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Fixed Assets in SAP S/4HANA

Writer's picture: Serkan YagliSerkan Yagli

Fixed assets are an essential component of financial accounting that records and manages all asset accounting data. Asset Accounting is tightly integrated with other financial accounting processes and is structured based on the organizational hierarchy of financial accounting.


Additionally, Asset Accounting introduces unique organizational structures such as the Chart of Depreciation, Depreciation Areas, and Asset Classes, built upon the financial accounting structure.


Fixed assets in SAP S/4HANA enable companies to generate flexible reporting according to multiple accounting frameworks. The multi-ledger reporting capabilities that SAP offers are particularly critical for global enterprises that must comply with various accounting standards, such as IFRS and US GAAP.


With the introduction of the Universal Journal in SAP S/4HANA, fixed assets are now fully integrated with the general ledger in real-time. This integration eliminates the need for redundant data structures and periodic posting programs to non-leading ledgers. Table ACDOCA allows direct access to information like Asset Number (ANLN1), Depreciation Area (AFABE), and Asset Value Date (BZDAT).


In this article, we will delve into key concepts like the Chart of Depreciation, Depreciation Areas, and Asset Classes to discuss how to structure new Asset Accounting in SAP S/4HANA.

General Table Display

1. Organizational Structures


Organizational structures are the fundamental elements that must be configured to represent the company’s setup in terms of fixed assets. Correctly establishing the organizational structure is crucial for the accurate reflection of fixed assets in SAP S/4HANA and is a prerequisite for Asset Accounting.


To create a company code, navigate to the configuration menu in SAP S/4HANA using Transaction SPRO, and follow the path Enterprise Structure > Definition > Financial Accounting > Edit, Copy, Delete, Check Company Code. You can also directly access this menu with Transaction EC01.

Organizational Object Company Code

When creating a new company code, it is advisable to copy an existing company code with similar parameters to ensure that critical control settings are preserved, though they can be modified if necessary. For instance, in our example, we will copy the SAP-provided country template for Germany (company code DE01) into a new company code named DE11.

Organizational Object Company Code DE11

If the new company code and the source company code share the same Chart of Accounts, it is efficient to copy ledger accounts. In our example, we click Yes to copy the ledger accounts as well.

Organizational Object Company Code DE01

We will use the standard Controlling Area (0001) provided by SAP for DE01, confirming this by clicking Yes. Typically, assignments to the controlling area are retained, especially when the source and target companies share vital control parameters.

Information

Upon completing the company code setup, SAP will display a confirmation message indicating the successful copy of the company code. After creating the company code, we proceed to review and adjust its basic control settings and name. On the initial configuration screen, you will see a list of existing company codes.

Company Code Overview

Select the newly created DE11 company code and navigate to the screen where you can modify the company name and other details. Save your changes by clicking Save.

Company Code Details

Next, review other essential control settings for the company code by following the path Financial Accounting > Financial Accounting Global Settings > Global Parameters for Company Code > Enter Global Parameters or by entering Transaction OBY6.

Company Code Global Data

Several settings need to be configured on the following screen. For example, the Chart of Accounts is a predefined list of ledger accounts used at the global level (for settings that apply to all company codes) and the company code level (for settings specific to a single company code). In our example, the Chart of Accounts is GKR, the standard provided by SAP for Germany. The Posting Period Variant defines the open and closed periods for various account types, such as the general ledger, customer, vendor, asset, and material accounts. The Field Status Variant defines which fields are mandatory, optional, or hidden during financial document postings. After adjusting the settings to the company's requirements, save these configurations by clicking Save.


1.1. Charts of Depreciation


Depreciation is the process of allocating the cost of an asset (e.g., machinery, buildings, equipment) over its useful life, typically recognized as an expense periodically. Depreciation reflects the asset's value decline in financial statements over time. The Chart of Depreciation is an independent organizational object in SAP, not directly tied to the company code or Controlling Area. Instead, it is associated with the country through the company code, determining which company codes will use a specific Chart of Depreciation. To create a new Chart of Depreciation, copy an existing or SAP-provided reference chart that includes predefined Depreciation Areas aligned with local, country-specific requirements. To configure a Chart of Depreciation, follow the path Financial Accounting > Asset Accounting > Organizational Structures > Copy Reference Chart of Depreciation/Depreciation Areas.

Display IMG

Double-click on Copy Reference Chart of Depreciation to open the dialog where you can select a source Chart of Depreciation and specify a target company code.

Organizational object Chart of Depreciation
Organizational object Chart of Depreciation

In our example, we will copy the SAP reference Chart of Depreciation for Germany (0DE) to create a new Chart of Depreciation named GKR1. Proceed by clicking the green tick button.

Organizational object Chart of Depreciation Information

The subsequent screen will display a log of the copy process. In our example, the system confirms that the copy was performed from Chart of Depreciation 0DE.

Organizational object Chart of Depreciation 0DE

Click on the Completed activities tab to see what the system accomplished, as shown in the image.

Organizational object Chart of Depreciation Completed activities

To update the description of the new Chart of Depreciation, select Specify Description of Chart of Depreciation and enter a new description.

Chart of Depreciation Specify name

1.2. Depreciation Areas


A Depreciation Area is an organizational object that defines how fixed assets are valued based on specific rules. Depreciation rules and asset useful life are maintained at the Depreciation Area level. To configure Depreciation Areas, follow the path Financial Accounting > Asset Accounting > General Valuation > Depreciation Areas > Define Depreciation Areas.

Define Depreciation Areas

Depreciation Areas allow for multiple valuations of fixed assets, essential for various purposes such as balance sheet reporting, cost accounting, or tax reporting. SAP permits defining up to 99 Depreciation Areas, providing flexibility in managing different valuation types.


The Derived Depreciation Area is a feature that enables the calculation of new asset values by applying mathematical formulas to values from actual Depreciation Areas, such as differences between two fields. The system tracks these calculated values in the Derived Depreciation Area, which functions similarly to actual areas in reporting and value representation. Derived Depreciation Areas can also be included in Financial Accounting postings.


In FI-AA Customizing, formulas for Derived Depreciation Areas can involve up to four actual Depreciation Areas and support arithmetic operations like addition and subtraction. The key assigned to the Derived Area must be greater than those of the actual areas it references. For instance, a Derived Area with key "03" can be based on actual areas "01" and "02", but not "04" or "05". The Derived Area can also be designated for reporting only, in which case the system will not apply value checks like positive/negative net book value validations.


Here are some standard Depreciation Areas provided in the Chart of Depreciation for Germany:


01 Book Depreciation: The main Depreciation Area where most processing occurs. Special tax depreciation must be managed as special reserves in separate areas.


02 Special Tax Depreciation for APC in Financial Statements: Manages special tax depreciation required for the Derived Depreciation Area (03), necessary for compliance with specific German Commercial Code (HGB) articles.


03 Special Reserves Due to Special Tax Depreciation: Derived from Book Depreciation (01) and Special Tax Depreciation (02), this area calculates special reserves and manages them in Financial Accounting.


15 Tax Balance Sheet: Manages alternative tax balance sheets independently of the commercial balance sheet, often required when special tax depreciation differs significantly.


20 Cost-Accounting Depreciation: Manages asset values for cost accounting, allowing depreciation below zero and supporting interest calculations on cost accounting.


30 Consolidated Balance Sheet in Local Currency: Needed when consolidating different valuation rules within a corporate group, with distinct APC and depreciation terms from the Book Depreciation area.


31 Consolidated Balance Sheet in Group Currency: Manages consolidation in group currency, distinct from local currency, to differentiate valuation method differences from currency conversion differences.


32 Book Depreciation in Group Currency: Required during consolidation to accurately determine intra-group profits and losses from asset transfers.


41 Investment Support Deducted From Asset: Manages investment support on the asset side of the balance sheet, reducing APC in Book Depreciation.


51 Investment Support Posted to Liabilities: Manages investment support on the liabilities side, adjusting acquisition and production costs on the payables side.


While these are our core areas, we also need to create new areas in practice. When creating a new area, we always create it by copying the existing space. For example, if we create the area 11 from the area 01.

Define Depreciation Areas Book depreciation

Note that you will need a separate depreciation field for each local currency that is defined for the corresponding company codes for each accounting policy. The accounting principle is an important setting in the depreciation area that drives integration with the general ledger. According to the selected accounting principle, the system automatically assigns the ledger that is subordinate to it. If you select the Real-Time Field Posts option as shown in the image, this notebook will be published automatically.

Define Depreciation Areas Details

This automatic posting feature is the main difference between the new asset accounting in SAP S/4HANA and classic asset accounting in SAP ERP. Another option in SAP ERP made it possible for you to post multiple depreciation fields to non-leading ledgers, but this registration occurred only periodically with the execution of the RAPERB2000 (Transaction ASKBN) program. This process is no longer valid because the update of the general ledger is immediate.


If you are migrating from an existing SAP ERP system to SAP S/4HANA, you may need to set up some new depreciation areas to take advantage of the new features for fixed assets. For example, you might want to add a new depreciation field that will be recorded in real-time based on another accounting principle. The good news is that starting with SAP S/4HANA 1809, a new program is available that streamlines the process of opening new depreciation fields and adding them to existing asset master records: the RAFAB_COPY_AREA (Subsequent Application of Depreciation Area) program. BAdI FAA_AA_COPY_AREA (Subsequent Application of the Depreciation Area). You can also implement your BAdI to influence depreciation terms and transaction data as the field opens.


Similarly, you’ll have to configure the transfer of depreciation values. To configure the transfer of depreciation values, follow the menu path Financial Accounting > Asset Accounting > General Valuation > Depreciation Areas > Specify Transfer of Depreciation Terms. On the configuration screen, shown in the image, you can specify a source depreciation area for the depreciation values for each depreciation area.

Depreciation Areas Rules for takeover

The logic is the same as with APC value—the depreciation area specified in the TTr column provides the source values for depreciation. When no depreciation area has been specified in this column, no depreciation values are transferred from another area.


In the next step, you’ll assign a company code to the chart of depreciation by following the menu path Financial Accounting > Asset Accounting > Organizational Structures > Assign Chart of Depreciation to Company Code. The configuration screen, shown in the image, lists the company codes available in the system.

Maintain company code in Asset Accounting

1.3. Asset Classes


The asset class, created to categorize different types of assets, is also used to group assets together. With the help of asset classes, you can configure account determination, which defines which general ledger accounts will be recorded in the context of asset transactions. Account determination is crucial for both balance sheet and depreciation postings. It is important to note that the asset class is not tied to the depreciation area. The significance of this is that the asset classes defined in the SAP system can be accessed across all countries and company codes within the system.


To configure asset classes, follow the menu path: Financial Accounting > Asset Accounting > Organizational Structures > Asset Classes > Define Asset Classes, as shown in the image.

Define Asset Classes Display IMG

These standard SAP classes are provided by SAP, allowing you to reference them when creating your own asset classes in your system. Many companies prefer similar asset class lists, typically consisting of 4 or 6-digit codes. Most companies have classes for machines, vehicles, furniture and fixtures, software, goodwill, etc., in addition to specific asset types typical for each type of business. For most global companies, 20 to 30 asset classes are sufficient. However, it is common for local teams to attempt to create new asset classes not present in the SAP template when the system is rolled out in a new country. The key here is to ask: Is it really necessary? Often, creating a new asset class is both risky and adds additional burden. Creating new asset classes tailored to the needs of a single country should be a rare exception.

Asset classes Overview

To create a new asset class, select one of the existing classes and select Copy As… from the menu. Let`s review the settings of an asset class by double-clicking on class 3000: Fixtures and fittings, as shown in the image.

Asset classes Details of Selected Set

The asset class code, along with the long description and short text, as well as several other important settings, need to be maintained on this screen. Another configuration object is the account determination, which links to the general ledger accounts that will be posted during various business processes, such as purchasing, retirement, depreciation, etc. Additionally, the screen layout rule is an important setting. Another crucial setting is the "Asset Class Blocked" indicator, which prevents the creation of new assets in this class at the asset class level.


Asset classes serve as a configuration object that combines various other configuration objects, such as account determinations, screen layouts, number range assignments, etc. In this context, we can examine the account determinations.


1.4. Specifying the Account Determination


The first step is to create the account determinations. You can follow the menu path: Financial Accounting > Asset Accounting > Organizational Structures > Asset Classes > Specify Account Determination.

FI-AA Account determination

We click on the New Entries button to create a new account determination.

New Entries Overview of Added Entries

You will need to create a naming convention for your account determination codes. It is good practice to use the same number of digits for all account determinations. In our example, we used seven characters. We could have used just numbers as well: 250000, 251000, 252000, and so on. The reason we start with 25X is actually a habit carried over from the Uniform Chart of Accounts used in Turkey. In this chart, fixed assets are represented between 25X-26X. This way, the numbering of account determinations is based on the main general ledger account numbers where acquisition costs are recorded. After identifying all necessary account determinations to be used, we save the entries by clicking the Save button.


1.5. Creating Screen Layout Rules


Similar to account determinations, we should create a naming convention for screen layout codes as well. To differentiate from the standard SAP screen layout, it makes sense to start with a Z or Y within the customer number range. Don’t forget to save your changes after making them.

Asset Accounting Screen layout for master

1.6. Defining Number Range Intervals


Now it’s time to define the number range intervals. Start by following the menu path: Financial Accounting > Asset Accounting > Organizational Structures > Asset Classes > Define Number Range Interval. In the initial screen, as shown in the image, enter a company code, for example, DE11.

Edit Intervals Asset Number

You need to click on number range intervals before you can enter the new ranges. After clicking, you will see an image like the one below.

Edit Intervals Asset Number DE11

Due to the nature of fixed assets, it is consistent to create separate number ranges for each asset class. Sometimes, you may encounter a situation where multiple asset classes share the same number range. In such cases, it is a prudent action to separate the number ranges. To create several new number ranges, click Insert Line from the top menu, and you will see a blank line where you can define as many new number ranges and intervals as needed.


When you save, you will encounter a screen similar to the one shown below. Therefore, number ranges must be maintained separately in each client of the system. For this reason, it is not appropriate to include them in a transport. This limitation applies not only to asset accounting but to all number range objects within the SAP system. The main reason for this restriction is to prevent inconsistencies caused by the transport of number ranges. Confirm the message by clicking the Green checkmark button. By clicking the NR Status button, which opens the screen shown in the image, you can change the current number within a range. In the NR Status column, enter a number that will be the current number within the range. For example, if you enter "010000000005" for range 01, the next asset created will have the number 010000000006. The NR Status field allows the system to store the current number within a range.

Number Range Interval Transport

1.7. Creating Asset Classes


Finally, you’re ready to create an asset class. Start by following the menu path: Financial Accounting > Asset Accounting > Organizational Structures > Asset Classes > Define Asset Classes. In the initial screen, as shown in the image, you’ll see a list of defined asset classes, along with the names of their account determinations and screen layouts.


The SAP system provides sample asset classes by default. Just as with account determinations and screen layouts, you need to define a naming convention for asset classes as well. It makes sense to use the naming convention already established for account determinations. For asset class codes, you can use up to 8 characters.


As seen in the image, after entering a description for the Asset Class, we created an Account Determination for TR254, similar to what we had previously done for TR253. Likewise, we created a Screen Layout Rule with Z254. Finally, we extended the Number Assignment created with No 01 to 54 and saved it. This way, we successfully created a new Asset Class.


On the other hand, if you select the Lock Status shown in the image, the corresponding asset class will be blocked, making it impossible to create new assets with this class. Additionally, the Manage Historically indicator defines whether the asset needs to be managed with a history, which means the asset is displayed in an asset chart. Until the asset is deactivated, the asset, along with its values and transactions, cannot be rearranged. The Technical Information field contains technical information related to the creation of the asset class.

New Entries Details of Added Entries

1.8. Modifying Settings for Country-Specific Requirements


Now we come to country-specific requirements. Let's first examine the image below. But before that, follow the menu path: Financial Accounting > Asset Accounting > Organizational Structures > Asset Classes > Specify Chart-of-Dep.-Dependent Screen Layout/Acct Assignment. At this stage, we need to double-click on the data dependent on the depreciation chart.

Display View Asset class selection

We select TR254 and double-click on Chart of Depreciation. Then, we click on New Entries. On the screen that appears, we select TR254 as the dependent data. We then enter the independent data, which in this example are TR253 and Z253, and for the Chart of Depreciation, we enter GKR1. Finally, we click Save.

Chart of depreciation dependent data Details

Conclusion


Fixed asset management in SAP S/4HANA represents a significant evolution from previous ERP systems, offering integrated, real-time capabilities that enhance the efficiency and accuracy of asset accounting. The key concepts of Organizational Structures, Charts of Depreciation, Depreciation Areas, and Asset Classes provide a robust framework for managing fixed assets in a global environment, ensuring compliance with various accounting standards and enhancing financial reporting.


Organizational Structures: Properly setting up organizational structures, such as company codes and control settings, is fundamental for accurate asset management. The integration of these structures with the general ledger through the Universal Journal ensures real-time data consistency and eliminates redundancy.


Charts of Depreciation: The Chart of Depreciation plays a critical role in defining how assets are depreciated and reported. By customizing and copying reference charts, organizations can align their asset accounting practices with local and international requirements, ensuring compliance and accuracy in financial reporting.


Depreciation Areas: Configuring Depreciation Areas allows companies to manage multiple valuations of assets for different reporting purposes. The introduction of Derived Depreciation Areas in SAP S/4HANA offers additional flexibility in calculating and reporting asset values, contributing to more precise financial insights.


Asset Classes: Asset Classes categorize and manage assets, defining how transactions are recorded and reported. By setting up asset classes with appropriate account determinations and screen layouts, companies can streamline asset transactions and ensure consistency across financial reporting.


Country-Specific Requirements: Adapting settings to meet country-specific requirements ensures that asset accounting practices comply with local regulations and standards. By modifying settings related to the Chart of Depreciation and integrating them with relevant asset classes, organizations can tailor their asset management processes to meet diverse regulatory needs.


In summary, SAP S/4HANA provides a comprehensive and integrated approach to asset management, enhancing both operational efficiency and financial accuracy. By understanding and configuring the essential components—Organizational Structures, Charts of Depreciation, Depreciation Areas, and Asset Classes—companies can effectively manage their fixed assets and achieve accurate financial reporting in a global context.


Ömer Serkan YAĞLI

SAP Consultant


References:

  • Jotev, Stoil. Configuring SAP S/4HANA® Finance (2021).

  • Jotev, Stoil. Asset Accounting with SAP S/4HANA® (2020).

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