30 Jan SAP Fixed Assets – Flexibility to Support Dynamic Businesses
SAP Fixed Assets has been a stable sub-module in the ERP suite for many years, yet it contains an enormous degree of flexibility to meet business demands. Capital asset valuations, depreciation calculations, and reporting have been a significant topic recently due to three major trends:
1. Governments are offering special depreciation incentives to encourage capital spending and economic growth.
2. Excessive cash on corporate balance sheets has led to an increase in merger and acquisition activity.
3. The regulatory and economic environment has been friendly to companies extending to new geographic locations.
SAP offers standard functionality that can easily be configured to meet the challenges associated with each of these business initiatives.
Special bonus depreciation can be calculated in addition to the standard depreciation on an asset. A default method per asset class (machinery, autos, buildings, etc.) will apply the most common depreciation, but each asset can be manually reassigned to recognize the nuances of any specific exclusions based upon the tax regulations. Multiple sets of asset books can be used in parallel to track the distinct requirements of each taxing authority (e.g. state, federal, alternate federal).
Mergers and acquisitions often drive two primary impacts to the fixed asset ledger — changes to the fiscal year of the corporation and revaluation of assets based upon fair market value. A change to the fiscal year variant (possibly including a shortened year) is often necessary to align with the parent company’s reporting requirements. Fixed assets will naturally follow the overall fiscal year of the general ledger, but can also be assigned its own fiscal year variant. Additional sets of asset books can also be added to existing assets to track unique fiscal years, valuations, and/or depreciation calculations.
As organizations expand into new states or countries, they may be faced with the requirement to maintain unique valuations and depreciation calculations to meet multiple tax and GAAP requirements. Here again multiple sets of asset books can be maintained even if they aren’t originally defined as the asset is acquired. Integration to non-leading general ledgers can smoothly pass along these results to satisfy the overall financial reporting of different GAAP.
Our clients are often pleasantly surprised by the degree of business change that can be supported with quick-hit projects in SAP Fixed Assets.
Matt Christensen is a Principal Consultant with Phoenix Endeavors. He has more than seventeen years of experience implementing a broad set of SAP solutions, including configuration and development in ERP and Business Intelligence. Matt holds an undergraduate degree in computer science and an MBA in finance.