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Entering content frameFunction documentation Depreciation on Retired Assets (Finland)

Use

Tax laws in

Finland allow declining-balance depreciation on fixed assets. The depreciation terms and conditions depend on the type of fixed asset. Not only can these assets be depreciated longer for tax purposes tha n is allowed for book depreciation, it is also possible to continue to depreciate assets that have been retired, either by sale or by scrapping.

The following explains the system settings required to carry out depreciation for non-extant assets using special assets. These are referred to as EVL assets (from the Finnish Ennakkoverolainmukaiset poistot for tax depreciation).

Note

The settings for the depreciation key that are described here are intended to serve as an example only. You have to ensure that the depreciation key you use meets your legal and tax requirements.

Features

EVL depreciation can sometimes result in a number of assets, which have already been sold or scrapped, still managing values in the tax depreciation area. In order to continue to calculate depreciation from the net book value in the tax depreciation area, you have to transfer the values of these assets to special EVL assets. Depreciation then continues on these EVL assets. You can already archive the master records of the original assets.

Create an EVL asset for each asset class. This EVL asset has to have the same depreciation rules in the tax depreciation area as the other assets in its asset class.

Chart of Depreciation

Copy chart of depreciation 0FI that is pre-configured for

Finland .

Depreciation Areas

Settings

Depreciation area

Setting (Path in Customizing for Asset Accounting)

02 (annual tax depreciation)

  • Real depreciation area (Valuation ® Depreciation Areas ® Define Depreciation Areas)
  • Do not post value to the General Ledger
  • Allow positive and negative net book value
  • Adopts APC values from depreciation area (Valuation ® Depreciation Areas ® Define Transfer of APC Values)
  • Posting takes place once annually (Integration with the General Ledger ® Post Depreciation to the General Ledger ® Specify Intervals and Posting Rules)
  • Rules for positive/negative sign for special depreciation: All values allowed (Depreciation ® Special Depreciation ® Determine Depreciation Areas)
  • Transfer of reserves: All values allowed (Special Valuation ® Transferred Reserves ® Determine Depreciation Areas)

03 (annual allowed book depreciation)

  • Adopts APC values from depreciation area 01
  • Posting takes place once annually

04 (annual depreciation difference between areas 02 and 03)

  • Post assets periodically in general ledger
  • Negative net book value allowed
  • Rules for positive/negative sign for ordinary depreciation: All values allowed
  • Rules for positive/negative sign for special depreciation: All values allowed
  • Transfer of reserves: All values allowed
  • Rules for positive/negative sign for acquisition values: All values allowed (T093-VZANS)

Depreciation Keys

You need a depreciation key like this:

Dep. Key

Dep. Type

Dep. Method

 

FI04

Ord. dep. (N)

Stated percentage rate 4%

Base value: Net book value (24)

No depreciation after end of planned life (base method)

No depreciation below net book value zero (base method)

Period control: At the start of the year (06, period control method)

FI07

"

"

"

FI20

Ord. dep. (N)

Stated percentage rate EVL 20%

Base value: Net book value with proportional value adjustments (27)

Depreciation after end of planned life (base method)

Depreciation below net book value zero (base method)

Period control: At the start of the year (06, period control method)

FI25

Ord. dep. (N)

Stated percentage rate EVL 25%

"

The depreciation key has to be the same both on the sending asset and the receiving EVL asset.

Transaction Types

You should set up the retirement transaction types so that they do not receive values from depreciation area 02. Create transaction types for complete retirement by sale or scrapping that are only for

Finland , for example.
  • 206 instead of 200 for retirement without revenue
  • 216 instead of 210 for retirement with revenue
  • 256 instead of 250 for retirement of current-year acquisitions without revenue
  • 266 instead of 260 for retirement of current-year acquisitions with revenue

You have to define special treatment of asset retirement for these transaction types for depreciation area 02: Post gain on

liabilities side (variant 2). The result is that depreciation area 02 cannot be changed when retirements are posted with these transaction types, thereby making it possible to transfer the asset values to a special EVL asset.

In order to use mass intercompany transfers, you have to create a new transaction type. (In Customizing for Asset Accounting, choose Transactions ® Intercompany Asset Transfers ® Automatic Intercompany Asset Transfers ® Define Transfer Variants.) You can then identify the assets in the asset history sheet by their transaction type. Use transaction type 306 instead of transaction type 300 (transfer of prior-year acquisition retired from capitalized asset). Limit this transaction type to depreciation area 02.

Timing of the Transfer

You carry out the transfer once a year after both of the following have taken place:

  • All depreciation runs and posting runs for the fiscal year are ended.
  • The fiscal year change was carried out.

The difference between the book depreciation area and the tax depreciation area is normally posted once a year in

Finland , in the December posting run.

Activities

Mass Transfer

Create a worklist for each asset class for the transfer (Fixed Assets ® Environment ® Worklist ® Generate). Choose Edit ® Worklist to assign a task to the worklist and to save it. Then edit the worklist (Worklist ® Edit) and release it.

Legacy Data Transfer with No EVL Data per Asset

There are two options for the legacy data transfer:

  • Tax depreciation is transferred for each fixed asset. An acquisition value exists for each asset in depreciation area 02. SAP recommends this procedure in preference to the second option (described below), if it is possible to calculate the data per asset.
  • Tax depreciation is transferred to one fixed asset per asset class. In depreciation area 02, each asset thereby receives the value 0. Tax depreciation is then managed on the special asset per asset class.

Example

Example

 

Depreciation area 01

Depreciation area 02 (special asset)

Acquisition value

200000

0

Depreciation

40000

0

Asset retirement

150000-

150000-

Net book value

0

112500-

(-150000-(-150000*0.25))

To use this procedure, you also have to make the following settings:

  • Allow negative acquisition values (T093-VZANSW = '*') in the derived depreciation area (difference between tax depreciation and depreciation area 01).
  • Create an additional transaction type for the retirement of these legacy assets that posts gain/loss to asset.
  • For this transaction type, enter special retirement treatment Post gain/loss to special asset (variant 3) for depreciation area 02.
  • Specify a special asset for gain/loss posting for each asset class.

 

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