New GL parallel ledgers in asset accounting

Parallel ledgers in Asset Accounting
New GL Code: FAGL_FLEXGL_IMG Page 1
Steps in parallel ledgers in asset accounting :
1. Define3Depreciation Areas-01(leading),30(Non-leading),55(deltadep)-OADB
2. Setup areasforparallel valuation-OADB_WZ
3. DetermineDepreciationAreasintheAssetClass-oayz
4. Integrationwith the General Ledger -ao90
5. SpecifyDocumentTypeforPeriodicPostingofAssetValues-se38-RAPERB2000
6. Scenario forparallel ledgers
Create an asset master for ‘Furniture’ with straight-line depreciation method with the following
parameter controls:
Depreciation area Useful life Depreciation rate per year
01 (For US GAAP) 2 Years 50%
30 (Indian GAAP) 4 Years 25%

Depreciation calculation for asset value 2, 40,000/- for each depreciation area is as under:
Depreciation area Total Posting periods Depr amount per period
01 (For US GAAP) 2 x 12 = 24 2,40,000/24 = 10,000
30 (Indian GAAP) 4 x 12 = 48 2,40,000/48 = 5,000
Now, do the asset acquisition for above asset and then run depreciation for one period and finally
retirement of the asset and see the effect in parallel ledgers.
TestingPart:
7. Create assetmaster - as01
8. Asset acquisition-f-90
9. Displayassetvaluein assetexplorer-Aw01n
10. DisplayAssetAPC general ledgerlineitems- FAGLL03
11. Run periodicassetdepreciation -AFAB
12. DisplaydepreciationGLlineitems-FAGLL03
13. Asset retirementpostings-ABAON
14. Periodicpostingfromfixedassets-ASKB
PARALLEL LEDGERS IN ASSET ACCOUNTING
We can use parallel ledgers in asset accounting for different valuations as per different
accounting principles. In our scenario, company code AIPL (Hindustan Mills Ltd) follows two
accounting principles that is US GAAP and Indian GAAP. In General Ledger accounting we
have created ledgers for each GAAP i.e. leading ledger ‘0L’ for US GAAP and Non-leading
ledger ‘X1’ for Indian GAAP. In asset accounting, we use master area i.e. area 01 for leading
ledger valuation. For valuation of non-leading ledger, we create one separate real depreciation
area and one derived depreciation area for each accounting principle so that the values of Asset
Accounting and General Ledger Accounting can be reconciled. The derived depreciation area

triggers adjustment postings to keep the general ledger and subsidiary ledgers in sync. We have
already created ledger group for each ledger in General Ledger accounting, the same ledger
group will be assigned in depreciation area of each accounting principle in asset accounting. The
following depreciation areas will be created:
1. DefineDepreciationAreas
Define depreciation area 1 (book depreciation area ) and 30 (depreciation area for Indian
GAAP). For depreciation area 1, system posts value in real time whereas for depreciation area
30, system posts only depreciation value. Use following menu path or transaction code:
Using above menu path or T.code we will assign the ledger groups in the respective depreciation
area i.e. ledger group '0L' in area 1 and ledger 'X1' in area 30:
Depr Area Description Posting in GL
1 Book depreciation area (Leading Ledger) Area posts in Real time
30 Valuation area for Indian GAAP (Non-Leading ledger) Area post depr only
55 Delta Depreciation Area Area Posts Only APC
Directly
SAP Menu SPRO-> IMG -> Financial Accounting (New) -> Asset Accounting ->
Valuation -> Depreciation Area-> Define Depreciation Area
Transaction Code OADB

In the above step, we have specified ledger group ‘0L’ as target ledger group for master
depreciation area 01 that means asset values of depreciation area 01 will be updated in leading
ledger ‘0L’ in General Ledger Accounting. The ledger group which we assign to master area
must contain leading ledger. In the same way we will specify ledger group ‘X1’ for depreciation
area 30 which we use for parallel valuation for Indian GAAP. The ledger group of the area for
parallel valuation is not allowed to contain the leading ledger. Asset values in area 30 will be
posted to Non-Leading ledger X1, as shown in the below screen:

Posting control in depreciation area 30 should be set as “Area posts Depreciation Only”.
We do not have to set up a separate set of GL accounts for this new depreciation areas 30.
Instead we use the same set of GL accounts of the master depreciation area 01. In this scenario,
we do not have to create any new GL accounts in the chart of accounts or in the company code.
We also do not have to create a new financial statement version for different parallel valuations
and Ledgers. Depreciation area 30 uses the GL account set of depreciation area 01. Ledger group
‘X1’ is not allowed to contain the leading ledger when we specify X1 as target ledger group in
depreciation area.
To enable this setting, we have to select 1 in the field “Different Depreciation Area” in
depreciation area 30 as shown in the above picture.
2. Setup areasforparallel valuation
Using this wizard, system automatically creates a derived depreciation area that is used for
updating the APC differences in the ledger group of parallel valuation. Posting control in the

derived depreciation area is set as "Area posts only APC directly" while the real depreciation
area for parallel valuation posts only depreciation.
Real depreciation area 30 for parallel valuation use the GL accounts of the master depreciation
area 01 for posting values. If the accounts of the master depreciation area are entered as cost
elements, then this also applies to parallel valuation, although there is no update to CO in this
general ledger.
Follow the steps below:
Click on "Continue" button.
Valuation -> Depreciation Area-> Set Up Areas for Parallel Valuation
Transaction Code OADB_WZ

Enter the real depreciation area 30 for parallel valuation and target ledger group X1 and click on
"Continue" button.
Since we have not created any derived or delta depreciation area in chart of depreciation ALTM
for company code AIPL, here we will select option “Create New Depreciation Area” so that

system automatically creates the delta depreciation area for parallel valuation. System shows the
difference between local and parallel valuation in this area and posts these differences in the
ledger group for parallel valuation i.e. X1.

Click on "Continue" button and complete the setting.
Now see the depreciation area overview (Transaction code OADB)

Notice that ledger group X1 has assigned in both depreciation area 30, which is for parallel
valuation and depreciation area 55 which is delta depreciation area for area 30 to post the
difference between area 1 and 30.
3. DetermineDepreciationAreasintheAssetClass
In this IMG activity, we determine the depreciation terms that are used in asset classes.
Select asset class 3000 ‘furniture and fittings’ and double click on “Depreciation areas” in dialog
structure:
Valuation -> Determine Depreciation Areas in the Asset Class
Transaction Code OAYZ

Deselect the check box ‘deactivate’ for depreciation area 30 so that all the depreciation areas will
appear when we create an asset master under this asset class.
We have specified useful life 2 years for area 01 and 4 years for area 30.
4. Integrationwith the General Ledger
In this IMG activity, we specify the balance sheet accounts and the depreciation accounts for
master depreciation area 01 and parallel depreciation area 30. For derived depreciation area 55,
account assignment is not required.

Integration with the General Ledger -> Assign G/L Accounts
Transaction Code AO90
Assign balance sheet GL accounts to depreciation area 1 as follows:

Similarly assign balance sheet GL accounts to depreciation area 30 and then assign depreciation
GL accounts for depreciation area 1 and 30 as follows:
Depreciation area 1:

Depreciation area 30:
5. SpecifyDocumentTypeforPeriodicPostingofAssetValues
In this IMG activity, we specify a default document type for periodic posting of asset balance
sheet values (values other than depreciation). This document type is used only by the periodic
posting program, RAPERB2000. We have created a separate document type ‘SX’ for this
purpose, the same will assign to company code AIPL in this step as follows:

We have completed the necessary configuration steps for parallel ledgers in asset accounting.
Now we will test the same settings for the business scenario in the following steps:
6. Scenario for parallel ledgers
Create an asset master for ‘Furniture’ with straight-line depreciation method with the following
parameter controls:
Depreciation area Useful life Depreciation rate per year
01 (For US GAAP) 2 Years 50%
30 (Indian GAAP) 4 Years 25%
Depreciation calculation for asset value 2, 40,000/- for each depreciation area is as under:
Depreciation area Total Posting periods Depr amount per period
01 (For US GAAP) 2 x 12 = 24 2,40,000/24 = 10,000
30 (Indian GAAP) 4 x 12 = 48 2,40,000/48 = 5,000
Now, do the asset acquisition for above asset and then run depreciation for one period and finally
retirement of the asset and see the effect in parallel ledgers.

7. Create asset master
Create an asset master for furniture.
SAP Menu SAP Easy Access-> Accounting -> Financial Accounting ->
Fixed Asset -> Asset -> Create -> Asset
Transaction Code AS01
Click on “Deprec.Area” tab page and give useful life and depreciatoin key are 1 and 30 as
follows:

Now save the data, system has created asset master number 300011 for furniture.
8. Asset acquisition
Do asset purchase on date 01.03.2013 for amount 240,000 using following menu path or
transaction code:
SAP Menu SAP Easy Access-> Accounting -> Financial Accounting ->
Fixed Asset -> Posting -> Acquisition -> External
Acquisition -> With Vendor
Transaction Code F-90

Asset purchase document has posted as shown in above screen shot.
9. Display asset value in asset explorer
Use the following menu path or transaction code to display the asset value for all depreciation
areas for the asset posted in earlier step:
SAP Menu SAP Easy Access-> Accounting -> Financial Accounting -> Fixed
Asset -> Asset -> Asset Explorer
Transaction Code AW01N

In the above screenshot, we can see the value in depreciation area 01 (Leading ledger valuation
in local currency).
Now see the comparison value of depreciation area 30 as follows:

In the above picture, for depreciation area 30 (Non-Leading ledger valuation in local currency),
system shows comparisons for four years (2013, 2014, 2015 & 2016) because we have given
useful life four years in asset master 300011 for this depreciation area.
Note: System also shows value 10, 000 in fifth year i.e. 2017 this is because we have done asset
acquisition in third period of the current year 2013 so in current year system could calculate
depreciation only for 10 months and for remaining 2 periods, depreciation will be posted in year
2017 (5, 000 x 2 = 10,000).
Now display the comparison value of delta depreciation area 55. Here we can see that system
shows the difference value between area 01 and 30 under depreciation area 55.
Example: For the year 2013, ordinary depreciation is 1, 00,000 in depreciation area 01 and for
area 30 ordinary depreciation is 50, 000 in the same year so difference 50,000 (area 01minus
area30) has shown under delta area 55. See the below picture:
10. Display Asset APC general ledger line items

The asset acquisition posting which is made in the leading ledger is automatically posted into the
non-leading ledger also. Display G/L line items for asset ‘Furniture’ APC account for ledger 01
and 30 and notice that system has updated the same value in both the ledgers.
Choose ledger ‘X1’ by clicking on "Choose Ledger" button.
Execute and see the balance:
SAP Menu SAP Easy Access-> Accounting -> Financial Accounting -> General
Ledger -> Account -> Display/Change Items (New)
Transaction Code FAGLL03

Now choose ledger‘0L’by clickingon"Choose Ledger"button andexecute:
11. Run periodic asset depreciation

When we run depreciation program using below menu path or transaction code, system posts separate
documents in each ledgers i.e. ledger ‘0L’ and ledger ‘X1’ with their respective depreciation amount
accordingto depreciationkeyassignedinassetmasterdataforeach depreciationarea.
Firstexecute testrunandthenupdate run as follows:
SAP Menu SAPEasy Access->Accounting->Financial Accounting ->FixedAssets ->
Periodicprocessing ->Depreciationrun ->Execute
Transaction Code AFAB
Execute:

Notice that system has created two separate depreciation documents with different values for each
depreciation area i.e. area 1 and area 30. Since area 1 is assigned to ledger ‘0L’ and area 30 is assigned
to ledger‘X1’incustomizingsosystemwill postseparate depreciationvaluestoeachledger.
12. Display depreciation GL line items
Display “book depreciation G/L account” line items for the each ledger using following menu path or
transactioncode:
SAP Menu SAPEasy Access->Accounting->Financial Accounting ->General
Ledger-> Account-> Display/Change Items(New)
Transaction Code FAGLL03

Displaybalance forLeadingLedger –0L
Display balance for Non-Leading Ledger –X1
Notice that system has posted depreciation value 10,000 for ledger "0L" and 5,000 for ledger
"X1"
Thus depreciation amount of 10, 000 under US GAAP is posted in leading ledger ‘0L’ and the
depreciationamountof 5,000 underIndianGAAPispostedinnon-leadingledger‘X1’

13. Asset retirement postings
We will retire the asset through sale for a value of Rs.2, 33,000 so that in US GAAP depreciation area,
there will be a gain of Rs.3, 000. On the other hand, there will be a loss of Rs. 2, 000 in the Indian GAAP.
The followingare the accountingentrieswhichshouldbe updatedineachledger:
AssetRetirementPosting- 0L (Area 01)
Furniture &Fixture (APCA/c) 2,40,000.00 Cr
ClearingAssetdisposal 2,33,000.00 Dr
Accm Depr-Furniture &Fixture 10,000.00 Dr
ProfitonassetSale 3,000.00 Cr
AssetRetirementPosting- X1 (Area30)
Loss onasset Sale 2,000.00 Dr
But when we do retirement postings in SAP, system does not post the separate values to eachledger i.e.
0L and X1 as explained in the above example rather the entries made in the leading ledger is duplicated
in the non-leading ledger. In this case, system will pass the following entry in area 30 (Ledger X1) which
isthe same accountingentryupdatedinarea01 (Ledger0L):

AssetRetirementPosting– X1 (Area30)
Due to thispostinginIndianGAAParea,we can see the followingmismatchesinIndianGAAPledgerX1:
1. The reverse of accumulated depreciation is more by 5,000 because 10,000 has been reversed
insteadof 5,000
2. There isno postingforactual lossof 2,000 inthisledger
3. Instead a gain of 3,000 has been posted.
To correct all these mismatches, the system automatically posts the entries necessary to reflect the
correct position in Indian GAAP (Ledger X1) when we run the periodic asset posting program. This
adjustmentisdone usingthe Deltadepreciationarea.
The followingentrywill be passedforadjustmentusingperiodicprogramrun:
AssetAdjustmentPosting - X1 (Area30)
Accm Depr-Furniture &Fixture 5,000.00 Cr
ProfitonassetSale 3,000.00 Dr

Lets see replicate the above scenario in SAP using the following menu path or transaction code to do
assetretirementposting:
SAP Menu SAPEasy Access->Accounting->Financial Accounting ->FixedAsset->
Posting->Retirement->AssetSale WithoutCustomer
Transaction Code ABAON
Click on "Simulate" button.

Post the document:
Note:Line item2 isfor accumulated depreciationaccountinthe above screenshot.

Displayassetvaluesinassetexplorerforeachdepreciationareaafterretirementasshownbelow:
DepreciationArea01:
Display Depreciation Area 30:

Displaydeltadepreciationarea55:

Now display balance for G/L account 30000004 (Profits on asset disposal / sale) after doing asset
retirementandnotice thatsystemhaspostedthe same value tobothledgeri.e.0l andX1:
Transactioncode:FAGLL03

Displaybalance forledgerX1:
In the above twoscreenshots,we cansee thatsystemhasupdatedsame value inbothledgers.
Now we need to correct these values and post the adjustment entry in non-leading ledgers using asset
periodicpostingasexplainedearlierinthe example,use the followingmenupathortransactioncode:

14. Periodic posting from fixed assets
We use this step to post the adjustment entries to specific ledger since we cannot post directly to
reconciliation G/L. As per the retirement adjustment posting, we need to post to accumulated
depreciation G/L account also which is reconciliation account.
Give the asset number 300011 in initial screen for which we want to post the adjustment entry.
First execute in test mode and then execute update run as follows:
SAP Menu SAP Easy Access-> Accounting -> Financial Accounting -> Fixed Asset ->
Periodic processing -> APC Values Posting
Transaction Code ASKB

In the above screenshot, we can see that system posts this adjustment document to ledger group
X1 only. When we execute the update run, system creates the following document as per
accounting entry explained in the example:

Note: Line item 3 is for accumulated depreciation account in the above screenshot.
Now after posting this adjustment document through periodic run, display balance for ledger
account 30000004 (Profit on disposal / sale of fixed assets) for Ledger – X1 and notice that
system has posted one reverse entry for the amount 3,000 which was posted during asset
retirement:
This way system nullifies the balance of “Profit on sale” account for ledger X1 and posts to
“Loss on sale” account, see the below picture:

Finally, after completing the above steps, we will find the GL balances for each ledger as per the
accounting entries given in the example as mentioned below:
AssetRetirementPosting- 0L (Area 01)
AssetRetirementPosting- X1 (Area30)

New GL parallel ledgers in asset accounting

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