Parallel Valuation Methods in New Asset Accounting

In new Asset Accounting, you can handle parallel accounting using depreciation areas. You have to define the necessary depreciation areas for each of the accounting principles involved.

You specify that a depreciation area is for a certain accounting principle or type of valuation by assigning an accounting principle to it.

For representing parallel accounting in Asset Accounting, you can use these scenarios:

Using parallel ledgers: the ledger approach
Using additional accounts: the accounts approach

Features

Ledger Approach and Accounts Approach

Ledger Approach

The following applies for the ledger approach in new Asset Accounting:

Different accounting principles or valuations are mapped in separate ledgers, as in new General Ledger Accounting. In general, the same accounts are used in the ledgers.
The depreciation areas have equal status. Separate documents are posted for each accounting principle or valuation.
For each accounting principle or valuation, the system posts the correct values in real time. The values that are posted are full values and not delta values.
For each valuation, there is always just one depreciation area that posts to the general ledger in real time and manages acquisition costs (APC). For this leading depreciation area, choose the posting option Area Posts in Realtime. This applies both for the leading valuation and for all parallel valuations. You can choose which of these depreciation areas, which post to the general ledger, posts to the leading ledger.
There can also be investment support on the liabilities side for the valuations. These depreciation areas also receive the posting option Area Posts in Realtime, both for the leading valuation and also for parallel valuations.

One or more depreciation areas represent a valuation. You must assign an accounting principle uniquely to all depreciation of a valuation. For each valuation, the accounting principle has to be assigned to a separate ledger group. The ledgers of these ledger groups are not allowed to overlap.

Example Example

Depreciation Area	Description	Posting Option	Accounting Principle	Ledger Group/Ledger
01	Local accounting principle in local currency (EUR)	Area Posts in Realtime	LGAAP	LGAAP/N1 ⁽¹⁾
05	Support based on local laws, in local currency (EUR)	Area Posts in Realtime	LGAAP	LGAAP/N1 ⁽¹⁾
31	International accounting principle (IFRS) in local currency (EUR)	Area Posts in Realtime	IFRS	IFRS/0L ⁽²⁾
35	Support based on international laws, in local currency (EUR)	Area Posts in Realtime	IFRS	IFRS/0L ⁽²⁾

Explanation:

(1) Contains the non-leading ledger, for example N1, as the representative ledger

(2) Contains the leading ledger 0L as the representative ledger

End of the example.

Differences in values in each accounting principle: You can enter documents that are valid only for a certain accounting principle or valuation. To do so, when entering the business transaction, you can restrict the posting to the accounting principle or to one or more depreciation areas.
You can assign different fiscal year variants to each type of valuation. (Restriction with this: start date and end date of the fiscal year variants must be the same.)
Within an asset class, it is possible to assign different G/L accounts (for example, reconciliation accounts for acquisition costs and accumulated depreciation) for each valuation if, dependent on the valuation, the G/L accounts should be assigned in different balance sheet items.
Provided that you have defined parallel currencies (or currency types) in General Ledger Accounting for a valuation, you must create the corresponding depreciation areas for the relevant parallel currency (or currency type) in your chart of depreciation.
For more information, see Parallel Currencies in New General Ledger Accounting and New Asset Accounting.
For an integrated asset acquisition posting, the system divides the business transaction into several documents; an operational part and, depending on your valuation, a valuating part:
- For the operational part (vendor invoice), the system posts a document valid for all accounting principles against the technical clearing account for integrated asset acquisitions. From a technical perspective, the system generates a ledger-group-independent document.
- For each valuating part (asset posting with capitalization of the asset), the system generates a separate document that is valid only for the given accounting principle. This document is also posted against the technical clearing account for integrated asset acquisitions. From a technical perspective, the system generates ledger-group-specific documents for each accounting principle.
If you have assets in your company that are not capitalized according to all accounting principles, you are only allowed to manage those depreciation areas for an asset in which it is actually capitalized (called a unilateral asset).
For more information, see Unilateral Assets.
Managing quantities: By default this is the depreciation area for the quantity update that is linked to the leading ledger. If needed, you can specify a different depreciation area for the quantity update. However, this has to be a depreciation area that posts to the general ledger. The quantity – if it is to be managed on the asset – is updated in the asset master record only when a posting is made to this different depreciation area.

Accounts Approach

The following applies for the accounts approach:

You represent different valuations on different accounts within the same general ledger. This means that you have to create the same set of accounts again for each parallel valuation.
Separate documents are posted for each accounting principle or valuation.
For each accounting principle or valuation, the system posts the correct values in real time. The values that are posted are always full values and not delta values.
For each valuation, there is always just one depreciation area that posts to the general ledger in real time and manages acquisition costs (APC). The following applies for these posting depreciation areas:
- For the leading valuation, choose the posting option Area Posts in Realtime.
- For the parallel valuations, choose the posting option Area Posts APC Immediately, Depreciation Periodically.
You can choose which of these depreciation areas that post to the general ledger represent the leading valuation.
There can also be investment support on the liabilities side for the valuations. These depreciation areas also receive the posting option Area Posts in Realtime, both for the leading valuation and also for parallel valuations.

One or more depreciation areas represent a valuation. You must assign an accounting principle uniquely to all depreciation areas of a valuation. For each valuation, the accounting principle has to be assigned to a separate ledger group. These ledger groups must always contain the leading ledger as the representative ledger.

Example Example

Depreciation Area	Description	Posting Option	Accounting Principle (AP)	Ledger Group/Ledger
01	Local accounting principle in local currency (EUR)	Area Posts APC Immediately, Depreciation Periodically	AP LGAAP	LGAAP/0L ⁽¹⁾
05	Support based on local laws, in local currency (EUR)	Area Posts in Realtime	AP LGAAP	LGAAP/0L ⁽¹⁾
31	International accounting principle (IFRS) in local currency (EUR)	Area Posts in Realtime	AP IFRS	IFRS/0L ⁽²⁾
35	Support based on international laws, in local currency (EUR)	Area Posts in Realtime	AP IFRS	IFRS/0L ⁽²⁾

Explanation:

(1) Contains the leading ledger 0L as the representative ledger

(2) Contains the leading ledger 0L as the representative ledger

End of the example.

Note Note

For existing charts of depreciation, you can have the system generate ledger groups for parallel valuations. Use the migration program Migrate Charts of Depreciation (program FAA_CHECK_MIG2SFIN). You can find the program in Customizing under Start of the navigation path Asset Accounting (New) Next navigation step Migration: Asset Accounting (New) Migration for New Asset Accounting Migrate Charts of Depreciation End of the navigation path ).

End of the note.

Differences in values in each accounting principle: You can enter documents that are valid only for a certain accounting principle or valuation. To do so, when entering the business transaction, you can restrict the posting to the accounting principle or to one or more depreciation areas.
If you have defined parallel currencies (or currency types) in new General Ledger Accounting, and you want to use these currencies in new Asset Accounting, you are required to create a depreciation area for each currency (or currency type) for the leading valuation. However, this is not mandatory for the parallel valuations.
For more information, see Parallel Currencies in New General Ledger Accounting and New Asset Accounting.
If necessary (for instance for integrated postings), the system splits the business transaction into several documents. In doing so, it generates an operative document for the non-asset-specific part of the business transaction, such as the the vendor invoice; this document is valid for all valuations. In addition, the system generates (for the asset) an accounting-principle-specific document that posts to the parallel account sets within the same ledger of General Ledger Accounting.
If you have assets in your company that are not capitalized according to all accounting principles, you are only allowed to manage those depreciation areas for an asset in which it is actually capitalized.
For more information, see Unilateral Assets.
Managing quantities: By default this is the depreciation area for the quantity update that is linked to the leading ledger. If needed, you can specify a different depreciation area for the quantity update. However, this has to be a depreciation area that posts to the general ledger. The quantity – if it is to be managed on the asset – is updated in the asset master record only when a posting is made to this different depreciation area.

Differences in Recognition and Valuation

In Asset Accounting, the different accounting principles differ primarily in the following:

Rules regarding what values are capitalized
Rules regarding valuation
- Valuation at capitalization
  - Exception: Capitalization of assets produced in-house
- Depreciation

Customizing (Overview)

To be able to show these differences, make the following Customizing settings:

Define depreciation areas:
- Check which depreciation areas you need for parallel valuation, and create these areas or copy them from an existing valuation.
- For each depreciation area, you specify how changes to asset values and depreciation are posted to the general ledger. Depending on whether you are using the ledger approach or the accounts approach, you have to choose different posting options for representing parallel valuations. (The different options are, for example, Area Posts in Realtime and Area Posts APC Immediately and Depreciation Periodically.)
  For more information, see Automatic Posting from Depreciation Areas to General Ledger Accounting.
Specify transfer of values:
You specify how depreciation areas adopt values (APC) from other depreciation areas. The leading depreciation area of a valuation is not allowed to adopt values, that is, value transfer is initial (00). The other depreciation areas of a valuation can only adopt their values from an area that is assigned to the same accounting principle.
Specify transfer of depreciation terms:
For each depreciation area, you specify if it adopts its depreciation terms from other depreciation areas and define how this takes place. The leading depreciation area of a valuation is not allowed to adopt values, that is, the transfer of depreciation terms is initial (00). The other depreciation areas of a valuation can only adopt their values from an area that is assigned to the same accounting principle.
Specify parallel currencies:
You specify how parallel currencies are used.

The Customizing settings differ according to whether you use the ledger approach or the accounts approach.

For more information, see:

Rules Regarding What Values Are Capitalized

If you have assets in your company that are capitalized only according to some valuations but not according to all valuations, you are only allowed to manage those depreciation areas in the asset master record in which the asset is actually capitalized (called a unilateral asset).

For more information, see Unilateral Assets.

Valuation at Capitalization

For the acquisition posting, you might have to take different amounts into account for different accounting principles.

Example Example

As the first step, you enter the vendor invoice and capitalize the full amount for all relevant accounting principles. As the second step, you enter an asset-specific credit memo that is only valid for one accounting principle. This causes the amount of the capitalization to be cleared for this accounting principle and posted directly to expense.

End of the example.

For more information, see Example 1: Acquisition, Integrated Posting and under Example 2: Acquisition, Integrated Posting.

Capitalization of Assets Produced In-House

For capitalizing in-house produced assets, you can use the function for determination of capitalization values in Investment Management (IM) (see Investment Management (Overview)). Using this function, you can specify by depreciation area the percentage to be capitalized and the percentage to be posted to non-operating expenses when investment measures are settled (see Parameters for Settlement).

You can use the preliminary settlement to settle cost items that are not to be capitalized, for example to cost centers. You can then no longer settle these preliminary-settled values to the asset or to the asset under construction (AuC). In all depreciation areas, these non-capitalized values are shown as costs.

Note Note

From the point of view of Controlling, there must be a cost-accounting depreciation area that is completely settled. This ensures that all values remaining after preliminary settlement are always completely capitalized for Controlling.

End of the note.

For more information, see Settlement of Investment Measures.

Accounting-principle-specific documents are generated for each valuation. In the case of the ledger approach, these documents are posted to separate ledgers. In the case of the accounts approach, these documents are posted to parallel account sets within the same ledger of General Ledger Accounting.

The depreciation area that represents the leading valuation view must always exist on the asset under construction. You cannot deactivate this depreciation area.

Depreciation

For each depreciation area, this means for each accounting principle, you define specific depreciation rules, useful life, etc, in Customizing as the default value or enter them directly in the master record of the fixed asset. The depreciations are determined in parallel for each depreciation area using the depreciation rules defined and are posted separately for each depreciation area. The postings are made either to parallel ledgers or additional accounts, depending on whether you use the ledger approach or the accounts approach.