SAP Asset Accounting - Depreciation Methods

This Course basically covered two depreciation methods one is units of production and another one is the sum of digits year.

in this course, we explained business scenarios to sap system configurations. by end of this course, you will be familiar with all steps.

1. Production Units Method

You can change the total output quantity, or the remaining output, to the exact periods. The system then calculates unit-of-production depreciation based on the new total output quantity or the new remaining output, starting with the period in which the change was made.

• Specify the probable output quantity for every depreciation period in fiscal years that are still open.

Calculation:

Depreciation = acquisition value (net book value) / total output (remaining output) * period output

2. Sum of Digits Method

Use

For each year of the expected useful life, the system notes the remaining useful life for the assets and totals the figures in each year. In each fiscal year, the remaining life is divided by this total in order to calculate the depreciation percentage rate for that fiscal year. This method leads to depreciation amounts that are reduced progressively by the same amount each period.

Since the remaining useful life is no longer defined after the end of the planned useful life, this depreciation method does not allow for depreciation after the end of the planned life. However, you can change to another method after the expected useful life has expired.

Acquisitions after the depreciation start year or post-capitalization will necessarily lead to a positive net book value at the end of planned life. For this reason, such transactions are not allowed when using the sum-of-the-years-digits method of depreciation. With this method, you have to handle subsequent acquisitions by creating sub-numbers. It is also a requirement that the acquisition year is the same as the depreciation start year.

Calculation :

Depreciation = APC * remaining useful life (current period) / total of remaining useful life (over entire useful life)