Base Value for Depreciation Simulation for Planned Investments (SAP Library

Base Value for Depreciation Simulation for Planned Investments

Use

In contrast to depreciation forecasts for already capitalized assets, there are special considerations when the forecast is for planned investments. With depreciation forecasts for planned investments, there are also some aspects that are open to interpretation. These special considerations and some room for interpretation are explained below.

Features

Base Value for Depreciation Simulation within Hierarchies

For depreciation simulation, the system uses either budget or plan values as the APC for planned capital investments. This is a parameter in the report selection screen. Within the hierarchy, (investment program, positions or measures), the plan or budget values of the subordinate hierarchy elements are considered "from values" of the plan or budget values of the elements just above them in the hierarchy. Therefore, the system ensures that plan and budget values are not included more than once in the depreciation simulation.

The system does this by determining the base amounts for the depreciation "from the bottom up" within a hierarchy. This means that the system reduces the base amount for depreciation simulation on a given element of the hierarchy, by the total amount of all base amounts determined on the elements subordinate to it in the hierarchy. This principle applies to:

· The hierarchy of an investment program, including all measures and appropriation requests assigned to it

· Project hierarchies

Determining the Capitalization Date for Plan or Budget Values

The system uses the following set of rules for determining the capitalization date:

· If there is no percentage distribution of depreciation terms for the position or measure (there is only one set of depreciation terms), then the depreciation terms are used in the depreciation simulation with the annual plan or budget values of the program positions or individual measures. The system then assumes that both of the following are true:

– The plan or budget value of the start-up year will be capitalized on the start-up date entered in the depreciation terms.

– The plan or budget values of all later years will be capitalized on the first day of each plan year.

The system only assumes that the overall value is capitalized on the start-up date, if no annual values have been entered in the planned investment.

Example

Example 1

· The same procedure is used when there are several sets of depreciation terms entered, but the resulting distribution is only based on asset class or cost center (that is, all the depreciation terms have the same start-up date).

· If you have a number of sets of depreciation terms with different start-up dates, then these terms are related to the overall plan or budget value.

Example

Example 2

· If you have a number of depreciation simulation terms with different start-up dates, but no overall plan or budget value has been maintained, then the annual values for the percentages entered in the depreciation term records are taken into account as in the first instance. You should avoid this situation, however, since the simulation created is inconsistent and not clear.

Past Acquisitions

As described above, it is always possible to derive one or more simulated acquisitions, based on the depreciation terms and the overall or annual values of a planned capital investment. Since the system is simulating capitalization to fixed assets, it assumes that all simulated acquisitions, before the current fiscal year, were actually carried out. These simulated acquisitions, therefore, are not included in the depreciation simulation!

Example

See examples 1 and 2. The acquisitions that resulted on July 1, 1998 are not included in the depreciation simulation in fiscal year 1999 (for the years 1999 and following).

Cumulative Annual Values before Start-Up Date

As already mentioned above, the system uses the depreciation terms and the annual plan or budget values of the planned capital investment as a basis for the simulation, when these are maintained, and when only one set of depreciation terms is entered (or else all the sets of depreciation terms entered have the same start-up date). If annual values exist in years prior to the fiscal year of the start-up, the system assumes that costs requiring capitalization accrued in those years, but that these costs should not be capitalized until the start-up date, and then cumulatively.

Example

Example 3

Capitalization in the Current Fiscal Year

For determining the APC basis for depreciation simulation for planned investments, the system uses the corresponding plan or budget values as a basis.

For orders and WBS elements, the system normally does not modify these plan or budget values, as long as parts of the planned capital investment were already settled to fixed assets. If you have already settled to fixed assets, and you simulate depreciation for capitalized assets together with planned capital investments, both the unchanged plan or budget values of the order or WBS element, as well as the already capitalized asset values would be included in the simulation. As a result, the already capitalized values would incorrectly appear twice in the report. To avoid this situation, there are two options in the system:

The system ignores the capitalization postings of the current year. That is, the depreciation simulation is always based on the values at the start of the current fiscal year.
The system deducts the amount of these capitalization postings from the APC basis for the depreciation simulation of the order or WBS element.

To determine the method you use, enter the appropriate indicator in the initial screen of the depreciation simulation report before starting the report.

See also:

For more information on the basic calculation logic, see Depreciation Simulation with Planned Investments . Also see the field documentation for the indicators.