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Function documentationLow-Value Assets (LVA)

 

In general, low value assets are fully depreciated in the year of purchase or in the period of acquisition. This can be achieved by using the special depreciation key GWG and the expected useful life of one month (one period). In order to ensure that depreciation is fully posted in the acquisition month during the monthly depreciation posting, activate the catch-up method for the depreciation posting run (see System Settings for Depreciation Posting).

Features

In contrast to fixed assets of greater value, low value assets (LVAs) are completely depreciated in the year in which they are acquired. Therefore, you do not usually need an individual assessment of their values. Since they individually have little value, they are often managed collectively as a single asset master record. In Asset Accounting, you can collectively manage all LVAs in a certain category (such as those belonging to a given cost center) in this way. You activate collective management by entering a unit of measure in the asset master record.

Maximum Amount

You set the maximum amount for low value assets when defining the depreciation area at company code level (in Customizing for Asset Accounting under   Valuation  Amount Specifications (Company Code/Depreciation Area)  ). You can enter one maximum amount for purchase orders (taking possible discounts into account) and one for the actual acquisition posting. Enter either an individual check or quantity check for the verification of the maximum amount for low value assets. You make this specification in the depreciation area at the asset class level (Customizing:   Valuation  Determine Depreciation Areas in the Asset Class  ):

  • Individual check (individual management)

    When the acquisition is posted, the entire acquisition and production costs of the asset are compared with the LVA maximum amount.

  • Quantity check (collective management)

    When the acquisition is posted, the entire acquisition and production costs of the asset, divided by the total quantity, are checked against the LVA maximum amount. When you make your first posting, you must also post the quantity.

Simulation in the Asset History Sheet

When you create an asset history sheet, you can specify that asset retirement be simulated for any low value assets acquired during a specified time period. The affected assets then appear in the asset history sheet as retired. The system ignores any actual retirements of low value assets when it calls up the asset history sheet.

You should be aware that choosing to simulate LVA retirement in the asset history sheet means that you are required to do the same in following years. Otherwise, the danger exists that LVA retirements could be listed in two asset history sheets (once as simulated retirement, and once as actual retirement).

Before running the report, enter the classes for low value assets, as well as the time period for the simulation. The simulation time period has to begin with the same date each year (see Asset History Sheet).

The system then carries out a retirement simulation for all assets belonging to the classes entered, which have a capitalization date in the simulation time period. The system simulates a complete retirement at the end of the fiscal year, if the book value of the asset is zero at that point in time.

In addition, the retirement affects not only the fiscal year requested in the report (that is, the fiscal year of the report date), but also the previous fiscal year. There is a certain principle of continuity: If the asset already fulfilled the requirements for retirement simulation at the end of the previous year, then the system bases its simulation on a simulated retirement at the end of the previous year. There are two possible consequences:

  • The asset did not have any additional transactions in the current fiscal year. Then the system treats the asset as if it were retired in the previous year. The asset then no longer appears in the list.

  • There were additional transactions for the asset in the current fiscal year. In this case, the system treats the asset as if the entire acquisition value were retired at the end of the previous fiscal year. However, the asset is not deactivated.

    Note Note

    The retirement simulation always simulates the retirements at the end of the fiscal year. Therefore, it is not useful to simulate asset retirement unless the report date is the end of the fiscal year.

    End of the note.

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