Depreciation Areas

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Definition
Depreciation Areas are are used to calculate different values in parallel for the same asset. This may be required for legal requirement, management report, cost reporting etc.The Depreciation Areas help us to manage assets with different depreciation terms i.e. depreciation key, useful life, expired useful life. This helps us to meet many statutory requirements and also to evaluate assets as per multiple parameters.

The Depreciation Areas are divided majorly into Real Areas and Derived Areas. Here we will discuss about the Real Depreciation Areas. We will come up on the derived depreciation areas very soon.Implementation Consideration
The Depreciation Areas are available in standard and you should copy the same. (Please note that when we copy the country specific Chart of Depreciation, system also makes available the standard depreciation areas for the specific country).

IMG Path: Financial Accounting (New) >  Asset Accounting > Asset Accounting (Lean Implementation) > Organizational Structures > Depreciation Areas > Define How Depreciation Areas Post to General Ledger

Once you enter here, system shows the available standard depreciation areas (here you can’t create new chart of depreciation from scratch). Use the existing depreciation area by copying to create a new depreciation area. The depreciation area contains following:

Number
Enter the number to identify the depreciation are. Area 1 is standard area provided by SAP. Also there are some other depreciation areas available in SAP as per the country. For e.g. Area 15 available in SAP for Income Tax Depreciation in India. (SAP has provided a new set of functionality for Indian IT Depreciation).

Name
The name  is divided into long name and short name. Enter the appropriate name.

Real Dep. Area
Set this  indicator if you want the system to store values for this depreciation area. If this indicator is selected, system updates values for all the transactions. This indicator also means this is not a derived depreciation area.

Posting in G/L account
Specifies if changes to balance sheet values and/or depreciation from this depreciation area are to be posted to the general ledger, and how they are to be posted.

Options available are listed below:

0    Area Does Not Post
1    Area Posts in Realtime
2    Area Posts APC and Depreciation Periodically
3    Area Posts Depreciation Only
4    Area Posts APC Directly and Depreciation
5    Area Posts APC Only
6    Area Posts Only APC Directly

You will always have one area posting in realtime and other areas used for parallel accounting should be not posting. (Go through the other options carefully before opting for)

Target Ledger Group
In case of parallel ledger, if you want the area to post to the specific Ledger in General Ledger accounting (majorly for accounting in parallel currencies).

Alternative Depreciation Area
This option is obsolete

Value  Maintenance
Under value maintenance we have to configure the kind of values allowed for the following parameters

Acquisition Value
Net book value
Investment grants
Revaluation
Ordinary depreciat.
Special Depr.
Unplanned Depreciat.
Transfer of reserves
Interest
Revaluation ord.dep.

Options available for above parameters
Only Positive Values  or Zero Allowed
Only Negative Values  or Zero Allowed
All Values Allowed
No Values Allowed

Select the above options carefully so as to avoid any errors  in future.

Once we have setup the Depreciation Area, we need to specify what types of depreciation are allowed for the Depreciation area:

IMG Path: Financial Accounting (New) >  Asset Accounting > Asset Accounting (Lean Implementation) > Organizational Structures > Depreciation Areas > Specify Allowed Depreciation Type for Depreciation Areas

List of depreciation types

  • Ordinary depreciation
  • Special depreciation
  • Unplanned depreciation
  • Transfer of reserves
  • Investment support
  • Revaluation

Under every section of above, we can separately specify whether applicable for the area.

Hope above explanation adds value to your SAP experience.

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