How to configure depreciation key in SAP

How to configure the depreciation key

Deprecation key is dependent of so many other keys defines on sap like base method and period control method and others. So in the first step you need to define all these methods and then at last you define the key which will be used for calculation.

Define Base Method

Sap provides lots of base method. You need not create a base method for your own use as these bases methods are sufficient for any business process. If you want your own base method then that can be either created by pressing “new entries” by selecting “copy” icon from the top of sap screen.

You can reach the base method creation screen by using following path;

SPRO > Financial Accounting > Asset Accounting > Depreciation > Valuation method > depreciation key > calculation methods > define base method

By selecting any base method if you double click on it then you will find that following settings are done to define the method to be used for depreciation calculation;

  • Type of depreciation

You select whether your type of depreciation is ordinary depreciation or special for tax purpose or interest

  • Depreciation method

You mention the method that needs to be used here.

  • Under the tab of “treatment of end of depreciation” you specify the treatment at the end of the life of asset or when net book value becomes zero.

Define Declining balance method in SAP

SAP delivers standard declining balance methods for use. If you want to use then no need to create a new method in SAP or else you can create by selecting “New entries” or “copy” from the top menu.

To define a declining balance method in sap you enter the transaction code AFAMD or path;

SPRO > Financial Accounting > Asset Accounting > Depreciation > Valuation method > Depreciation key > Calculation method > Define Declining balance method

You can define the maximum and minimum percentage of the declining balance method in SAP. Based on this percentage system will calculate depreciation. You have to create separate declining balance methods for different percentage use for depreciation calculation.

You also can use the standard declining balance methods if you are satisfied with it.

How to define maximum amount method for depreciation calculation

This maximum amount is specified to indicate SAP that depreciation calculation should not exceed this amount at any point of time. If your calculation exceeded this maximum amount then system will reduce the calculated depreciation to the maximum amount specified. You need to specify this against the currency you use for depreciation calculation.

For this configuration you need to follow the following path;

SPRO > financial accounting > asset accounting > depreciation > valuation method > depreciation key > calculation methods > define maximum amount methods

How to define multi level method for depreciation calculation

You can define multi level method and assign the same to your depreciation key to use. You can define it as a straight line method or declining balance method.

To define your multi level method please follow the following path;

SPRO > financial accounting > asset accounting > depreciation > valuation method > depreciation key > calculation methods > define multi level methods

You can also use transaction code AFAMS to reach the above screen for defining multi level method

After reaching the screen for creation you can select the “new entries” option or you can copy it by selecting “copy” option.

After selecting new entries option you need to specify the name of the multi level method and description of such multi level method.

Specify your validity start date and double click on “levels”. Here you specify the base value of calculating dep. and a percentage on the base value for calculating it. Bases on this value SAP will calculate your depreciation. Suppose I have decided to use base value as acquisition value and percentage as 10% then system will calculate 10% of my acquisition value as depreciation.

How to maintain period control method for depreciation key

You can use transaction code AFAMP or following path;

SPRO >Financial Accounting > Asset Accounting > Depreciation > Valuation Methods > Depreciation Key > Calculation Method > Maintain Period Control Methods

Here you define it and assign to depreciation key for use.

You have to specify following things while defining period control;

  • Deprecation start date for acquisition
  • Subsequent acquisition
  • Retirement
  • Transfer posting

Maintain Depreciation Key

You can maintain depreciation key either by using transaction code AFAMA or path;

SPRO > Financial Accounting > Asset Accounting > Depreciation > Valuation Methods > Depreciation Key > Maintain Depreciation Key

You define a depreciation key against your chart of depreciation and assign your base method, declining balance method, period control and multilevel method to finish creating it. Now save and activate it. You can create this depreciation key either by selecting “new entries” or by selecting the “copy” option available at the top of the screen.

When you do a depreciation run system will consider the depreciation key assigned to the asset master and based on that it calculated and does the posting on your behalf. such posting can be monthly or annually or as defined by you in SAP. you can define another period like weekly for such calculation.

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