transaction is part of any business process. For            in Procure to Pay process vendor invoice and vendor payment are Business Transaction. In SAP business transaction can have multiple variant (pre-defined settings).In Accounting Document Type is associated with Business Transaction and Business Transaction Variant

Category

Expense Account

0200

Customer Invoice

0300

Vendor Invoice

0400

Bank Account Statement

1000

Payment

1010

Clearing Transaction

3.4. Splitting Method

It is key element for Document splitting it actually define all the major  of splitting mention above. Example Business Transaction and variant for which splitting will take place.

4.    Implementation of Document Splitting:

Document Splitting need to be activated in SAP.

But in order to activate Document Splitting following Configuration is required:

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4.1. Document Splitting Activation

SPRO Path: Financial Accounting (New) -> General Ledger Accounting (New) -> Business Transaction -> Document Splitting -> Activate Document Splitting

When Activation executed


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First Document Split Check Box need to be marked and a pre-configured Document Splitting Method need to be choose.

Here it must be noted that Document Splitting activate on client level but it can be deactivated by Co Code.

4.2. Document Splitting Method

Document Splitting Method actually Determine which Business Transaction and Variant will activate split and it is applicable for which GL accounts as base category and accounts which is to be split.

SPRO Path : Financial Accounting(New) -> General Ledger Accounting (New) -> Business Transaction -> Document Splitting -> Extended Document Splitting -> Define Document Splitting Method

First Splitting Method is defined as an identifier


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For example here we have choose Method 0000000012 Follow Up Cost line. Next this Method identifier is configured in Splitting Rule.

4.3. Document Splitting Rule

SPRO Path : Financial Accounting(New) -> General Ledger Accounting (New) -> Business Transaction -> Document Splitting -> Extended Document Splitting -> Define Document Splitting Rule

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In Splitting Rule first it is define that splitting method will be activated for which Business Transaction and variant.

Next we need to define that this Business transaction will split which type of Account (e.g. Vendor, Customer etc.)


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Splitting Method are pre-defined by SAP .In order to implement document splitting following elements need to be configure

In order to Activate Document Splitting we need to Define Splitting Rules. But in order to have correct rule we need to first define few important elements.

4.4. Assign Item Categories to GL account

All splitting rule are define for item categories which is in turn define for a set of GL accounts


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Choose Chart of Account:


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Maintain Range of Account for Item Categories:

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Note that Categories are pre-defined in system.

4.5. Classify Document Types

To bring relevant Business Transaction and variant for Document Splitting a Document Type need to be defined.


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Here for given document Type Business Transaction and variant are defined:


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Here we defined Vendor Invoice for Transaction 0300 and variant 0001

4.6. Define Zero Balance Account

As discussed above we have to configure zero balance account

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4.7. Define Document Splitting Characteristics:

This is step is most critical, here we define document splitting will take place on which characteristics (e.g. Profit Center, Segment)

As it can be seen for our example we choose Profit Center.


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Splitting Characteristics can also define for Controlling and Asset Accounting if required.


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References:

www.help.sap.com

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4 Comments

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  1. Karteek k

    Hi Asish,

    Beautiful document. Thanks for detailed explanation. expecting few more documents. Once again thanks for sharing your knowledge !

    Regards

    Karthi

    (0) 
  2. João Paulo Almeida

    Hi,

    According note 1085921 SAP recommends do not use method standard, so you should create by copying the 0_12 as follow:

    2.2 Define document splitting method

    The document splitting method contains the rules governing how the individual item categories are dealt with.

    In case changes need to be applied to standard customizing, SAP recommends copying the standard method 0000000012 and applying the changes.

    Sequence:

    – Create an own defined method (e.g. Z000000012):

    IMG-path: Financial Accounting (New) – General Ledger Accounting (New) – Business Transactions – Document Splitting – Extended Document Splitting – Define Document Splitting Method

    – Select all rules included in the standard method and copy it to the Z000000012:

    IMG-path: Financial Accounting (New) – General Ledger Accounting (New) – Business Transactions – Document Splitting – Extended Document Splitting – Define Document Splitting Rule

    – Apply the changes needed

    – Activate the new to be used document splitting method

    This copy is requires because SAP can access the system and update when is necessary or if you need create a new transaction and variant.

    Please check the note before to configure.

    Thanks.

    JPA

    (0) 

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