Assets Management Concepts & Theories

AssetsAssets ManagementManagement

EGN 5622 Enterprise Systems Integration EGN 5622 Enterprise Systems Integration

(MSEM, Professional)(MSEM, Professional)Fall, 2013 Fall, 2013

Assets ManageAssets Management ment

Concepts & TheoriesConcepts & Theories

Asset AccountingAsset AccountingConcerned with tracking the financial

consequences associated with the entire lifecycle of an asset, from acquisition to disposal (retirement).

Assets can be categorized as tangible, intangible, and financial

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Asset Accounting ClassificationAsset Accounting ClassificationTangible assets

◦ Fixed assets◦ Leased assets◦ Assets under construction

Intangible assets◦ Intellectual property◦ Patents◦ Trademarks

Financial assets◦ Securities◦ Long term notes (debts)◦ Mortgages

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Asset Accounting ComponentsAsset Accounting ComponentsAsset Asset

accountingaccounting

Intangible Intangible assetsassets

Tangible Tangible assetsassets

Financial Financial assetsassets

- Fixed assets- Fixed assets- Leased assetsLeased assets- Assets under Assets under constructionconstruction

- Intellectual Intellectual propertyproperty- PatentsPatents-TrademarksTrademarks

- SecuritiesSecurities- Long term Long term notes (debts)notes (debts)- Mortgages- Mortgages

Asset Accounting in corporate Asset Accounting in corporate financial structurefinancial structure

Chart of AccountsGeneral Ledger Accounts

◦Balance sheet accounts◦Income statement accounts◦Reconciliation accounts

Subsidiary ledgers (sub ledgers)◦Accounts Receivable (customers)◦Accounts Payable (vendors)◦Assets

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Asset AccountingAsset AccountingAssets are assigned to

◦ company code◦ Business area

Accounting data of assets are maintained in asset sub-ledger accounts.◦ E.g. Acquisition costs and depreciation

Asset sub-ledger accounts are created when asset master record is created and associated with a reconciliation account in the general ledger

Sub-ledger account and the master record share the same account number

Companies maintain separate reconciliation accounts for different types of assets

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Example of Asset Accounts in GLExample of Asset Accounts in GL

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Asset Accounts (AA) Structure Asset Accounts (AA) Structure ExampleExample

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Asset Management (Lifecycle)Asset Management (Lifecycle)Asset master Asset master creation (AA)creation (AA)

Vendor masterVendor master

Outgoing Outgoing paymentpayment

Asset Asset Transfer (AA)Transfer (AA)

Within/outsideWithin/outsideCompany codeCompany code

Asset Asset AdditionAddition

(AA)(AA)

Asset Asset Acquisition Acquisition

(AA)(AA)Vendor invoiceVendor invoiceExternalExternal

Cost centerCost center

Asset Asset ReportReport (AA)(AA)

Customer/ScrapingCustomer/Scraping

Depreciation Depreciation ChargeCharge

Asset Asset RetirementRetirement

(AA)(AA)

Customer Customer PaymentPayment

Customer Customer InvoiceInvoice

Customer Customer MasterMaster

Business Business AreaArea

Plant/locationPlant/location

Major Activities in Asset Major Activities in Asset Management (Lifecycle)Management (Lifecycle)Asset AcquisitionAsset DepreciationAsset Retirement

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Asset AcquisitionAsset AcquisitionAsset acquisition is concerned with acquiring assets

via internal or external processes◦ Internal:

production process or project systems

◦ External: 3 external options for purchasing assets, Purchase from an established vendor using the purchasing process

(different GL accounts) Purchase from an established vendor without using the purchasing

process (manual entry in GL and sub-ledger; similar to AP accounting) Purchase from a one-time vendor or a vendor for whom master data

are not maintained (via clearing account).

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Asset Acquisition With a Clearing Asset Acquisition With a Clearing AccountAccount

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Asset DepreciationAsset DepreciationAsset depreciation is concerned with the

decrease in the value of an asset over timeDepreciation can be planned or unplannedDepreciation methods are used

◦Straight line◦Double declining balance

Useful lifeResidual valueBook valueDepreciation areas: parallel valuation

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Straight Line DepreciationStraight Line Depreciation

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Double Declining Balance Double Declining Balance DepreciationDepreciation

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Financial Statements Based on Financial Statements Based on Depreciation Areas (parallel Depreciation Areas (parallel valuation)valuation)

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Asset RetirementAsset Retirement

Concerned with the disposal or retirement of an asset after its useful life

Retirement may be:◦Revenue generating (sold)◦Non-revenue generating (scrapped)

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Asset ExplorerAsset ExplorerAsset explorer provides an overview of all

activities related to the asset, including:◦Acquisition data◦Planned and posted depreciation◦Drill-down details for:

Master data Transactions Documents

◦Depreciation posting run (for an assumed useful life)

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Asset ExplorerAsset ExplorerThe asset explorer can:show all the values of a fixed assetdisplay various forms of summarized

information for decision makingdisplay connections from the Asset

Explorer to the G/L accounts, vendor accounts, the cost center, and the Purchase Order of the Asset

display planned values are, as well as values already posted for analyzing asset values

Asset Explorer InterfaceAsset Explorer Interface

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Asset management linked to Asset management linked to financial accountingfinancial accounting

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Assets ManagementAssets Management

SAP Implementation SAP Implementation

R/3

SAP Module ViewSAP Module View

Integrated SolutionClient / Server

Open Systems

FinancialAccounting

Controlling

Fixed AssetsMgmt.

ProjectSystem

Workflow

IndustrySolutions

ProductionPlanning

Sales &Distribution

MaterialsMgmt.

HumanResources

PlantMaintenance

QualityMgmt.

Create Asset MasterCreate Asset Master

Create Asset MasterCreate Asset Master

Purchasing an AssetPurchasing an Asset

One way to skip the step of creating an Asset in the books is to directly go to the Purchase Order, and click the button pointed to.

Purchasing an AssetPurchasing an Asset

Receiving an AssetReceiving an Asset

Invoicing an Asset Invoicing an Asset

Asset Explorer (Comparison)Asset Explorer (Comparison)

Asset Explorer (Parameters)Asset Explorer (Parameters)

Asset Explorer (Simulation)Asset Explorer (Simulation)

Asset Explorer (Simulation)Asset Explorer (Simulation)

Features of the Asset ExplorerFeatures of the Asset Explorer

Header: where you enter the company code and asset number (Structure)

Overview tree: allows you to navigate between the different depreciation options

More Features of Asset More Features of Asset ExplorerExplorer

Overview tree: displays objects that are related to the asset

Tabs: allows you to analyze the planned values and posted values using different parameters, as well as compare fiscal years and depreciation areas

SAP SAP IDESIDES Client, Userid, Password Client, Userid, Password Exercises for Assets Management:

Client: 145Application server: riga.cob.csuchico.eduSystem number: 76System ID: RGA

Userid: ides-025 to ides-047Initial Password: SAP4US

© SAP 2008 / SAP University © SAP 2008 / SAP University Alliances Page Alliances Page 3838

HW Assignment HW Assignment (Due date 9/21/2013)(Due date 9/21/2013)

1.Create appropriation request2.Create asset 3.Create a vendor 4.Create an information record to link the vendor

and the asset5.Create a purchase order for the asset6.Check the asset and accounting records7.Make assets receipt against purchase order8.Enter incoming invoice9.Post outgoing payment10.Use asset explorer