Scrap Value 

Use

It may sometimes be necessary to depreciate assets not to net book value zero, but only up to a scrap value or cutoff value. Therefore, the system enables you to set up a scrap value for assets per depreciation area. There are two ways of defining a scrap value:

Features

Scrap Value Key

In FI-AA Customizing (Depreciation ® Valuation Methods ® Further Settings ® Define the Scrap Value Key), you can define scrap value keys with any cutoff percentage rate. You can specify these cutoff percentage rates for each year of acquisition and with a validity period that you define. For each scrap value key, you can specify several cutoff percentage rates with different periods of validity and acquisition years.

In addition, you have to make the following specifications:

In the first case, depreciation stops before the end of the planned useful life. In the second case, the scrap value is the net book value reached at the end of the planned expected useful life.

You can assign a scrap value key to each depreciation key in its definition.

Start date: Capitalization date

Percentage: 5%

Term of validity: 5 years

A cutoff percentage rate of 5% is valid for assets that are no older than 5 years old according to their capitalization date.

Explicitly Defined Scrap Value

When maintaining the area-specific asset master data, you can enter an absolute scrap value in the detail screen of each depreciation area. This amount is not depreciated.

This has the following affect:

Memo Value

You can define a memo value or cutoff value for specific assets, as described above. You can also define a memo value that is valid for all assets in a given depreciation area. You enter this memo value in the depreciation area (FI-AA Customizing: Valuation ® Amount Specifications (Company Code/Depreciation Area) ® Specify Memo Value). This memo value is then valid in this depreciation area for all assets. You can exempt certain asset classes (such as LVAs) from the memo value by means of an indicator in their asset class master record.

The system reflects the memo value by reducing the planned annual depreciation of the acquisition year by the amount of the memo value.

Usually you do not need to manage memo values, since Asset Accounting (FI-AA) always manages gross values. This means it records both the acquisition value and accumulated depreciation, not just the net book value of assets. In this way, the system guarantees that even fully depreciated fixed assets appear in all legally required reports, even if they have a net book value of zero.