Calculation of Interest (SAP Library - Asset Accounting (FI-AA))

Calculation of Interest

Purpose

For cost accounting, you might have to calculate imputed interest on the capital tied up in assets. Therefore, the system enables you to calculate this interest per depreciation area, in addition to the depreciation and/or valuation types already mentioned (ordinary depreciation, special depreciation, unplanned depreciation, and reduction of APC).

Features

Interest calculation is controlled in the same way as depreciation calculation, using a depreciation key. In addition to the base value for the calculation (for example, acquisition value or replacement value), you can also specify the interest rate using the calculation method of the depreciation key. Interest calculation is carried out either until book value zero is reached, up to the end of expected useful life, or for an unlimited period.

Calculation of Interest

The calculation of interest to be posted depends fundamentally on the base value of the interest key. When you use an interest key that uses the current net book value as the base value, this net book value is taken into account to the exact period during depreciation posting. Therefore, the planned value for the distribution during the fiscal year is not the planned book value at the end of the year. Instead, the system uses the net book value determined in the posting period (period net book value).

An example of a depreciation key of this kind is the interest from the mean net book value, which is calculated as follows:

Interest amount = (NVSY + NVPER) / 2 * Interest rate / 100

NVPER = Net book value in period

NVSY = Net book value at fiscal year start

Concrete example:

Asset: Net book value at start of year = APC = 12000, useful life 10 years, straight-line depreciation = 10%

Calculation of annual depreciation:

Planned annual depreciation: 12,000 / 10 = 1,200

Period depreciation to be posted: 100 per period
Net book value per period: 01 – 11: 900; 02 – 11: 800; 03 – 11: 700... 12 – 10,800

Calculation of interest: 5% from mean net book value

Planned annual interest: (12,000 + 10,800) / 2 * 5 / 100 = 570
Interest to be posted:

Period 01: (12,000 + 11,900) / 2 * 5 / 100 / 12 * 1 = 49.79

Period 02: (12,000 + 11,800) / 2 * 5 / 100 / 12 * 2 = 99.17

Previously posted: 49.79

To be posted: 99.17 – 49.79 = 49.38

Period 03: (12,000 + 11,700) / 2 * 5 / 100 / 12 * 3 = 148.13

Previously posted: 99.17

To be posted: 148.13 – 99.17 = 48.96

The figures in the example could be somewhat different, depending on the specifications for rounding that were set in Customizing (for example, rounding to whole numbers). Similar problems can occur when posting depreciation, if the base value for depreciation is also the exact net book value in the period.

Prerequisites

If you would like the system to calculate interest in a depreciation area, make the following system settings:

Specify that interest should be managed in the depreciation area.
Define depreciation posting in this company code and in this depreciation area so that interest should be posted.

Use a depreciation key that has an interest key assigned to it for calculating interest (or define such a key yourself).

The system then posts interest together with depreciation when you perform a periodic depreciation posting run. Account assignment is to the accounts specified in the given depreciation area in the account determination. It is also possible to have additional account assignment to the cost center entered in the asset master record (just as for depreciation). Refer to Additional Account Assignment.