Shortened Fiscal Years

Shortened Fiscal Years

Use

A shortened fiscal year results when you change from a normal fiscal year to a non-calendar fiscal year, or the other way around. This type of change might be necessary, for instance, if an enterprise becomes part of a new corporate group.

Features

The R/3 Financial Accounting component fully supports the use of shortened fiscal years. However, there are still some points to consider from the perspective of Asset Accounting when you use a shortened fiscal year.

Timing of the Change to the Shortened Year

You change the current fiscal year to a shortened fiscal year by changing the fiscal year version in the FI General Ledger. You can only make this change if there has not been any posting yet in a period that will disappear when the shortened fiscal year becomes effective. Reversing any such postings does not make the change possible.

If you have already posted depreciation during the current fiscal year, you need to run the depreciation recalculation program (Tools ® Recalculate values) after the change to the shortened fiscal year.

Posting Periods

In order for the calculation of depreciation to be correct in the shortened fiscal year, the shortened year must begin with period 1 and be defined with fewer posting periods. Therefore, when you change the fiscal year cycle, you must define the fiscal year version in the given company code as year-dependent. You can specially identify the shortened fiscal year and define fewer posting periods for it, only if the fiscal year version is year-dependent (FI Customizing: Financial Accounting global settings.)

As long as you are still posting in or before the shortened fiscal year, or if you are transferring legacy data from this time period, then you must also retain the year-dependent fiscal year version, even after the shortened fiscal year. Define the fiscal year version with the full number of posting periods and the corresponding shift in the posting periods (see Non-Calendar Fiscal Years). You can redefine the fiscal year as not year-dependent only when the shortened fiscal year is closed for accounting, and no more correction postings are expected.

Calendar Assignments for Shortened Fiscal Year

Historical Fiscal Years

If the fiscal year version was not defined as year-dependent up to the point when the fiscal year cycle was changed, you have to change the definition of the fiscal year version in FI Customizing. Define the fiscal year version as year-dependent, and specify the posting periods for each calendar year. In order to ensure that the calculation of depreciation remains correct after this change is made, you must also maintain the historical calendar dates with the correct posting periods for the calendar years of all open fiscal years (or, at least two calendar years before the shortened fiscal year).

Future Fiscal Years

It is also necessary to define at least the calendar year following the shortened fiscal year. In order to predict depreciation, maintain the future years involved.

For a version with a non-calendar fiscal year, the calendar/period assignments of the last maintained calendar year define only a part of the last fiscal year. Therefore, the system no longer predicts correct values for this fiscal year.

Period Control

The system automatically generates the correct calendar assignments for standard period control for Asset Accounting in a shortened fiscal year (see Period Control). However, since all possible period/calendar combinations cannot be one hundred percent predicted and resolved, you should check the assignments and correct them if necessary (FI-AA Customizing: Period Control).

You can also manually initiate the generation of calendar assignments for a fiscal year (application menu: Periodic processing ® Settings).

Reducing Depreciation

In a shortened fiscal year, you generally reduce depreciation in proportion to the amount that the fiscal year is shortened. Therefore, you can define whether the system should reduce planned depreciation, or if the full year's depreciation should be calculated. You make this specification in FI-AA Customizing. You specify for each company code/depreciation area and depreciation type (ordinary depreciation, special depreciation, and so on), whether depreciation should be reduced or not ( Valuation ® Fiscal Year).

Special Calculation Keys

In certain circumstances, the law stipulates depreciation cannot be reduced for certain depreciation methods (for example, a set percentage rate per year). Therefore, you can set an indicator in the Customizing definition of the internal calculation key. As a result of setting this indicator, depreciation cannot be reduced for this internal calculation key, even though the definition at company code level specifies that depreciation should be reduced.

Depreciation Levels in Shortened Fiscal Years

Various depreciation keys (for example, for buildings) use special internal calculation keys. These keys work with depreciation levels that have time limitations, and specific depreciation percentage rates are set for each depreciation level (see Multi-Level Depreciation). These time limitations are set by entering the term of validity for the depreciation level in years and months (either in calendar years/months or fiscal years/months). A shortened fiscal year has the following affect on the definition of these depreciation levels:

If you reduce the level depreciation in the shortened fiscal year, the standard depreciation keys supplied by SAP will continue to depreciate correctly. The total period of validity as defined in the calculation key continues to correspond to the useful life in calendar years, and the depreciation in the shortened fiscal year is reduced proportionally to the shortening of the fiscal year.

If you allow for a full year's depreciation in the shortened fiscal year, then the useful life as measured in calendar years will be shortened. For multi-level depreciation, this means that the full percentage rate defined for the depreciation level will be used. If the shortened fiscal year falls in the validity period of a depreciation level that has a different percentage rate than the one following it, this has the following result:

Since a validity period defined as a calendar year is longer than the shortened fiscal year, the system continues to depreciate beyond the end of the shortened fiscal year, using the defined percentage rate. For this reason, using the standard key in this instance will not ensure that depreciation is correctly calculated. Create your own calculation key and correct the validity periods for the depreciation levels. Reduce the length of the validity period, in which the shortened fiscal year falls, according to the length of the shortened fiscal year. Adjust the next validity periods to reflect this change.

Periods of Validity/Calculation Key