Asset Management

 1. Asset Accounting :
An Introduction
 2. Asset Master Data
 Chart of Depreciation
 Depreciation Key
 Asset procurement
process
 Depreciation run
 Asset retirement
 Asset Accounting is a sub module in SAP
which is used in supervision and
management of assets in business.
 It is a subsidiary ledger to General Ledger
which is used to record all asset transactions.
 Asset management component is intended to
use internationally by meeting the countries
own statutory requirements by customization
in system.
 Asset master is a reliable and authoritative
information maintained by organization with
respect to various fixed assets and intangible
assets.
 It contains all the information about asset like
depreciation key which is responsible for
depreciation method, rate etc.,
 It also contains information like cost centers
which are used in allocation of expenses.
 Chart of depreciation contains list of
depreciation areas which designed to meet
legal and management requires.
 Chart of depreciation is assigned to each
company code that is defined in asset
accounting.
 Depreciation keys are also maintained in
chart of depreciation which are responsible to
calculate depreciation.
 Depreciation key contains the parameters
which takes responsibility to determine the
depreciation amounts.
 It is a combination of different methods
which determine depreciation.
 The asset in organization can be procured
with the involvement of MM module and
without MM module.
 If asset is procured from purchasing
department then a Purchase Order will be
raised.
 Post receipt of asset business can capitalize
the asset.
 When an asset is procured from MM end, purchase
order is raised by selecting account assignment
category as ‘A’.
 All the MM process would remain same as if it is for
goods procurement.
 The GR will be done by using MIGO transaction code.
No accounting document will be generated at asset
receipt.
 Post receipt of asset an invoice will be raised by using
MIRO
 An accounting document will be generated as follows
Asset Dr
Vendor Cr
 Depreciation is a process of reducing the value of asset
periodically as the value of asset reduces day to day
because of wear and tear.
 The depreciation is calculated in different methods like
Straight line method, Reduce balancing method, Units of
production method etc.
 Depreciation is calculated periodically like monthly,
quarterly or annually.
 In SAP we can run depreciation efficiently as per the
requirement of business and statutory policies.
 T.code for running depreciation is AFAB
 The accounting entry generated will be

Depreciation A/c Dr
Acc. Depreciation A/c Cr
 Asset retirement refers to the removal of
asset from asset portfolio of business.
 Asset can be retired in multiple scenarios
1. Asset retirement by sale to customer
2. Asset retirement by sale without
customer
3. Asset scrapping without revenue.
 It involves the customer and also generate
the following accounting entry

Customer A/c Dr
Asset revenue – Clearing A/c Cr
Asset A/c Cr
Acc.Dep. A/c Dr
Profit/Loss A/c Dr/Cr
Asset revenue – Clearing Dr
An asset can also be retired/sold without
reference to customer.
The following entry triggered when we sale
asset without customer reference

Acc.Dep A/c Dr
Asset A/c Cr
Loss/Gain A/c Dr/Cr
Revenue Clearing A/c Dr
 When an asset has become obsolete an can
no longer being used in operations, the asset
will be scrapped.
 After scrapping the asset the following
accounting entry will be generate

Acc.Depreciation A/c Dr
Asset A/c Cr
Loss due to scrapping Dr
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