Posting Gain/Loss

Use

When you post an asset retirement, you can enter the revenue from the sale of the asset. The system automatically determines the gain or loss (affecting income) as the difference between this revenue and the book value of the asset being retired. Since gain or loss from asset retirement does not occur regularly, they have only limited relevance for management accounting. Therefore the system posts gain or loss only as a statistic to the cost center. The actual account assignment to CO takes place to the profit center, which is assigned to the cost center (refer to Additional Account Assignment ).

Features

Gain/loss from asset retirements and transfers requires special handling. You can make specifications for this in Customizing for Asset Accounting , in the definition of the retirement transaction types, per depreciation area (Customizing for Asset Accounting , choose Determine Posting Variants , Special treatment of retirement function).

Retirement with gain/loss (variant 0)

When you use this variant, the system posts the difference between the revenue realized and the book value retired as gain/loss that influences the profit and loss account. This is the type of posting used and allowed in most countries.

Show gain/loss as a liability (variant 1)

This variant can only be used for partial retirements. The system does not post any gain or loss. Instead it corrects the proportional value adjustments being retired by the amount of what would have been the gain or loss. There is no posting of gain/loss to the profit and loss account. Instead, the book value of the remaining part of the asset is increased or decreased by this amount. In this way, the affect on the profit and loss account is postponed from the year of the retirement to the years over which the asset is depreciated.

If the revenue is more than the value adjustments being retired, the system treats the excess revenue as gain as it would in version 0.

The system uses variant 0 for complete retirements here.

Revenue as a liability (variant 2)

With this variant, the system does not post any APC or value adjustments being retired. Instead, the existing cumulative value adjustments are corrected by the amount of the revenue received.

If the revenue is more than the existing cumulative value adjustments, the system treats the excess revenue as gain as it would in variant 0.

Graphic: Retirement Variants

Note Note

Variants 1 and 2, for example, are required for group assets according to American law on ADR (refer to Group Assets ). Note that the system only uses this liability posting procedure until the book value of the asset is zero. Any revenue that exceeds this amount is posted as gain using variant 0. These postings, therefore, do not lead to negative book values.

End of the note.

Account Assignment of Gain/Loss to Special Assets

The standard setting is for the system to post gain or loss to the corresponding profit and loss account that is specified in the account determination. There is an indicator in the definition of the transaction type that allows you to change this setting. Gain/loss is then no longer posted to the profit and loss account. Instead, it is posted as write-ups to special assets that are solely for this gain/loss posting. You specify these assets in Customizing for Asset Accounting under Transactions in the following ways:

By entering a corresponding asset for each asset class

By defining a substitution rule, which the system can use to determine the assets (refer to Validation and Substitution ).

There is an indicator for the asset account assignment of gain/loss in the definition of the general transaction type. If this indicator is set, you can limit special retirement handling by depreciation area to variant 3 (gain/loss posted to special assets). You make this setting in the transaction screen for special treatment of retirement. (In Customizing for Asset Accounting , choose Start of the navigation path Transactions Next navigation step Retirements Gain/Loss Posting Determine Posting Variants. End of the navigation path )

The reconciliation account for this posting transaction is the value adjustment account that is specified in the account determination for the asset.

Note Note

You have to allow negative values for special assets used for gain/loss posting. Otherwise, especially if there is no APC on the asset, complete depreciation could be posted in the year of the transfer although the special asset has a useful life of many years.

End of the note.

Retirement Revenue from Writing Off Special Reserves

You can specify that the system includes retirement-related revenue from the write-off of special reserves in the calculation of gain/loss. You make this specification by entering the gain/loss accounts in the account determination for the depreciation areas for special reserves. If you do not enter any accounts there, the system posts the book depreciation gain and loss separately from the revenue from writing off special reserves.

Posting Net Book Value

You can specify that the system posts net book value from asset retirements to a clearing account for revenue from asset sale, or a clearing account for sales to an affiliated company. You make this specification in the definition of the asset company code. The system then does not post gain/loss (from sale) or loss (from scrapping) for an asset retirement. This type of posting is necessary, for example, to meet legal requirements in France.