Discounting of Long-Term Assets and Liabilities in SAP S/4HANA CLOUD

Introduction

Discounting of Long- Term Assets and Liabilities function used to calculate the discounting on Long- Term Assets and Liabilities based on International Financial Reporting Standards (IFRS) 9, 15, 16.

You treat this as a loan and system use below formula for calculating discounting.

Formula for Discounting

Configuration

User needs to maintain below configuration in Manage Your Solution app, under Configure Your Solution:

• Define interest rates under Finance Accounts Receivable Item Interest Calculation Define Interest Rates . Make sure that you define interest rates for all the currencies that you use in discounting.

• Define interest rate indicator under Finance Accounts Receivable Item Interest Calculation Define Interest Indicator . Make sure that the interest indicator that you want to use for discounting has the type D.

• Activate advanced valuation under Finance General Ledger Ledgers and Valuation Activate Advanced Valuation.

• Define an aging and aging increments for discounting under Finance General Ledger Ledgers and Valuation Define Aging Increments for Advanced Valuation.

• Define Discounting Rules step, you´ve defined a discounting rule for your requirements. User should assign interest indicator and risk class to Ageing Increments.

• Assign Discounting Rules to Accounting Principles step, User must assign the discounting rule to an accounting principle.

Process

User can Schedule General Ledger Job app and Select the Post Discounting of Long-Term Assets and Liabilities template to schedule the job.

Step 1 : Template Selection

Go to Schedule General Ledger Job app and click on Create button. Select Post Discounting of Long-Term Assets and Liabilities template to schedule the job.

Step 2 : Scheduling Options

User can define recurring pattern, If user want to run this job just once or specific interval.

Step 3: Parameters

User can specify a company code, ledger, Valuation key date. User can also decide to run this on test run or update run.

Click on Check and Schedule button.

Example

Open customer invoice posted with 50USD and Due date is more than 12 months and, Interest rate maintained 2% against Interest indicator.

Accounting Entry during Invoice posting

Accounting Entry Posted from Discounting of Long- Term Assets and Liabilities function.

Result has been posted as Interest income and discounted present value.

Business Benefits

This function calculates the discounting of long-term assets and liabilities and post the net present value adjustments and the interest income or interest expense to the designated accounts based on International Financial Reporting Standards (IFRS) 9, 15, 16.

Reference SAP Best practice : J58 Available as of SAP S/4HANA CLOUD 2108

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