PARALLEL LEDGERS IN ASSET ACCOUNTING
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hsen ABROUG
April 8, 2020 5 minute read
PARALLEL LEDGERS VALUATION IN S/4 HANA NEW ASSETS ACOUNTING
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Using the parallel ledger, companies can set parallel valuation in different accounting principles
Typically, a local company that belongs to a group needs to follow both local and group accounting principles
In Assets accounting, we can set Parallel ledger accounting using depreciations areas
We need to define depreciation area per involved accounting principles,
In our scenario company FR01 a local branch of an international group, company FR01 needs to report financial statements in group accounting principles IFRS and in local GAAP accounting principles.
We defined the Leading ledger ‘0L’ for IFRS and non leading ledger ‘2L’ for LG accounting principles.
Let’s see the major customizing steps and a process flow to demonstrate the power of the ledger approach in parallel valuation in assets accounting.
1. Define settings for ledgers
We assigned accounting principles to corresponding ledgers for the company ‘FR01’.
0L Ledger
2L Ledger
2. Define Depreciations areas
In our example we created the following 2 depreciation areas
Depreciation area 1 for IFRS accounting principles (0L Ledger group)
Depreciation area 12 for LG accounting principles (2L Ledger group)
Both areas 1 and 12 posts in real time
Important note
In New Assts accounting, the delta depreciation area is no longer needed, the system posts in real time to both ledgers.
3. Assign GL Accounts
In this step we need to assign GL accounts for both depreciations areas, 1 and 12
We used the same accounts for both areas as we are using separate ledgers for both areas
The following screen shots applies for area 1, area 12 have the same accounts assignments
4. Define technical clearing account for integrated assets aquisition
Below the SAP definition of the integrated aquisition postings available in SAP HELP
You can find this definition also when clicking on the glasses in front of the main customizing neud
“For an integrated asset acquisition posting, the system divides the business transaction into an operational part and a valuating part:
For the operational part (vendor invoice), the system posts a document valid for all accounting principles against the technical clearing account for integrated asset acquisitions. From a technical perspective, the system generates a ledger-group-independent document.
For each valuating part (asset posting with capitalization of the asset), the system generates a separate document that is valid only for the given accounting principle. This document is also posted against the technical clearing account for integrated asset acquisitions. From a technical perspective, the system generates ledger-group-specific documents for each accounting principle.”
5. Specify alternative document type for the valuation part of the posting
The derived document type is for the valuation posting created at the same moment of vendor invoice when posting Asset aquisition
6. Determine Depreciations Areas in Asset Class
Select Asset class 3000
–> Deactivate all depreaciations areas except 01 and 12 areas
–> Set the usefull life 2 years for depreciation area 01 and 4 years for depreciation area 12
7. Business Scenario for Parallel Ledger Valuation
The company FR01 needs to maintain accounting and reporting for Assets in both group and local accounting principles,
In this scénario will process the following flow and track accounting posting and reporting in both acct principles
Create an asset, Post acquisition, Run depreciation, post retirement
7.1 Create asset
Create asset for Fixture and fitting (class 3000) with straight line depreciation method for depreciation area 1 and depreciations area 12
In Class 3000 for Area 1, the useful life is 2 years
In Class 3000 for Area 12, the useful life is 4 year
Transaction: AS01
7.2 Asset Aquisition
Asset acquisition for 2400 Euros
Transaction: F-90
Operational part (vendor invoice)
Valuating part (asset posting with capitalization of the asset)
7.3 Asset Depreciation Run
Transaction: AFAB
Posting for the first 5 periods of 2020.
Asset explorer for IFRS (0L)
–> Posted depreciation value 500,00 Euos for ledger “0L” for 5 periods (100,00 Euros per period).
Depreciation FI document posted to Ledger 0L
Asset explorer for Local GAAP (2L)
–> Posted depreciation value 250,00 Euros for ledger “2L” for 5 periods (50,00 Euros per period).
Depreciation FI document posted to Ledger 2L
7.4 Asset Retirement
Asset retirement for a sale value of 2000 Euros
Transaction: ABAON
Posting to IFRS acct principles (Ledger 0L)
–> 100 Euros gain for 0L ledger
Posting to LG acct principles (Ledger 2L)
–> 150 Euros Loss for ledger 2L
–> In IFRS Depreciation area we have a gain of 100 Euros and in the LG depreciation area we have 150 Euros loss
Using the parallel ledgers 0L and 2L, we are able to run parallel valuation according to different accounting principles
Please feel free to comment
Best Regards
Ihsen ABROUG
Abdullah Galal
April 10, 2020 at 9:41 am
Awesome blog with a great level of details, will refer anyone asking about parallel ledgers with FA to here.
Thanks a lot for your efforts, I know how much effort that takes.
This blog will be here after 10 years and people will still learn from it , please keep posting
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Ihsen ABROUG
Blog Post Author
April 10, 2020 at 7:20 pm
Thank you Abdullah
Regards
Ihsen
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TALHA KHAN
April 13, 2020 at 6:51 pm
Very informative and detailed explanation.
Excellent Blog.
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Georgios Agagiotis
April 14, 2020 at 5:49 am
Great work. Many Thanks.
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Durga sai ram Naraharisetty
April 14, 2020 at 1:09 pm
Excellent and very much helpful
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VENKATESH BHANDARI
April 14, 2020 at 6:51 pm
Nicely articulated..one can understand better on parallel ledgers. Great effort. Thanks
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Kishore Kamarthapu
April 15, 2020 at 9:32 am
Good Information Ihsen ABROUG.
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Jagadeesh Gundachary
April 15, 2020 at 8:53 pm
Very Well explained, Great work.
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kotesh rao
May 14, 2020 at 12:36 pm
Very good blog and detailed explanation.
Thanks for sharing & I wish you keep posted nice blogs.
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Raja Sekhar Andey
July 16, 2020 at 6:51 am
Simple and clear explanation.
But It would be ideal to have local GAAP as leading ledger (L0) since all the reporting should be done at Local GAAP.
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Monika Patel
December 28, 2020 at 10:54 pm
Thanks for such a detailed blog. Requesting to please clarify one doubt : Which version of S/4HANA was ref. in the blog ? Accounting-Principle what is the difference between assigning it to each-Comp-Code, within-the-ledger ?
Reason for asking above question
In S/4HANA On-premise 1809, we have two-config --> (a) Define-Accounting-Principle & (b) Assign Ledger-Group to Accounting-Principle
As per my experience, we need to set-up the relation between Accounting-Principle >> Ledger-Group so that while creating Dep-Area, when we assign Accounting-Principle, accordingly Ledger belonging to Ledger-Group will get picked-up.
Thanks in anticipation to get the required clarity on above question. Regards
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Asharaf Jamal
April 16, 2021 at 10:12 am
Excellent !
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Dambuluwana Maddumage Ajith Madduma
April 18, 2021 at 11:34 am
Very useful, Detail explanation.
Thanks
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Kushal Vaidya
July 29, 2021 at 8:36 pm
Very Good Explanation.
Hi Have one Question - I understand how technical Account works and post acquisition documents in each ledgers.
Question - How can we handle posting different valuation to separate accounting ledgers during capex order settlement?
Can we still use capitalization key in S/4 HANA to configure how much we want to capitalize in each ledger.
Kushal Vaidya
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Thomas Langheim
May 15, 2022 at 9:42 am
Simply excellent, Ihsen.
Very good information in a very central part of SAP-FI.
OSS 2856765 - telling that table BSEG is not filled anymore here - is also very interesting in this context.
ACDOCA-BSTAT = 'U' is an interesting one (i.e. "not in BSEG anymore") mentioned in note OSS2297729 - and can be seen in "document status" in the depreciation postings inside this blog.
Again, thanks a lot. Inspiring.
Thomas
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Ram Kumar Swami
April 16, 2014 14 minute read
PARALLEL LEDGERS IN ASSET ACCOUNTING
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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. Define Depreciation Areas
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:
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