Individual Value Adjustment (SAP Library

Individual Value Adjustment

Use

In the current account system you use individual value adjustment if you need to perform a value adjustment on the balance sheet as a result of credit risks.

Depending on the type of value adjustment (addition, reversal), the posting is made to the corresponding general ledger account. Only an amount or a percentage rate is stored in the current account system as current individual value adjustment.

When a current account with value adjustment is closed, you can bring the account balance to zero in the current account system by means of a manual posting with a special transaction type (set up by you).

Integration

You can post the individual value adjustment of receivables from current accounts directly in FI. This does not need to be done in the current account system.

Prerequisites

Before you can execute an individual value adjustment, you must have maintained the following settings in the Implementation Guide (IMG).

Choose Account management ® Assign posting categories to transaction types to maintain the posting categories 87 (IVA addition), 88 (IVA reversal current year) and 89 (individual value adjustment previous years).

Choose Periodic tasks ® General ledger transfer ® Assign GL transaction / PT transaction type to assign the transaction types to the general ledger transaction types, so that the system can select the correct general ledger account assignment on the general ledger.

Choose Periodic tasks ® General ledger transfer ® General ledger account assignment individual value adjustment to specify the general ledger accounts to be posted to during individual value adjustment.

GL group	GL transaction	Crcy	Extra key	Acct IVA on receivables	Offsetting acct
BUSI	4050 IVA addition			500100 IVA on receivables	700100 Write off on receivables
BUSI	8050 IVA reversal current year			500100 IVA on receivables	700100 Write off on receivables
BUSI	8060 IVA reversal previous years			500100 IVA on receivables	800100 Income from reversal IVA
BUSI	9000 – Currency changeover			198020 Clearing - currency changeover	198020 Clearing - currency changeover

Choose Periodic tasks ® General ledger transfer ® Transfer posting payables / receivables to specify the division between payables and receivables. This entry is for technical reasons. Once made, the transfer postings required in the case of a change of the general ledger group can be executed.

Clearing account G/L	G/L account debit	G/L account credit
500100	500100	500100

Additionally, you will need to choose Account management ® Assign medium/payment method to posting processes <DS:SIMG.SIMG_BA-CA-V_TBKKI1>Buchungsprozessen Medium und Zahlweg zuordnenand make an entry for process 150 (individual value adjustment, GL process 0005) and for process 160 (loss on receivables, GL process 0001) an entry with medium.

Before you can post losses on receivables, you must have maintained the following settings in the Implementation Guide (IMG):

Choose Account management ® Assign posting categories to transaction types to maintain the posting categories 85 (loss on receivables) and 86 (loss on value adjusted receivables).

By choosing Periodic tasks ® General ledger transfer ® Assign GL transaction / PT transaction type, you assign the transaction types to the general ledger transaction types so that the system can select the correct general ledger account assignment on the general ledger.

Choose Periodic tasks ® General ledger transfer ® Define general ledger account assignment current accounts to specify the general ledger accounts to be posted to as a result of a loss on receivables.

It is advisable to assign a separate general ledger transaction to each of the posting categories to enable a meaningful distribution and display on the general ledger accounts.

GL group	GL transaction	Crcy	Extra key	Acct IVA on receivables	Offsetting acct
BUSI	8070 – Loss on receivables			130100 Clearing receivables / payables corporate customers	700100 Write off on receivables
BUSI	8080 – Loss on value adjusted receivable			130100 Clearing receivables / payables corporate customers	500100 IVA on receivables

Scope of functions

The process flow of an entry for an individual value adjustment is as follows:

Choose Account management ® Individual value adjustment ® ® Create, and store a fixed amount or a percentage amount for the individual value adjustment. When you save, the system 'flags' the account for a later posting of the individual value adjustment.

Then you can perform a proposal run on a certain key date. During this run, the system outputs a list of all accounts, including amounts, that are to be value adjusted. Choose Account management ® Individual value adjustment ® ® Edit proposal list.

Note Note

The proposal run for individual value adjustment on a certain key date outputs a list showing all accounts, including amounts, that are value adjusted. If you specify a percentage rate, the posting balance on the key date applies. It is irrelevant how the posting balance has arisen (for example, posting items, debit interest, sales tax). Value adjustment is only conducted in the case of a debit balance on the key date.

If the need arises to change the proposal values, you can branch directly to maintenance from the list in the column "IVA fixed amount" and "IVA percentage". Alternatively, choose Account management ® Individual value adjustment ® Change.

Choose Periodic tasks ® General ledger ® Individual value adjustment, to execute a posting run. During the posting run, the system posts the difference from the previous amount. You can see the amount posted for the individual value adjustment by choosing Account management ® Individual value adjustment ® Display. The field "IVA posted " now shows the new value and the "item" has been saved in a database table. The system writes a change document as statement.

You write off uncollectable receivables by posting payment items under Account management ® Loss on receivables ® Post. We established a special transaction for this, since individual value adjustment can result in several postings that are determined automatically.

In the case of a loss on receivables, you can always decide fir an IVA fixed amount if an existing individual value adjustment is to be taken off the books or is to remain. In this way it is possible to depict a receivable that involves an individual value adjustment having to remain, even if a customer still owes an amount after a partial loss.

If a loss on receivables is posted to an individual value adjusted account with an IVA fixed amount and the indicator 'Take IVA off books' is set, the system deducts the IVA amount taken off the books from the fixed IVA amount maintained on the account to a minimum value of 0. The new value is then saved. (The indicator 'Take IVA off books' is not an option if the IVA on the account is determined as a percentage, meaning that in this case, there can be no partial taking off books).

For examples of losses on receivables, refer to Case 2: Loss on Receivables, IVA is to be Taken Off the Books and Case 3: Loss on Receivables, IVA is to Remain.

Note Note

If the amount of the individual value adjustment changes, you can update the new overall amount of the individual value adjustment by choosing Account management ® Individual value adjustment ® Change, and the difference is posted during the next valuation run. A distinction is made between an increase (addition) or reversal from an individual value adjustment posted in the current year and individual value adjustments posted in previous years. You can find examples for individual value adjustment and loss on receivables by choosing Case 1: Change in the Economic Situation.

Note Tip:

It is not possible to close an account if an individual value adjustment is still posted on it or planned. In this case, when you enter the closure date for the account you would receive a warning, during the closure run there would be an error.