Split Revaluation of Depreciation (SAP Library

Split Revaluation of Depreciation

Use

Using this function, the Asset Revaluation (Inflation) program splits the revaluation of an asset's depreciation into two components (as illustrated in step 3 of the asset revaluation process) which you can then record on separate accounts:

The amount for the current month

The amount for months that have already passed

Normally, these amounts are not split and are posted to a single account, but this distinction is required by law in some countries.

Prerequisites

To activate the split, you

Select the indicator in the inflation method
Define the appropriate G/L accounts

Example

This function is best explained using an example. Consider the aforementioned sample asset revaluation process.

February

At the end of February, the drilling equipment is revaluated from UNI 12,000 to UNI 13,200. The increased value of the equipment has to be taken into account in the depreciation process. Before we revaluate the asset, we have to depreciate it by UNI 100 per month in order to write it off over the course of its useful life of 10 years. Now that the value of the asset has increased, the monthly depreciation also has to be revaluated too. To this end, we take the asset's new value and calculate how much we need to depreciate each month over the machinery's useful life:

UNI 13,200 ÷ 120 months (10 years) = UNI 110

This figure breaks down into the unadjusted depreciation on the APC at UNI 100 and the revaluation of the depreciation amount, UNI 10.

That means that on 28 February you post:

The revaluation amount on the asset's APC for February (UNI 1,200)
The unadjusted depreciation for February (UNI 100)
The revaluation of the depreciation for the current month (UNI 10)
The revaluation of the depreciation for past months (UNI 10)

On 31 January you had already posted UNI 100 depreciation on the asset. The posting here serves to increase this amount to UNI 110, which is necessary in order for the machinery to be depreciated over the asset's useful life.

March

In March, inflation is again running at 10%, which means that the asset is now worth UNI 1,320 more:

UNI 13,200 + UNI 1,320 = UNI 14,520

This takes the monthly depreciation up to UNI 121:

UNI 14,520 ÷ 120 months (10 years) = UNI 121

This represents an increase of UNI 21 on the original monthly depreciation amount, and an increase of UNI 11 on the depreciation amount adjusted for February. So on 31 March you make the following posting:

The revaluation amount on the asset's APC for March (UNI 13,200 × 10% = UNI 1,320)
The unadjusted depreciation for March (UNI 100)
The revaluation of the depreciation for the current month (UNI 21)

This sum increases the depreciation for March (UNI 100) to UNI 121, the amount now required to depreciate the asset.

The revaluation of the depreciation for past months (UNI 11 ´ 2 = UNI 22)

This sum, UNI 11, increases the deprecation already accumulated in January and February (UNI 100 + UNI 10 = UNI 110) to the necessary amount (UNI 121)