SAP FICO Interview Questions 201-300

201. What is a ‘Dunning Procedure’?
SAP comes equipped with a number or ‘Dunning Procedures,’ which you can copy, or you can create your own:

  
Figure 50: List of Dunning Procedures 


A dunning procedure controls:

• Dunning interval/frequency

• Grace days/minimum days in arrear

• Number of dunning levels (at least one level)

  
Figure 51: Dunning Levels 

• Transactions to be dunned

• Interest to be calculated on the overdue items

• Known or negotiated leave, if any, which needs to be considered when selecting the overdue items

• Company Code data such as (a) Is dunning per ‘dunning area’? (b) Is dunning per ‘dunning level’? (c) Reference Company Code, (d) Dunning Company Code, etc.

• Dunning forms/media to be selected for the dunning run 

  
Figure 52: Control Information in a Dunning Procedure 
202. What is the ‘Dunning Area’?
The ‘Dunning Area’ is optional and is required only if dunning is not done at the Company Code level. The Dunning area can correspond to a sales division, sales organization, etc.

203. Describe the ‘Dunning’ Process.
The ‘Dunning Process’ involves three major steps:

1. Maintaining the parameters for the dunning run 

2. Creating/editing the dunning proposal generated by the system

3. Printing dunning notices 

Maintaining Dunning Parameters 

As the first step in dunning, you need to maintain certain parameters, which identify the current dunning run. Entering the date of execution and the dunning run identifier is the starting point, after which you will continue to maintain other parameters such as:

• Dunning date to be printed on the notice

• Document posted up to

• Company Code

• Account restrictions (optional)

Now, you can save the parameters and display the log generated (to see if there were any errors), the dunning list (list of accounts and items), and some dunning statistics (blocked accounts/items, etc.).

Creating a Dunning Proposal 

Once scheduled, the ‘dunning program’ prepares the ‘dunning proposal’ as described below:

1. The Dunning Program determines which accounts to dun:

a. System checks the fields ‘Dunn.procedure’ and ‘Last dunned’ in the customer master record to determine whether the arrears date or the date of the last dunning run lies far enough back in the past.
b. Checks whether the account is blocked for dunning according to the dunning block field in the customer master record.
c. Program processes all open items relating to the accounts thus released in (ii) above that were posted to this account on or before the date entered in the field ‘Documents posted up to.’ 
d. Program checks all the open items, as released in (iii) above, in an account to decide:
• Is the item blocked?
• Is it overdue according to the date of issue, the base date, the payment conditions, and the number of grace days granted?
e. Program then proceeds to process all open items thus released in (iv): 
• How many days the item is overdue
• Which ‘dunning level’ for a particular open item
f. The program determines the highest ‘dunning level’ for the account based on (v) above. The highest ‘dunning level’ determined is stored in the master record of the account when you print the letters. This ‘dunning level’ determines the ‘dunning text’ and a ‘special dunning form,’ if defined.
g. The program then proceeds to check each account:
• Does the customer/vendor have a debit balance with regard to all open overdue items selected?
• Is the total amount to be dunned and the percentage of all open items more than the minimum amount and percentage defined in the ‘dunning procedure’?
• Is the ‘dunning level’ for the account or the overdue items higher than it was for the last ‘dunning run’? If not, are there new open items to be dunned (with a previous dunning level of 0)? If not, does the ‘dunning procedure’ for this level specify that dunning be repeated?

2. The program creates the dunning proposal list 

3. Edit dunning proposal list 

a. You can edit the Dunning Proposal to:
• Raise or lower the ‘dunning level’ of an item
• Block an item from being dunned
• Block an account for the current ‘dunning run’ or remove the block
• Block an account in the master record for dunning or remove the block
• Block a document for dunning or remove the block
b. You can view the sample print out to ascertain how the printed notice will look (a maximum of 10 notices can be seen on the screen).
c. You may also display ‘logs’ to see the changes made in the editing earlier, as a confirmation of what you wanted to change in the systemgenerated proposal earlier. If necessary, you can go back and change the proposal.

Print Dunning Notices 

You can use a ‘single form’ or ‘multiple forms,’ which will have different text, based on the ‘dunning levels.’ There may also be a requirement to use a completely different form for ‘legal dunning.’ Once the print option is activated, the program prints the notices, and the dunning related information such as ‘dunning level,’ ‘last dunned,’ etc., are updated in the customer/vendor masters. SAP provides the option of optically ‘archiving’ the notices as the system prints the dunning notices. There is also a provision to re-start the printing if it is interrupted before completing the printing.

204. Can you ‘dun’ customers across ‘Clients’ in a Single ‘Dunning Run’?
No. All the data processing is carried out per Client.

205. What differentiates one ‘Dunning Level’ from Another?
The ‘Dunning Level’ determines the ‘dunning text’ and (if one is required) a ‘special dunning form.’ The ‘dunning program’ determines what ‘dunning level’ should be used in the ‘dunning run.’ The dunning level so determined is stored in the master record of the account when the ‘dunning letter’ is printed. The dunning level may also determine whether there will be some ‘dunning charges.’

206. How many ‘Dunning Levels’ can be Defined?
You may define up to nine dunning levels. If there is only one dunning level, then it is called a ‘payment reminder.’ 



Accounts Payables

207. Explain the ‘Account Payables’ Submodule.
‘Accounts Payables,’ a submodule under Financial Accounting (FI), takes care of vendor-related transactions as the module is tightly integrated with the purchasing transactions arising from the ‘Procurement Cycle.’ The module helps in processing outgoing payments either manually or automatically through the ‘Automatic Payment Program.’ It also helps in ‘Vendor Evaluations.’ 

208. What Documents Result from ‘Procurement Processes’?
In Materials Management (MM):

• PR: Purchase Requisition (manual or automatic using MRP)

• PO: Purchase Order

In Financial Accounting (FI):

• Invoice Verification

• Vendor Payment (manual or automatic)

Both MM and FI areas:

• Goods Receipt

You may also group these documents into (1) Order documents, (2) GR (Goods Receipt) documents, and (3) IR (Invoice Receipt) documents. While GR/IR documents can be displayed both in MM and FI views, the order documents can only be viewed in MM view.

209. Describe a ‘Purchase Cycle.’
A ‘Purchase Cycle or Procurement Cycle’ encompasses all activities including purchase requisition, purchase order, goods movement, goods receipt, invoicing, invoice verification, payment to vendors, and ends with the updating of vendor account balances.

  
Figure 53: Procurement Cycle 
210. What is a ‘Purchase Requisition’ (PR)?
A ‘Purchase Requisition,’ PR, is the document that outlines a company’s purchasing needs of a material/service from vendor(s). A PR, typically an internal document that can be created automatically or manually, identifies the demand for a product and authorizes the purchasing department to procure it. In the automatic creation of a PR, this is done as a result of MRP (Material Requirements Planning). The PR, after identifying the vendor, is processed further to result in a RFQ (Request for Quotation) or directly to a Purchase Order (PO).

211. What is a ‘Request for Quotation’ (RFQ)?
A ‘RFQ (Request for Quotation),’ which can be created directly or with reference to another RFQ or a PR or an Outline Agreement, is actually an invitation to vendor(s) to submit a ‘quotation’ for supplying a material or service. The RFQ will contain the terms and conditions for supply. You may send the RFQ to single or multiple vendors, and you can monitor it by sending reminders to those who have not responded to the RFQ.

212. What is an ‘Outline Agreement’?
An ‘Outline Agreement,’ a declaration binding both the buyer and seller, is the buyer’s intention to purchase a material/service with certain terms and conditions agreed to by both parties. The essential difference between the ‘outline agreement’ and ‘quotation’ is   that the outline agreement does not contain details such as delivery schedule or quantities. Outline agreements can be contracts or scheduling agreements.

213. What is a ‘Contract’?
A ‘Contract,’ also referred to as a ‘Blanket Order,’ is a long-term legal agreement between the buyer and the seller for procurement of materials or services over a period of time. The contract, created directly or with reference to a PR/RFQ or another contract, is valid for a certain period of time with start and end dates clearly mentioned. There are two types of contracts: Quantity Contracts and Value Contracts.

214. What is a ‘Release Order’?
A ‘Release Order’ is a ‘purchase order’ created against a Contract. The release orders usually do not contain information on quantities or delivery dates and are also called ‘Blanket Releases,’ Contract Releases,’ or ‘Call-Offs.’ 

215. What is a ‘Scheduling Agreement’?
A ‘Scheduling Agreement’ is also a long-term agreement with the buyer and seller for procurement of certain materials or services subject to certain terms and conditions. These agreements can be created directly or with reference to other documents such as another scheduling agreement, or an RFQ or PR. These agreements help in promoting Just-In-Time (JIT) deliveries, less paperwork, they reduce supply lead times, and ensure low inventory for the buyer.

216. What is a ‘Quotation?
A ‘Quotation’ contains information relating to the price and other conditions for supply of a material or a service by a vendor, and is the vendor’s willingness to supply the same based on those conditions. You will be able to compare the data from quotations using a Price Comparison List and will help in identifying the most reasonable vendor for supply of that item(s). After you receive the quotations, you will typically enter the quotation data (pricing/delivery) in RFQ. The SAP system can easily be configured to automatically print ‘Rejections’ for vendors whose quotation are not selected.

217. What is a ‘Purchase Order’ (PO)?
A ‘Purchase Order’ (PO) is a legal contract between a vendor and a buyer concerning the material/service to be purchased/procured on certain terms and conditions. The order mentions, among other things, the quantity to be purchased, price per unit, delivery related conditions, payment/pricing information, etc.

A PO can be created:

1. Directly or

2. With reference to a PR/RFQ/contract or another PO. Remember, all items on a PO should relate to the same Company Code.

218. What is a ‘PO History’?
The ‘Purchase Order History’ (PO History) lists all the transactions for all the items in a PO such as the GR/IR document numbers.

219. Will the FI Document be Created with the Purchase Order (PO)?
No. There will not be any document created on the FI side during creation of a PO. However, there can be a document for posting a ‘commitment’ to a Cost Center in CO. (The offsetting entry is posted at the time of GR.)

220. Explain FI-MM Integration.
FI-MM Integration is based on the following:

• Movement Types

• Valuation Class

• Transaction Keys

• Material Type

The Movement Type is the ‘classification key’ indicating the type of material movement (for example, goods receipt, goods issue, physical stock transfer). The movement type enables the system to find pre-defined posting rules determining how the accounts in FI (stock and consumption accounts) are to be posted and how the stock fields in the material master record are to be updated.
  
Figure 54: Movement Types 

The Valuation Class refers to the assignment of a material to a group of GL accounts. Along with other factors, the valuation class determines the GL accounts that are updated as a result of a valuation-relevant transaction or event, such as a goods movement. The valuation class makes it possible to:

• Post the stock values of materials of the same material type to different GL accounts.

• Post the stock values of materials of different material types to the same GL account.

The Transaction Key (also known as the ‘Event Key or Process Key’) allows users to differentiate between various transactions and events (such as physical inventory transactions and goods movements) that occur within the area of inventory management. The transaction/event type controls the filing/storage of documents and the assignment of document numbers. 

The Material Type groups together materials with the same basic attributes, for example, raw materials, semi-finished products, or finished products. When creating a material master record, you must assign the material to a material type. The material type determines:

• Whether the material is intended for a specific purpose, for example, as a Configurable Material or Process Material.

• Whether the material number can be assigned internally or externally.

• The Number Range from which the material number is drawn.

• Which screens appear and in what sequence.

• Which user department data you may enter.

• What Procurement Type the material has; that is, whether it is manufactured in-house or procured externally, or both.

Together with the plant, the material type determines the material’s inventory management requirement, that is:

• Whether changes in quantity are updated in the material master record. 

• Whether changes in value are also updated in the stock accounts in financial accounting.

221. What Happens, in SAP, when You Post a ‘Goods Receipt’?
When you post a ‘Goods Receipt’ (GR), the stock account is debited (stock quantity increases) and the credit goes to the GR/IR Clearing Account, which is the intermediate processing account, before you actually process the vendor invoice or payments to the vendor:

Debit: Inventory Account     

Credit: GR/IR Clearing Account

During this (1) a material document is created, (2) an accounting document to update the relevant GL account is created, (3) PO order history is updated, and finally (4) the system enables you to print the GR slip.

222. Explain ‘Invoice Verification’ (IV) in SAP.
‘Invoice Verification’ involves:

1. Validating the accuracy of the invoices (quantity, value, etc.).

2. Checking for ‘blocked’ invoices (which vary to a great extent from that of the PO).

3. Matching of invoices received from vendors with that of the Purchase Order/ Goods Receipt. At this point in time, the PO History is updated for the corresponding PO Line Item(s) of the matched invoice.

4. Passing of matched invoices to the FI module. The system posts the following entries:

Debit: GR/IR Clearing Account

Credit: Vendor a/c (Accounts Payable open line item)

Credit: GL Reconciliation Account

The different scenarios in invoice verification include:

1. GR-based Invoice Verification indicator is not set in the PO detail screen: Although this setting enables you to post the invoice referenced to a PO prior to making a GR, the system will block the invoice for payment (this kind of posting results in a Quantity Variance as there has not been a GR).

2. GR-based Invoice Verification indicator is set in the PO detail screen: When the PO number is referenced the system brings up all the unmatched items of GR in the selection screen. You will not be able to post the invoice for its full value, unless the PO has been fully received.

223. How do You Deal with ‘Tax’ when You Post an Invoice?
When you enter an invoice, based on the configuration settings, the system checks the Tax Code and calculates the applicable tax or validates the Tax Amount entered by you:

1. Manual Entry: Input the Tax Code and the Tax Amount. The system will validate and issue a message in case it does not find the tax code or if the amount is different.

2. Automatic Entry: Leave the Tax Code and Tax Amount fields blank. Check the ‘Calculate Tax’ indicator. The system picks up the corresponding tax code and calculates the tax amount automatically.

224. What ‘Variances’ do You come Across in Invoice Verification?
The system needs to be configured properly with ‘Tolerances’ so that you are not hampered with variances when you try Invoice Verification. You need to define the lower and upper limits for each combination of the Company Code and the tolerance key defined for the various variances. The system then checks these tolerance limits and issues warnings or prevents you from proceeding further when you process an invoice.

‘Variances’ arise because of mismatch or discrepancies between the invoice and the PO against which the invoice has been issued. Normally you will encounter:

1. Price variances: If there is a discrepancy in invoice price and PO item prices.

2. Schedule variances: If the planned delivery date is later than the invoice postings.

3. Quantity variances: If the delivered quantity (or delivered quantity less the previously invoiced quantity) is not the same as that of the invoiced quantity. When the invoiced quantity is more than the GR, the system requires more GRs to square off the situation.

225. Outline ‘Vendor Payments’ in the SAP System.
The payments to single or multiple vendors can either be handled in a manual process or through an ‘Automatic Payment Program.’ The open liability item created for the vendor during the invoice verification will be squared off when you make the vendor payment or when you run the automatic payment program. The payment program in SAP is designed to allow you to enjoy the maximum discount allowed by that vendor.

226. Explain ‘Automatic Payment Program.’
The ‘Automatic Payment Program’ in SAP helps to process payment transactions both with customers and vendors. AR/AP/TR/Bank Accounting uses the payment program.

The ‘automatic payment program’ helps in determining:

• What is to be paid? To do this, you specify rules according to which the open items to be paid are selected and grouped for payment.

• When is payment to be carried out? The due date of the open items determines when payment is carried out. However, you can specify the payment deadline in more detail via configuration.

• To whom the payment is made? You specify the payee (the vendor or the alternate payee as the case may be).

• How the payment is made? You determine rules that are used to select a payment method.

• From where the payment is made? You determine rules that are used to select a bank and a bank account for the payment.

227. Explain ‘Automatic Payment Program’ Configuration.
Before you are ready to run the ‘Automatic Payment Program,’ the following should have been defined/configured in the system:

• House Bank and the corresponding bank accounts.

• Payment Methods to be used for the Company Code. SAP comes with predefined payment methods, both for AR and AP. The following payment methods are available for you to select from depending on the requirements:

a. Accounts Payable
 Check (S)/Transfer/Postal Giro transfer/Bill of exchange
b. Accounts Receivable
 Bank collection/Bank direct debit/Refund by check/Refund by bank transfer/BE payment request

• Bank Chain defined, if necessary. Bank chains are used to make payment via more than one bank, for example, via the correspondence banks of the house bank, the recipient bank, or the intermediary banks. You can define up to three banks.

• Payment Forms defined. SAP delivers standard forms, which can be modified, or new forms can be created for use.

  

  
Figure 55: Customizing Automatic Payment program using FBZP 

You may do most of the configurations by using the Transaction Code FBZP and branching to individual sections thereon. Or you may use the following Transaction Codes for individually doing it:

1. (Sending) Company Code specifications 

  

• Sending the Company Code—if Company Code ‘A’ is making payments on behalf of ‘B,’ then ‘B’ is the Sending Company Code. Otherwise, the sending Company Code is considered the paying Company Code (both are one and the same).
• Tolerance days
• Paying Company Code specifications

• Minimum amounts for incoming and outgoing payments.
• Forms for payment advice and EDI.
• Bill of Exchange parameters

2. Payment Methods/Country and Bank determination 
  
a. Payment Methods/Country
• Payment Method for outgoing/incoming?
• Payment Method classification
• Master data requirements
• Posting details—document types
• Payment medium details—Print programs
• Permitted currencies (leave blank to allow all currencies)
b. Bank Determination
• Ranking Order
a. Per Payment Method:
• Which bank should be used first, second, etc.
• Currency
• Bill of Exchange
• Bank accounts
• Available amounts
a. Per House Bank and Payment Method combination:
• Offset a/c for subledger posting
• Available funds in each bank
• Clearing accounts for Bill of Exchange
• Value date
• Charge

3. Payment methods per Company Code


a. For each Payment Method and Company Code you need to define:
• Minimum/maximum payment amounts
• Whether payment abroad or in foreign currency is allowed
• Payment Media
• Bank optimization

4. House Bank 






228. How do You Execute an ‘Automatic Payment Program’?
The following are the series of events happening in the system when you try to execute an ‘Automatic Payment Program’: 

1. Maintain Payment Parameters 

To start with, you need to maintain the parameters required such as date of execution of ‘payment run,’ ‘payment run identifier,’ etc. Once this is done, you need to specify the ‘posting date’ of these payments, the ‘document date’ up to which the program should consider the items, the paying Company Code, payment methods to be considered, the ‘next posting date,’ is there certain accounts which need to be excluded from the run, etc. The payment run then needs to be scheduled either immediately or at a specified time/date.

2. Payment Proposal 

The system creates a ‘payment proposal’ based on the payment parameters maintained in (1) above. The system selects the eligible Open Items based on the following sequence:

a. Due date is determined via the Base Line Date and the Terms of Payment for each of the line items.
b. Program calculates the Cash Discount Period and due date for the Net Payment.
c. Grace Periods are then added to this due date.
d. Which Special GL accounts are to be included, based on what you have already maintained as the parameters in (1) above.
e. The system will determine whether to include an item during the current run or for the future one based on the specifications you made in (1).
f. Blocking an item.

The payment proposal can be displayed for further processing; the ‘log’ can be checked to see the system messages, and the exception list can be generated for further evaluation.

3. Payment Proposal
With the payment proposal available, you can now edit the proposal to:

a. Change House Bank, from what was maintained earlier
b. Change Payment Method, if necessary
c. Change Payment Due Date to relax or restrict certain open items
d. Block/Unblock line items

4. Payment Run 

After the payment proposal has been edited, you can run the Payment Program that creates the payment documents and prepares the data for printing the forms or creating the tape or disk. Before printing the forms, check the logs to determine that the payment program run was successful.

5. Print Run 

Payment Medium Programs use the data prepared by the payment program to create forms (payment advice, EDI accompanying sheet, etc.) or files for the data media. The data created by the payment program is stored in the following tables:

REGUH Payee or Payment Method data

REGUP Individual Open Items data

REGUD Bank Data and Payment Amounts data


You need to define Variants for print programs, which need to be defined:

a. Per Payment Method per country->assign a Print Program
b. To run the Print Program->at least one Variant per Print Program per Payment Method


229. Can You Pay a Vendor in a Currency Other than the Invoice Currency?
With release 4.5A, you can pay a vendor in a currency that is different from that of the transaction/invoice currency. This is achieved by entering the required currency code directly in the open item. Prior to this release, to pay in a different currency, you had to manually process the payment.

230. What is a ‘Payment Block’?
A ‘Payment Block’ prevents you from paying an open item of a vendor. The payment block is entered in the ‘Payment Block’ field in a vendor master record or directly in the open line item.

Use the payment ‘Block Indicators’ to define the ‘Payment Block Reasons.’ You may use the SAP delivered payment block indicators (A, B, I, R, etc.) or create your own. An indicator such as ‘*’ is used when you want to skip the particular account, and a blank indicator indicates that the account/item is free for payment. However, for each of these ‘block indicators,’ you need to configure whether changes would be allowed while processing the payment proposal. Then, it is also possible to block a payment or release a blocked one while processing the ‘Payment Proposal.’ 

You may also propose a ‘payment block indicator’ while defining Terms of Payment.

231. How do You Release ‘Blocked Invoices for Payments’?
The system will block an invoice if it comes across with an item with a ‘Blocking Reason.’ The blocking reason may be due to variances or inspection-related issues. When the system blocks an invoice for payment, the ‘payment block’ field is checked by the system.

You will use an ‘Invoice Release Transaction’ to select the blocked invoices for processing further. The ‘release’ of blocked invoices for payments can be handled either manually or automatically.

232. What is the ‘Account Assignment Category’?
The ‘Automatic Account Assignment’ logic takes care of posting to the correct GL accounts for ‘Stock Material’ with the ‘Material Type’ permitting inventory management, and the material master contains information as to which GL account needs to be updated. But there are material line items (‘Non-Stock’ materials) created manually in the Purchase Requisition/Purchase Order/Outline Agreement for which someone needs to decide the account assignment data and manually enter it in the Purchase Requisition. Here, the Account Assignment Category determines where to allocate the costs relating to such materials. The account assignment category helps you to define the type of account assignment (Sales Order-C, Project-P, Cost Center-K, etc.) and which accounts are to be posted to when GR/IR is posted to.

233. What is a ‘Credit Memo’?
A ‘Credit Memo’ is issued by a vendor who has earlier supplied you some services or materials. The occasion is necessitated when the delivered goods are damaged or you have returned some of the goods back to the vendor. The system treats both the invoices and the credit memo in the same way, except that the postings are done with the opposite sign.

If the credit memo is for the entire invoiced quantity, the system generates the credit memo automatically. However, if the credit memo relates to a portion of the invoiced quantity, you need to process it manually in the system.

234. What are ‘Special GL Transactions’?
‘Special GL Transactions’ are not directly posted to the GL (Reconciliation Accounts) though these are related to subledger accounts such as AR/AP. The transactions to these accounts are shown separately in the balance sheet. There are specific posting keys/indicators defined in the system to regulate the postings to these items. You need to specify a Special GL Indicator (such as a F-Down Payment Request, A-Down Payment) for processing such a transaction. And the system will make use of the specially defined posting keys (09-customer debit, 19-customer credit, 29-vendor debit, and 39-vendor credit) for posting these special GL transactions.

There are three types of Special GL transactions:

• Free Offsetting Entries (Down Payment)

• Statistical Postings (Guarantee)

• Noted Items (Down Payment Request)

  
Figure 56: Special GL Indicators 

235. Differentiate ‘Free Offsetting Entry’ from a ‘Statistical Posting.’
‘Free Offsetting Entry’ postings are part of the regular postings but with a freely definable offsetting entry, and relate to the On-Balance Sheet Items. On the other hand, in a Statistical Posting, you will always be posting to the same offsetting entry, and these are all the Off-Balance Sheet Items.

236. What is a ‘Noted Item’
‘Noted Items’ are never displayed on Financial Statements as they serve only as reminders of a financial obligation such as outstanding payments to be made or due to us, such as a ‘Down Payment Request.’ This kind of posting does not update any GL account in the system but helps to keep track of such obligations for easy follow-up. This is also sometimes referred to as a ‘Memo Entry.’ 

It is interesting to note that while the Special GL Indicator for a Down Payment Request is ‘F,’ you need to enter the indicator ‘A’ as the target Special GL indicator while you are in the Down Payment Request Entry Screen. When you post this entry, the system creates a one-sided memo entry for the customer or vendor but does not update the GL.
Asset Accounting

Asset Accounting
237. Explain ‘Asset Accounting’ (FI-AA).
The ‘Asset Accounting’ (FI-AA) submodule in SAP manages a company’s fixed assets, right from acquisition to retirement/scrapping. All accounting transactions relating to depreciation, insurance, etc., of assets are taken care of through this module, and all the accounting information from this module flows to FI-GL on a real-time basis.
  
Figure 57: FI-AA integration with other modules 

You will be able to directly post (the goods receipt (GR), invoice receipt (IR), or any withdrawal from a warehouse to a fixed asset) from MM or PP to FI-AA. The integration with FI-AR helps in direct posting of sales to the customer account. Similarly, integration with FI-AP helps in posting an asset directly to FI-AA and the relevant vendor account in cases where the purchase is not routed through the MM module. You may capitalize the maintenance activities to an asset using settlements through the PM module. FI-AA and FI-GL has real-time integration where all the transactions such as asset acquisition, retirement, transfer, etc., are recorded simultaneously in both the modules. However, batch processing is required to transfer the depreciation values, interest, etc., to the FI module. 

The FI-AA and CO integration helps in:

• Assigning an asset to any of the Controlling Objects such as cost center, internal order/maintenance order, or an activity type. Internal Orders act as a two-way link to the FI-AA: (i) they help to collect and pass on the capital expenditure to assets, and (ii) they collect the depreciation/interest from FI-AA to controlling objects. (Note that when there is a situation where the asset master record contains an internal order and a cost center, the depreciation is always posted to the internal order and not to the cost center.)

• The depreciation and the interest are passed on to the cost/profit centers.

238. What is a ‘Lean Implementation’ in FI-AA?
A ‘Lean Implementation’ is the scaled-down version of the regular FI-AA configuration in IMG, with minimal configuration required to enable asset accounting. This is suitable for small companies using the standard functionalities of asset accounting, and also in situations where the Asset Catalog is not that large.

  
Figure 58: Lean implementation in FI-AA 

You should not opt for lean implementation if:

• You need more than Depreciation Areas
• You need to Depreciate In Foreign Currencies as well
• You have Group Assets
• You need to define your own Depreciation Keys/Transaction Types/ Reports
• You need a Group Consolidation

  


239. What are the kinds of ‘Assets’ in SAP?
An asset can be a Simple Asset or Complex Asset. Depending on the requirement, assets are maintained with Asset Main Numbers and Asset Subnumbers. A complex asset consists of many Sub-Assets; each of them identified using an asset subnumber. You may also use the concept Group Asset in SAP.

240. Explain ‘Complex Assets’ and ‘Asset Subnumbers.’
A ‘Complex Asset’ in SAP is made up of many master records each of which is denoted by an ‘Asset Subnumber.’ It is prudent to use asset subnumbers if:

• You need to manage the ‘subsequent acquisitions’ separately from the initial one (for example, your initial acquisition was a PC, and you are adding a printer later).

• You want to manage the various parts of an asset separately even at the time of ‘initial acquisition’ (for example, an initial purchase of a PC where you create separate asset master records for the monitor, CPU, etc.).

• You need to divide the assets based on certain technical qualities (keyboard, mouse, etc.).

When you manage a complex asset, the system enables you to evaluate the asset in all possible ways such as (i) for a single subnumber, (if) for all subnumbers, and (iii) for select subnumbers.

241. What is a ‘Group asset’ in SAP? When You will use This?
A ‘Group Asset’ in SAP is almost like a normal asset except that it can have (any number of) sub-assets denoted by Asset Subnumbers. The concept of group asset becomes necessary when you need to carry out depreciation at a group level, for some special purposes such as tax reporting. Remember that SAP’s way of depreciation is always at the individual asset level. Hence, to manage at the group level, you need the group asset. Once you decide to have group assets, you also need to have ‘special depreciation areas’ meant for group assets; you will not be able depreciate a group asset using a normal depreciation area.

Unlike Complex Assets, you can delete a group asset only when all the associated subnumbers have been marked for deletion.

242. What is a ‘Asset Super Number’ in SAP?
The concept of ‘Asset Super Number,’ in FI-AA, is used only for reporting purposes. Here, you will assign a number of individual assets to a single asset number. By using this methodology, you will be able to see all the associated assets with the asset super number as a single asset (for example, brake assembly line) or as individual assets (for example, machinery, equipment in the brake assembly line).

243. What is a ‘Chart of Depreciation’? How does it differ from a ‘Chart of Accounts’?
A ‘Chart of Depreciation’ contains a list of country-specific depreciation areas. It provides the rules for the evaluation of assets that are valid in a given country or economic area. SAP comes supplied with default charts of depreciation that are based on the requirements of each country. These default charts of depreciation also serve as the ‘reference charts’ from which you can create a new chart of depreciation by copying one of the relevant charts. After copying, you may delete the depreciation areas you do not need. However, note that the deletion must be done before any assets are created.

You are required to assign a chart of depreciation to your Company Code. Remember that one Company Code can have only one chart of depreciation assigned to it, even though multiple Company Codes can use a single chart of depreciation.

The chart of accounts can be global, country specific, and industry specific based on the needs of the business. The chart of depreciation is only country specific. The charts are independent of each other.


Chart of Depreciation 
Chart of Accounts 

Established by FI-AA. Established by FI.
A chart of depreciation is a collection of country specific depreciation areas. The chart of accounts is a list of GL accounts used in a Company Code. The chart of accounts contains the chart of accounts area and the Company Code area. 
The chart of depreciation is country specific. Usually you will not require more than one chart of account. SAP comes delivered with many country specific charts of depreciation as ‘reference charts’ which can be copied to create your own chart of depreciation. Depending on the requirement you may have an ‘operating chart of accounts,’ ‘country specific chart of accounts,’ ‘global chart of accounts,’ etc.
One Company Code uses only one chart of depreciation. One Company Code uses only one chart of accounts.
Many Company Codes, in the same country, can use the same chart of depreciation. Several Company Codes within the same country can use the same chart of accounts.


244. How do You Create an ‘Asset Accounting Company Code’?
1. Define the Company Code in FI configuration, and assign a chart of accounts to this Company Code.

2. Assign a chart of depreciation to this Company Code in FI-AA configuration.

3. Add necessary data for the Company Code for use in FI-AA, and your ‘asset accounting Company Code’ is now ready for use.

245. What is ‘Depreciation’? Explain the Various Types.
‘Depreciation’ is the reduction in the book value of an asset due to its use over time (‘decline in economic usefulness’) or due to legal framework for taxation reporting. The depreciation is usually calculated taking into account the economic life of the asset, expected value of the asset at the end of its economic life (junk/ scrap value), method of depreciation calculation (straight line method, declining balance, sum of year digits, double declining, etc.), and the defined percentage decline in the value of the asset every year (20%, or 15%, and so on).

The depreciation can either be planned or unplanned.

Planned depreciation is one which brings down the value of the asset after every planned period; say every month, until the asset value is fully depreciated over its life period. With this method, you will know what the value of the asset at any point of time in its active life.

On the contrary, unplanned depreciation is a sudden happening of an event or occurrence not foreseen (there could be a sudden break out of a fire damaging an asset, which forces you to depreciate fully as it is no longer useful economically) resulting in a permanent reduction of the value of the asset.

In SAP, you will come across three types of depreciation:

• Ordinary depreciation, which is nothing but ‘planned depreciation.’

• Special depreciation, which is over and above ‘ordinary depreciation,’ used normally for taxation purposes.

• Unplanned depreciation, which is the result of reducing the asset value due to the sudden occurrence of certain events.

246. Define ‘Depreciation Areas.’
Fixed assets are valued differently for different purposes (business, legal, etc.). SAP manages these different valuations by means of ‘Depreciation Areas.’ There are various depreciation areas such as book depreciation, tax depreciation, depreciation for cost-accounting purposes, etc.

  
Figure 59: Depreciation Area 

A depreciation area decides how and for what purpose an asset is evaluated. The depreciation area can be ‘real’ or a ‘derived one.’ You may need to use several depreciation areas for a single asset depending on the valuation and reporting requirements.

The depreciation areas are denoted by a 2-character code in the system. The depreciation areas contain the depreciation terms that are required to be entered in the asset master records or asset classes. SAP comes delivered with many depreciation areas; however, the depreciation area 01—Book Depreciation is the major one.

  
Figure 60: Details of 01-Book Depreciation 

The other depreciation areas are:

• Book depreciation in group currency

• Consolidated versions in local/group currency

• Tax balance sheet depreciation

• Special tax depreciation

• Country-specific valuation (e.g., net-worth tax or state calculation)

• Values/depreciations that differ from depreciation area 01 (for example, cost-accounting reasons)

• Derived depreciation area (the difference between book depreciation and country-specific tax depreciation)

247. How do You Set up ‘Depreciation Area postings’ to FI from FI-AA?
You need to define how the various depreciation areas need to post to FI-GL. It can be any one of the following scenarios:

• Post depreciation through ‘periodic processing.’

• Post both the APC (Acquisition and Production Costs) and depreciation through periodic processing.

• Post the APC in ‘real time’ but depreciation through periodic processing.

• No values are posted.

However, you need to ensure that at least one depreciation area is configured to post values automatically to the FI-GL. Normally, this depreciation area will be 01 (book depreciation). For the rest of the depreciation areas, it may be configured that they derive their values from this area and the difference thus calculated is automatically posted to FI-GL. There may also be situations where you may define depreciation areas just for reporting purposes, and these areas need not post to the GL.

248. What is an ‘Asset Class?
An ‘Asset Class’ in SAP is the basis for classifying an asset based on business and legal requirements. It is essentially a grouping of assets having certain common characteristics. Each asset in the system needs to be associated with an asset class.

  
Figure 61: Asset Class 





An asset class is the most important configuration element that decides the type of asset (such as land, buildings, furniture and fixtures, equipment, assets under construction, leased assets, low-value assets, etc.), the document number range, data entry screen layout for asset master creation, GL account assignments, depreciation areas, depreciation terms, etc. An asset class is defined at the Client level and is available to all the Company Codes of that Client.

The asset class consists of:

• A header section—control parameters for master data maintenance and account determination.

• A master data section—default values for administrative data in the asset master record.

• A valuation section—control parameters for valuation and depreciation terms.

The asset class can be:

• Buildings

• Technical assets

• Financial assets

• Leased assets

• AuC (assets under construction)

• Low value assets

249. Why do You need ‘Asset Classes’?
An ‘Asset Class’ is the link between the asset master records and the relevant accounts in the GL. The account determination in the asset class enables you to post to the relevant GL accounts. Several asset classes can use the same account determination provided all these asset classes use the same chart of accounts and post to the same GL accounts.

250. What is an ‘Asset Class Catalog’?
An ‘Asset Class Catalog’ contains all the asset classes in an enterprise and is therefore valid across the Client. Since an asset class is valid across the Client, most of the characteristics of the asset class are defined at the Client level; however, there are certain characteristics (such as the depreciation key, for example), which can be defined at the chart of depreciation level.

251. Is it Possible to Create ‘Asset Classes’ Automatically?
One of the benefits of lean implementation configuration is the ability to create asset classes automatically from the asset GL accounts. This tool selects only necessary system settings so that the asset classes are created automatically in a very short time. During the process of creation, the system allows you to delete all the existing objects (i.e., asset classes, number ranges, account allocations, field selections, etc.) before creating the new ones.

The prerequisites for automatic asset class creation include:

• Company Code must be assigned to a chart of depreciation

• Depreciation areas have already been defined

• GL account number is not more than 8 digits (otherwise you need to assign the classes manually)

Also note that you may need to maintain the GL account for ‘accumulated depreciation’ manually. The system maintains the necessary account assignment only with regard to the depreciation area 01 (book depreciation). If you need more areas, you may need to do that manually in the IMG.

252. What is an ‘Asset Value Date’?
The ‘Asset Value Date’ is the start date of depreciation for the asset. The ‘planned depreciation’ is calculated by the system based on this depreciation start date and the selected ‘depreciation term’ for that asset. Be careful with the posting date and asset value date. Both dates need to be in the same fiscal year.

253. What is an ‘Asset Master’?
An ‘Asset Master’ can be created by copying an existing asset in the same Company Code or another Company Code; it can also be created from scratch when it is done for the first time. Again, while creating the master, SAP allows you to create multiple assets in one step, provided all such assets are similar (having the same asset class and all belonging to the same Company Code).

From Release 4.5, the transaction codes for creating an asset master have been changed to the AS series instead of the earlier AT series (for example, create asset is code AS01 (AT01 before), change asset is AS02 (AT02 before), and so on. If you are more comfortable with the creation of assets using the conventional screen than with the ‘tab’ feature available now in the AS transaction series, you can do so, but you cannot find these transactions under ‘ASMN’!

Each asset master contains the necessary information to calculate the depreciation:

• Capitalization date/acquisition period

• Depreciation areas relevant for the asset

• Depreciation key

• Useful life/expired useful life

• Change over year, if any

• Scrap value, if any

• Start date of (ordinary depreciation)

254. Explain the Two Ways used to Create ‘Asset Masters.’
• Copy an existing asset as a reference for creating the new one.

• From an existing asset class create a new asset so that this asset class provides the default control parameters for the new asset.

255. Is it Possible to Create Multiple Assets in a Single Transaction?
SAP enables you to create multiple (but similar) assets in one transaction. What you need to know is that all these assets should belong to the same asset class and the same Company Code. Enter the number of assets you need to create in the ‘Number of similar assets’ field. After creating the assets, you will be able to change the individual descriptions/inventory numbers when you are about to save the master records. When you save the master records, the system assigns a range of asset numbers.

  
Figure 62: Create multiple assets 


The only drawback of using this method of creating assets in bulk is that you will not be able to create long text for any of these assets.

256. What is the ‘Time-dependent Data’ in an Asset Master?
All the cost accounting assignment-related data such as cost center, internal orders or investment projects, etc., need to be maintained as ‘Time-dependent Data’ in asset masters. Additionally, the information related to asset shut-down and shift operation also needs to be maintained as time dependent. SAP maintains all the time-dependent data for the entire life span of the assets.

257. Explain ‘Asset Acquisition.’
‘Asset Acquisition’ can be through any one of the following three routes:

1. External Acquisition through Purchase 

External acquisition of assets will be primarily from vendors, who are either your business partners or third parties. It can also be from your affiliated companies (use Transaction Code: ABZP). The external asset acquisition can be done several ways:

a. The asset can be posted in the MM module.

b. The asset can be created in FI-AA with automatic clearing of the offsetting entry (Transaction Code: ABZON). This can be achieved either of the following ways:

1. The posting is made initially in FI-AP and the clearing account cleared when the posting is made to the asset (FI-AA).
2. Post the asset with the automatic offsetting entry (FI-AA) and then clear the clearing account through a credit posting by an incoming invoice (FI-AP).
c. When not integrated with FI-AP, you may acquire the asset in FI-AA with an automatic offsetting entry without referencing a Purchase Requisition (PR). This kind of acquisition is necessary when:
1. You have not yet received the invoice or
2. When the invoice has already been posted in FI-AP
d. When integrated with FI-AP, acquire the asset in FI-AA using an incoming invoice but without a reference to a Purchase Order (PO).
2. In-house Production/Acquisition 

In-house Asset Acquisition is primarily the capitalization of goods/services produced by your company. The costs associated with the complete or partial production of the goods/services from within the company needs to be capitalized into separate asset(s). Usually, the capitalization is done as follows:

a. Create an order/project (in Investment Management) to capture the production costs associated with the goods/services produced in-house.
b. Settle the order/project to an AuC (Asst under Construction).
c. Distribute/Settle the AuC so created into new asset(s). You will be using the Transaction Type 110 for asset acquisition from in-house production.

3.   Subsequent Acquisition 

When the asset/vendor accounts are posted, the system updates the corresponding GL accounts (FI-AP and FI-AA) through relevant account determinations. SAP uses various kinds of ‘transaction types’ to distinguish the different transactions. During acquisition the system makes the following entries in the asset master data:

• Date of initial acquisition/period and year of acquisition.

• Capitalization date of the asset.

• Start date for ordinary depreciation (the start date is determined from the asset value date/period/year of acquisition).

• Vendor is automatically entered in the ‘origin.’

258. What are Automatically Set in the Asset Masters During ‘Initial Acquisition’?
• Date of capitalization

• Acquisition period

• Posting date of original acquisition

• Depreciation start date (per depreciation area)

259. Why it is Necessary to ‘Block’ an Asset Master Record?
In case you decide that you do not want to post any more acquisitions to an existing asset, then it is necessary for you to set the Block Indicator in the asset master record. This is usually the case with AuC, where after the capitalization you no longer want any further additions to the asset. The block indicator prevents only further postings but not transfers or retirements or depreciation; even after an asset is blocked, you can continue to depreciate it as in the case of other assets.

260. How do you ‘Delete’ an Asset Master?
You can ‘Delete an Asset Master’ record from the system only when there are no transactions posted to it. The system will not allow you to delete the master record if there are transactions against the asset, even if you reverse all the previous transactions pertaining to the asset and bring down the asset value to zero. However, unlike FI-AR, FI-AP, or FI-GL where archiving is a prerequisite to delete the master records, you may delete the asset master records without archiving. When deleted, the system also deletes the asset number.

261. What is an ‘(Asset) Transaction Type’ in FI-AA?
‘Transaction Types’ in FI-AA identify the nature of an asset transaction (acquisition or transfer or retirement) to specify what is updated, among (a) Depreciation area, (b) Value field, and (c) Asset accounts (in B/S).

  
Figure 63: (Asset) Transaction types 

The following are some of the common transaction types used:

• 100   Asset Acquisition—Purchase
• 110   Asset Acquisition—In-house Production
• 200   Asset Retirement—Without revenue
• 210   Asset Retirement—With revenue

The transaction type is extensively used in most asset reports, including the asset history sheet, to display the various asset transactions differentiated by the transaction types. SAP comes with numerous transaction types, which will take care of almost all your requirements. However, should there be a specific case, you may also create your own transaction type.

Every transaction type is grouped into a Transaction Type Group (for example, 10 -> Acquisition), which characterizes the various transaction types (for example, transaction types 100 and 110) within that group. The system makes it possible to limit the transaction type groups that are associated with certain asset classes.

262. Explain ‘Assets under Construction’ (AuC) in SAP.
The goods and/or services produced, in-house, can be capitalized into asset(s). But, there are two distinct phases during this process:

1. Construction phase (AuC)

2. Utilization phase (useful or economic life phase)

It then becomes necessary to show the assets under these two phases in two different balance sheet items:

The ‘construction phase’ is one in which you start producing or assembling the asset but it is not yet ready for economic utilization. SAP categorizes these kinds of assets into a special asset class called ‘Assets under Construction’ (AuC).

The AuC is managed through a separate asset class with a separate asset GL account. SAP allows posting ‘down payments’ to AuC. It is also possible to enter credit memos for AuC even after its complete capitalization, provided you are managing this asset class and allowing negative APC (Acquisition and Production Costs). The IM (Investment Management) module helps to manage internal orders/projects for AuC. It is necessary to use the depreciation key ‘0000’ to ensure that you are not calculating any depreciation for AuC. But you can continue to have special tax depreciation and investment support even on these assets.

263. How do You Capitalize AuC in SAP?
An ‘Asset under Construction’ can be managed in two ways as far as the asset master is concerned:

• As a ‘normal’ asset.

• As an asset with ‘line item management.’

Later on, the AuC is capitalized and transferred to regular asset(s) by ‘distribution’/‘settlement.’ While doing so, the system, with the help of different transaction types, segregates the transactions relating to the current year with that of the previous years. The capitalization can be:

1. Lump sum capitalization.

2. With line item settlement (when capitalized using line item settlement, it is not necessary to settle all the line items and 100% in a particular line item).

In the case of integration with SAP-IM (Investment Management), capital investments can be managed as an AuC by:

• Collecting the production costs associated with an order/project.

• Settling the collected costs to an AuC.

• Capitalizing the AuC into new assets by distribution/settlement.

  

264. What do You mean by ‘Low Value Assets’?
SAP uses the term ‘Low Value Assets’ to denote assets that will be depreciated in the year of purchase or in the period of acquisition. This categorization usually follows the statutory requirements of the country of the Company Code, wherein you define a monetary limit and consider all those assets falling below the value, say $1,000, as low value assets. You have the flexibility of managing these assets either on an individual (individual check) basis or a collective basis (quantity check).

SAP uses a special depreciation key called LVA, and the expected useful life of such an asset is considered to be one period (month).

265. Explain ‘Asset Transfer’ in SAP.
There are two types of ‘Asset Transfers,’ namely:

1. Inter-company asset transfer

2. Intra-company asset transfer

Inter-company Asset Transfer is between Company Codes, resulting in the creation of the new asset in the target Company Code (the receiving one). The transaction posts the values per the ‘posting method’ selected during the transfer. In doing so the system:

• Retires the asset in the source/sending Company Code by asset retirement.

• Posts acquisition in the new/target Company Code by asset acquisition, and creates the new asset in the target Company Code.

• Posts inter-company profit/loss arising from the transfer.

• Updates FI-GL automatically.

An inter-company asset transfer is usually necessitated when there is a need for physically changing the location from one company to the other or there is an organization restructuring and the new asset is to be attached to the new Company Code. You may use the standard Transfer Variants supplied by SAP. The selection of a suitable transfer variant will be based on the legal relationship among the Company Codes and the methods chosen for transferring the asset values.

Inter-company asset transfers can be handled:

• Individually using the normal transaction for a single asset.

• For a number of assets using the ‘mass transfer.’ 

If you need to transfer assets cross-system, you need to use ALE functionality.

Intra-company Asset Transfer is the transfer of an asset within the same Company Code. This would be necessitated by:

• Change in the asset class or business area, etc.

• Settlement of an AuC to a new asset.

• Transfer of stock materials into an asset (by posting a GI to an order through MM or settlement of a production order to an asset).

• Splitting an existing asset into one or more new assets.

  


266. What is a ‘Transfer Variant?
A ‘Transfer Variant’ is dependent on whether the Company Codes involved are legally dependent or independent. Transfer variants specify how the transferred asset will be valued at the receiving Company Code and the type of transaction (acquisition or transfer) used for the transaction.

  
Figure 64: Transfer variant 

267. Explain ‘Asset Retirement’ in FI-AA.
‘Asset Retirement’ is an integral part of asset management. You may retire an asset by sale or by scrapping. In the case of sales, it can be with revenue or without revenue; again, the asset sale can be with the customer or without the customer.

  
Figure 65: Asset Retirement 

During asset sales transactions, the system removes the APC (Acquisition and Production Costs) and also the corresponding accumulated depreciation, then the profit or loss arising from the sale is recorded in the system. Even in the case of ‘partial retirement’ or ‘partial sales,’ the system records the proportionate gain/ loss arising from the transaction. Any tax posting arising from the transaction is automatically created by the system.

SAP provides various ways of posting retirement in the system, which includes:

• Mass retirement

• Asset retirement with revenue

o With customer (involving integration with FI-AR)
 Debit customer, credit assets
o Without customer
• Asset retirement without revenue
o With customer
 Debit clearing account, credit asset
 Debit customer in A/R, credit the clearing account
• Asset retirement using GL document posting

  

268. Describe Transfer of ‘Legacy Asset Data’ to SAP.
One of the challenges in the implementation of FI-AA is the transfer of ‘Legacy Asset Data’ from your existing systems to SAP FI-AA. Though SAP provides multiple options and appropriate tools to carry out this task, you need a carefully planned strategy for completing this task. You may have to transfer the old asset values through any one of the following ways:

• Batch data inputs (large number of old assets)

• Directly updating the SAP Tables (very large number of old assets)

• Manual entry (few old assets)

Normally, you will not have to use the manual process as it is time consuming and laborious; however, you may do this if you have a very limited number of assets. Otherwise, you may use either of the other two options, though batch data input with error handling is the preferred way of doing it. You need to reconcile the data transferred, if you resort to any of the two automatic ways of transferring the data. You may also use BAPIs (Business Application Programming Interface) to link and process the asset information in SAP FI-AA from non-SAP systems.

The transfer can be done at the end of the last closed fiscal year, or during the current fiscal year following the last closed fiscal year. You will be able to transfer both master data as well as accumulated values of the last closed fiscal year. If required, you can also transfer asset transactions, including depreciation, during the current fiscal year. It is important to note that the GL account balances of the old assets need to be transferred separately.

269. Outline ‘Automatic Transfer of Old Assets’
SAP provides you with the necessary interfaces for converting your ‘legacy asset data’ into prescribed formats for upload into the SAP system. The data transfer workbench allows you to control the entire data transfer process.

  
Figure 66: Legacy asset transfer to SAP FI-AA 

1. These interface programs convert the data so that it is compatible with SAP data dictionary tables such as BALTD for master data and BALTB for transactions. If you have more than 10 depreciation areas, then you need to change the transfer structures for both BALTD and BALTB.

2. The converted data is stored in sequential files.

3. Use the data transfer program RAALTD01 (for batch input) or RAALTD11 (direct table update) for transferring the data to SAP.

• Do a test run. This will help to correct errors if any.
• Do a production run, with a few asset records, to update the relevant tables in FI-AA.
• Reset the values in the asset Company Code.
• Continue with the production run for all the assets.
4. All the asset records without errors will be updated immediately through background processing in relevant tables such as ANLH, ANLA, ANLB, ANLC, etc.
5. The records with errors will be stored in a separate batch input session, which can be processed separately.

270. What is an ‘Asset Transfer Date’?
The ‘Asset Transfer Date’ refers to the ‘cut-off’ date for the transfer of old assets data from your existing system. Once established, you will not be able to create any old assets in SAP before this reference date. Any transaction happening after the transfer date but before the actual date of asset transfer needs to be created separately in SAP after you complete the old asset transfer.

271. Describe ‘Mass Change/How do You Achieve this?
‘Mass Change’ enables you to make changes (such as mass retirements, changes to incomplete assets, etc.) in FI-AA to a large number of asset master records at one time. The mass change functionality is achieved through work lists, which are FI-AA standard tasks pre-defined in the system. These tasks are assigned with ‘work flow objects,’ which can be changed according to your specific requirements. The work lists are created in several ways from asset master records, asset value displays, from the asset information system, etc.

To make a mass change you need to:

1. Create a substitution rule(s) in which you will mention what fields will be changed. This rule will consist of an ‘identifying condition’ (for example, if the cost center=1345), and a ‘rule to substitute’ new values (for example, replace the ‘field’ cost center with the ‘value’ ‘1000’).

2. Generate a list of assets that need to be changed.

3. Create a ‘work list’ to carry out the changes.

4. Select the appropriate ‘substitution rule’ (defined earlier in step 1 above).

5. Process the ‘work list.’ You may also release it to someone else in the organization so that he/she can complete the task.

6. Run a ‘report’ to verify the changes.

272. What is ‘Periodic Processing’ in FI-AA? Explain.
‘Periodic Processing’ in FI-AA relates to the tasks you need to carry out at periodic intervals to plan and post some transactions. The tasks include:

• Depreciation calculation and posting.

• As you are aware, SAP allows automatic posting of values from only one depreciation area (normally 01 -book depreciation). For all other depreciation areas, including the derived ones, you need to perform the tasks periodically so that FI is updated properly.

• Planned depreciation/interest for CO primary cost planning.

• Claiming and posting of ‘investment support’ (either ‘individually’ or through ‘mass change’).

273. What is a ‘Depreciation Key’?
Depreciation is calculated using the ‘Depreciation Key’ and Internal Calculation Key in the system. Depreciation keys are defined at the chart of depreciation level, and are uniform across all Company Codes, which are attached to a particular chart of depreciation. The depreciation key contains all the control amounts defined for the calculation of planned depreciation. The system contains a number of predefined depreciation keys (such as LIMA, DWG, DG10, etc.) with the controls already defined for calculation method and type. A depreciation key can contain multiple internal calculation keys.

  
Figure 67: Depreciation Key 

274. What is an ‘Internal Calculation Key’?
‘Internal Calculation Keys’ are the control indicators within a ‘depreciation key.’ Together with the depreciation key, these calculation keys help in determining depreciation amounts. Each internal calculation key contains:

1. Depreciation type (ordinary or unplanned)

2. Depreciation method (straight-line or declining balance)

3. Base value

4. Rate of percentage for depreciation calculation

5. Period control for transactions (acquisition, retirement, etc.)

6. Change-over rules (in case of declining/double declining methods of calculation)

7. Treatment of depreciation after useful life period

275. What is known as a ‘Depreciation Run’ in SAP?
The ‘Depreciation Run,’ an important periodic processing step, takes care of calculating depreciation for assets and posting the corresponding transactions in both FI-AA and FI-GL. The depreciation calculation is usually done in sessions, and the posting session posts the different depreciation types, interest/re valuation, and also writing-off/allocating special reserves. The depreciation run should be started with a ‘test run’ before making it the ‘production run,’ which will update the system. The system will restart a run session should there be problems in the earlier run. The depreciation run needs to be completed per period. During every depreciation run, the system will create summarized posting documents per business area and per account determination; no individual posting documents are created.

276. Explain the Various Steps in a ‘Depreciation Run.’
1. Maintain the parameters for the depreciation run on the initial screen of the Transaction AFAB (Company Code, fiscal year, and posting period).

2. Select a ‘reason’ for the posting run (repeat run, planned posting run, restart run, or unplanned run).

3. Select the appropriate check boxes in the ‘further option’ block if you need a list of assets, direct FI posting, test run, etc. Please note that it is a good practice to select the ‘test run’ initially, see and satisfy the outcome of the depreciation run, then remove this ‘check box’ and go for the ‘productive run.’

4. Execute the test run (if the assets are less than 10,000, you may then do the processing in the foreground; otherwise execute the run in the background).

5. Check the results displayed.

6. Once you are convinced that the test run has gone as expected, go back to the previous screen, uncheck the ‘test run’ check box, and execute (in the background).

7. Complete the ‘background print parameters,’ if prompted by the system. You may also decide to schedule the job immediately or later. The system uses the ‘depreciation-posting program’ RABUCH00, for updating the asset’s values and generating a batch input session for updating FI-GL. The ‘posting session’ posts values in various depreciation areas, interest, and revaluation, besides updating special reserves allocations and writing-off, if any. If there are more than 100,000 assets for depreciation calculation and posting, you need to use a special program, RAPOST00.

8. Process the ‘batch input session’ created by the system in step-7 above. You may use the Transaction Code SM35. Again, you have the option of processing the session in the foreground or in the background.

9. System posts the depreciation in FI-GL.

277. How does the System Calculate ‘Depreciation’?
1. The system takes the ‘depreciation terms’ from the asset master record and calculates the annual depreciation for the asset taking into account the ‘useful life’ and the ‘depreciation key.’ The start date for depreciation is assumed to be the first date of acquisition of the asset.

2. The system may also calculate other values such as interest, revaluation, etc.

3. The depreciation and other values are calculated for each of the depreciation areas.

278. Explain ‘Derived Depreciation.’
‘Derived Depreciation’ is a separate depreciation area that is ‘derived’ from two or more ‘real depreciation’ areas using a pre-determined rule. You may use this to calculate something such as special reserves or to show the difference in valuation between local and group valuation, etc. Since the values are derived, the system does not store any values in the database, but updates the derived values whenever there are changes in the real depreciation area or its depreciation terms. You may also use the derived depreciation only for reporting purposes.

279. What is known as a ‘Repeat Run’ in the Depreciation Process?
A ‘Repeat Run’ is normally used at the end of the fiscal year to carry out posting adjustments or corrections that may arise due to changes in depreciation terms or manual depreciation calculations. However, you can also use this to repeat but within the same posting period. The ‘repeat run’ also provides the flexibility to restrict the calculations to specific assets.

280. What does ‘Restart a Depreciation Run’ Mean?
Restart Depreciation Run is used only when there has been a problem with the previous run resulting in the termination of that run. To make sure that all the steps in a depreciation run are completed without errors, the system logs the status at every stage of the processing and provides ‘error logs’ to find the problem. This ‘restart’ option is not available during the ‘test run’ mode.

281. What is ‘Depreciation Simulation’?
‘Depreciation Simulation’ refers to a ‘what if valuation of assets. This is achieved by changing and experimenting with the ‘parameters’ required for depreciating the assets. The simulation helps you to ‘foresee’ the depreciation should there be changes in various ‘depreciation terms.’ You may simulate to see the valuation for future fiscal years. Sort versions and options for totals report are also available in simulation. The depreciation simulation can be applied to a single asset or your entire asset portfolio.

282. What is a ‘Sort Version’?
A ‘Sort Version’ defines the formation of groups and totals in an asset report. You can use all the fields of the asset master record asset group and/or sort criteria for defining a sort version. The sort version cannot have more than five sort levels.

283. Can you select ‘Direct FI Posting’ for a ‘Depreciation Run’?
If the check box to enable ‘Direct FI Posting’ is clicked then the system will not create the ‘batch input session’ for a depreciation posting; instead, the FI-GL is posted directly. Be careful when checking the Direct FI Posting check box because there will not be an opportunity to correct mistakes, if any, in accounts and account assignments such as business area, cost objects, etc., when you execute the depreciation run. Also, you will not be able to check and correct postings. Note that if this option is selected during a depreciation run, and if the run is terminated for any reason and needs to be restarted, this has to be kept checked during that time as well.

The standard system comes with the document type ‘AF’ (number range defined as ‘external numbering’) configured to be used in ‘batch input.’ Hence, with this default configuration, you will get an error when you try a depreciation posting run by selecting the option ‘direct FI posting.’ You can, however, overcome this by not restricting the same FI-AA customization. (Use Transaction Code OBA7 and remove the check mark from ‘Batch input only’ check box.)

284. Explain ‘Year Closing’ in FI-AA.
The year-end is closed when you draw the final balance sheet. But, to reach this stage, you need to ensure that the depreciation is posted properly; you can achieve this by checking the ‘depreciation list’ and also the ‘asset history sheets.’ After this is done, draw a test balance sheet and profit and loss statement and check for the correctness of the depreciation. Correct the discrepancies, if any, with adjustment postings. You need to re-run the depreciation posting program if you change any of the depreciation values.

When you now run the ‘Year-End Closing Program,’ the system ensures that the fiscal year is completed for all the assets, depreciation has fully posted, and there are no errors logged for any of the assets. If there are errors, you need to correct the errors before re-running the year-end program. When you reach a stage where there are no errors, the system will update the last closed fiscal year, for each of the depreciation areas for each of the assets. The system will also block any further postings in FI-AA for the closed fiscal year. If you need to re-open the closed fiscal year for any adjustments postings or otherwise, ensure that you re-run the year-end program so that the system blocks further postings.

285. Explain ‘Asset History Sheet.’
SAP comes delivered with country-specific ‘Asset History Sheets,’ which meet the legal reporting requirements of a specific country. The asset history sheet is an important report that can be used either as the year-end report or the intermediate report whenever you need it. Asset history sheets help you to freely define the report layout, headers, and most of the history sheet items.

  
Figure 68: Configuring Asset History Sheet 
You may create various versions of the Asset History Sheet:

  
Figure 69: Asset History Sheet Versions 
For each of the versions, you will be able to define various columns according to your requirements:

  
Figure 70: Field Positions in an Asset History Sheet Version 

286. What is an ‘Asset Explorer’?
‘Asset Explorer’ is a handy and convenient single interface transaction that helps you to display asset values, depreciation details, etc., in a very user friendly way. Gone are the days where you had to move to different pages and re-enter the same transaction many times to display the details of different assets.

Using asset explorer you have the convenience of:

• Moving from one asset number to the other effortlessly.

• Displaying asset values, both planned and posted, for any number of depreciation areas from the same page but in various tab pages.

• Jumping to the asset master or cost center master or GL account master.

• Calling up various asset reports.

• Currency converted views.

• Looking at the various transactions relating to an asset.

• Looking up all the values for different fiscal years.

• Distinguishing between real and derived depreciation areas with two differentiating symbols.

• Displaying the depreciation calculation function, and if necessary, recalculating depreciation.

Asset explorer is designed for easy navigation, with the following sections:

1. Asset values window 

The top-left area/window is the ‘asset values’ window, which is in a tree-like structure expanding to various depreciation areas such as 01, 03, 10, etc. By selecting any one of these depreciation areas, you will be able to view the value of an asset in the ‘asset value details window.’

2. Objects related to asset window 

This is also on the left-hand side of the display page, just below the ‘asset values window.’ With a drill-down tree-like structure you will be able to navigate between cost centers and GL accounts relating to the asset.

3. Asset value detail window (with tab pages)

This is the main window on the right, usually occupying most of the page area. Here, you will see information such as Company Code, asset number selected, fiscal year, etc. This window is made of two components that are completely re-sizeable: the top area displaying the asset values and the bottom showing the asset transactions.


  


Figure 71: Asset Explorer 
287. Explain ‘Production Set-up’ in FI-AA.
The ‘Production Set-up’ is a collection of logical steps in FI-AA to ensure that all the required configuration and activities are in place for making the asset accounting Company Code ‘productive.’ This includes:

1. Consistency check 

This will enable you to analyze errors, if any, in FI-AA configuration in the charts of depreciation, assignment of Company Code to the chart of depreciation, definition of depreciation areas, asset classes, GL account assignments, etc.

2. Reset Company Code 

As you will have test data, before the Company Code becomes productive, resetting the company is necessary to delete all this data. Note that this is possible only when the Company Code is in ‘test’ status. All the master records and values will be removed only from FI-AA. You need to remove all the FI and CO values separately as the resetting of the asset account Company Code does not remove these. Resetting will not remove any configuration settings of FI-AA.

3. Reset posted depreciation 

This step is required when there had been errors during a previous depreciation run. This is also possible only when the asset Company Code is in test status.

4. Set/reset reconciliation accounts 

Define the GL accounts for FI-AA reconciliation, if not done already. You may also reset already defined reconciliation accounts in the case of wrong account assignments earlier.

5. Transfer asset balances 

Transfer the asset balances to the GL accounts that have been defined as the asset reconciliation accounts.

6. Activate asset accounting Company Code 

This is the last step in the production set-up. All the previous statuses of the Company Code (test status/transfer status) become invalid now. No more transfer of old asset data is allowed when the asset Company Code becomes productive.

Controlling (CO)
General Controlling

288. Explain ‘Controlling (CO)’ in SAP.
SAP calls managerial accounting ‘Controlling’ and the module is commonly known as ‘CO.’ The CO module is, thus, primarily oriented towards managing and reporting cost/revenue and is mainly used in ‘internal’ decision-making. As with any other module, this module also has configuration set-up and application functionality.

The controlling module focuses on internal users and helps management by providing reports on cost centers, profit centers, contribution margins and profitability, etc.

289. What are the Important ‘Organizational Elements of CO’?
The important organizational structure of controlling includes:

• Operating Concern (the top-most reporting level for profitability analysis and sales and marketing controlling).

• Controlling Area (central organization in ‘controlling,’ structuring internal accounting operations).

• Cost Centers (lower-most organizational units where costs are incurred and transferred).

290. What is a ‘Controlling Area’? How is it Related to a Company Code?
A ‘Controlling Area’ is the central organizational structure in ‘controlling’ (CO) and is used in cost accounting. The controlling area, as in the case of a Company Code, is a self-contained cost accounting entity for internal reporting purposes. The controlling area is assigned to one or more Company Codes to ensure that the necessary transactions, posted in FI, are transferred to controlling for cost accounting processing.

  
Figure 72: Operating Concern, Controlling Area, and Company Code 

  
Figure 73: Controlling Area—Details 
• One controlling area can be assigned one or more Company Codes.

• One chart of accounts can be assigned to one or more controlling areas.

• One or more controlling areas can be assigned to an operating concern.

• One Client can have one or more controlling areas.

291. Outline ‘Company Code—Controlling Area’ Assignments.
There are two types of assignments possible between the Company Code and a controlling area:

• One-to-one: Here, one Company Code corresponds to one controlling area.

• Many-to-one: More than one Company Code is assigned to a single controlling area.

292. Explain the Different Types of ‘Controlling Area/Company Code’ assignments.

Controlling area-Company Code assignment 1:1 assignment 1: many assignments (cross-Company Code cost accounting) 
Chart of accounts The chart of accounts should be the same between the controlling area and the Company Code. The ‘operative chart of accounts’ of the Company Codes, and the controlling area should be the same.
Fiscal year variant (special and posting periods) The number of special periods may be different between the Company Code and the controlling area, but the number of posting periods should be the same.
Also, the period limits of posting periods should be identical.
Controlling area currency Same as the Company Code currency. You may use the same currency as that of the Company Code.
You may also use another currency in controlling
Object currency Additional currency, besides the controlling area currency, can be used for each account assignment objects in CO. You can choose any object currency if all the assigned Company Codes have the same currency that are the same as the controlling area currency. Otherwise, the system automatically assigns the Company Code currency to the account assignment object as an object currency. 
Transaction currency Documents are posted in CO in the transaction currency.
Allocations Cross-Company Code cost allocation in CO is not possible. Cross-Company Code allocation in CO is possible.


293. What are the ‘Components of Controlling’?
There are three major submodules in CO and each of these submodules has many components as detailed below:

  
Figure 74: Controlling Module’s Components 

• Cost Element Accounting

• Cost Controlling

• Cost Center Accounting

• Internal Orders

• Activity-Based Costing

• Product Cost Controlling

• Profitability Analysis

• Profit Center Accounting

  
Figure 75: Controlling Components 

294. Why do You Need ‘Cost Element Accounting’?
‘Cost Element Accounting’ (CO-OM-CEL) helps you to classify costs/revenues posted to CO. It also provides you the ability to reconcile the costs between FI and CO. CO-OM-CEL provides the structure for assignment of CO data in the form of cost/revenue carriers called cost elements or revenue elements.

295. Explain ‘Cost Center Accounting.’
‘Cost Center Accounting’ deals with the difficult task of managing ‘overheads’ within your organization. Since overhead costs are something that you cannot directly associate with a product or service, which can be difficult to control, cost center accounting provides you with the necessary tools to achieve this.

296. What is ‘Activity-Based Costing’?
‘Activity-Based Costing,’ popularly known as ABC, helps you to view overhead costs from the point of business processes. The result is you will be able to optimize costs for the entire business process. As a single business process, activity-based costing will cut across several cost centers and will give you an enhanced view of the costs incurred.

297. What is ‘Product Cost Controlling’ (CO-PC)?
‘Product Cost Controlling’ (CO-PC) deals with estimating the costs to produce a product/service. CO-PC is divided into two major areas:

1. Cost of materials

2. Cost of processing

With CO-PC, you can calculate:

• Cost of goods manufactured (COGM)

• Cost of goods sold (COGS)

CO-PC is tightly integrated with Production Planning (PP) and Materials Management (MM), in addition to FI. The functionality helps to:

• Calculate Standard Costs of manufactured goods

• Calculate the Work-in-Progress (WIP)

• Calculate the Variances, at period-end

• Finalize settlement of product costs

Note that CO-PC deals only with production costs as it deals only with the production.

298. What is ‘Profitability Analysis’ (CO-PA)?
‘Profitability Analysis’ (CO-PA) helps you determine how profitable (denoted by the ‘contribution margin’) your market segments are. The analysis is on the external side of the market. You will be able to define what segments, such as customer, product, geography, sales organization, etc., of the market are required for analyzing ‘operating results/profits.’ With multi-dimensional ‘drill-down’ capability, you have all the flexibility you need for reporting.

299. How is ‘Profit Center Accounting’ (EC-PCA) Different from CO-PA?
Unlike CO-PA where the focus is on external market segments’ profitability, ‘Profit Center Accounting’ (EC-PCA) focuses on profitability of internal areas (profit centers) of the enterprise. Profit center accounting is used to draw internal balance sheets and profit & loss statements. You may use EC-PCA in place of business area accounting.


Attribute Profitability Analysis (CO-PA) 
Profit Center Accounting (EC-PCA) 
Focus External market segments Internal responsibility centers
Reporting Any point of time During period-end
Margin reporting Profit & Loss statements
Accounting Cost of sales Period-based


Both CO-PA and EC-PCA serve different purposes, and are not mutually exclusive. You may need them both in your organization.

300. Explain ‘Integration of CO’ with its Components and Other SAP Modules.
The CO module is integrated with FI, AA, SD, MM, PP, and HR:

• FI is the main source of data for CO. All expenses, posted in FI, flow to CO through the ‘primary cost elements’ to the appropriate ‘cost centers.’ Similarly, postings in Asset Accounting (such as depreciations) are also passed on to CO.

• Revenue postings in FI would result in postings in CO-PA and also in EC-PCA.

• The SD, MM, and PP modules have many integration points in CO. Goods issue (GI) to a controlling object or goods receipt (GR) from a ‘production order’ are some examples of integration. These modules are tightly integrated as consumption activities, cost of goods issued, overhead charges, material costs, etc., which are passed on to production objects such as PP production order or sales order. The WIP (Work-in-Progress) and the variances, at period ends, are settled to CO-PA, CO-PCA, and also to FI. Revenues are directly posted when you generate billing documents in SD, if the sales order is a cost object item.

• The HR module generates various types of costs to be posted in CO. Planned HR costs can also be passed on for CO planning.

  
Figure 76: Integration of CO components within and outside CO 
The following table illustrates how the various components of CO are integrated:
CO-OM Overhead Cost Controlling 

External costs can be posted to cost centers/internal orders from other SAP modules.
Cost centers can then allocate costs to other cost centers, orders, and business processes in Activity-Based Costing (ABC).
Internal orders can settle costs to cost centers, other internal orders, and to business processes in ABC.
ABC, in turn, can pass on costs to cost centers and orders.
CO-PC Product Cost Controlling 

Direct postings from FI to cost objects (such as production orders).
Costs from cost centers can be posted to the production orders as overhead cost allocation.
Costs settled from internal orders can be passed on to production orders.
CO-PA Statistical cost postings from all CO components 
Cost assessments from cost centers/ABC.
Costs settled from internal orders.
Production variances from CO-PC.