1. In New GL, how would you incorporate companies with different fiscal years if you wanted to assign them to the same controlling area?
A. Create company codes with the same fiscal year variant and assign the company codes that have a different fiscal year to non-leading ledgers with the appropriate fiscal year variant.
2. What are the necessary elements required to create a customer-specific drilldown report for New General Ledger Accounting?
A. Form and Characteristics.
3. How many possibilities are possible with New General Ledger? Choose all that apply.
A. Account balancing with any characteristic
B. Customer Fields Extensibility
C. Segment Reporting
D. Reduction of Total Cost of Ownership
E. Transparency and Uniformity
(All are correct)
5. What are the advantages of using the New General Ledger? Choose all that apply.
A. Extended data structure
B. Document (Online) Split
C. Real Time Integration between CO and FI
D. Multiple Ledgers can be maintained under leading ledger.
E. Interfaces for entering the data and postings are nearly identical.
(All are correct)
6. True or False: Please choose the correct answer.
A. the New GL is optional for existing SAP Customers.
True
7. What Customizing transaction will activate the New General Ledger? A. FAGL_ACTIVATION
8. After Activating the New GL, what following changes will take place?
A. There will be new Paths for New GL in addition to existing (Old) GL.
B. Conventional Financial Accounting Paths will remain at their present form.
C. Old paths can be eliminated by running RFAGL_SWAP_IMG_OLD
(All are correct)
9. What will be the New ledger definitions after the activation?
A. Control Parameters (as before) will be from company code.
B. The leading ledger will manage local currency(s) assigned to company code.
C. New GL will use the same Fiscal Year Variant and Posting Period Variant that is assigned to company code.
(All are correct)
10. Choose the correct answer(s).
A. After activation, Financial Accounting Document will have two views: the entry view and the GL View.
True
B. Entry View will be the same in sub-ledgers (AR / AR / AA / Taxes).
True
11. The depreciation position program RAPOST2000 can be used to record the following:
A. Ordinary (book and cost-accounting) depreciation.
B. Tax special depreciation or the allocation and write off of reserves for special depreciation on the basis of tax special depreciation
C. Unplanned depreciation (or other manually planned depreciation)
D. Imputed interest
E. APC revaluation below/above the accumulated depreciation
((All are correct)
12. The ‘posting period’ can be defined for each
A. Company code
B. Accounting principle
C. Accrual type
(All are correct)
13. Which of the following are advantages of document splitting?
A. Accelerate closing
B. Increased data quality
C. Extensibility and flexibility
(All are correct)
14. Which of the following is not correct?
A. The main ledger generally reflects the accounting principle used to draw up consolidated financial statements.
B. The main ledger is the only ledger that is integrated with controlling module by default.
C. For parallel financial reporting, other ledgers cannot be used in addition to the main ledger.(Not Correct)
D. Consolidated financial reporting is normally mapped with main ledger
15. Splitting process can be divided into following steps
A. Active split, Passive split, and Clearing lines/zero balance formation by document
16. Which of the following are correct about periodic allocation?
a) Both Distribution & Assessment can be applied as a Periodic Allocation Technique in the
New Ledger. However Periodic Reposting is not used.
b) Statistical Key Figure presently cannot be used as a Tracing Factor.
c) Distribution Generates a FI Document as an output.
d) A separate Assessment account needs to be defined for New General Ledger as a GL Account that is not a secondary Cost Element of category 42.
(All are correct)
17. Which of the following are advantages of ledger solution?
a) You maintain a separate ledger for every accounting principle
b) You can use different fiscal year variants in this scenario
c) The number of G/L accounts is manageable
(All are correct)
18. Which of the following are migration principles?
a) Date of Migration is at the beginning of a Fiscal Year (Current or Future)
b) Year End closing of the Old Fiscal Year must be completed prior to migration and Activation of New GL.
c) After successful data Migration, New GL will be activated.
(All are correct)
19. Which program hides the old paths in the new general ledger?
A. RFAGL_SWAP_IMG_OLD
Monday, January 25, 2010
SAP ECC 6.0: New GL Configuration Steps
22. Activate Document Splitting
In this IMG activity, you have to activate document splitting. The splitting method used is the SAP standard one, which contains the splitting rules for the different business transactions. If this splitting method does not meet your requirements, you can first define and then select your own method in Customizing for document splitting. You can do this choosing Extended Document Splitting > Assign Splitting Method.
The activation then applies for the entire client. You can explicitly exclude individual company codes from document splitting. This means, however, that you are then no longer able to create any cross-company-code transactions containing company codes that have divergent settings for document splitting.
Financial Accounting (NEW) > General ledger accounting (NEW) > Business transactions > Document splitting > Activate Document Splitting
Field name User action and values
Document Splitting √
Inheritance √
Standard A/C Assignment √
Constant ZBP01
23. Define Tolerance Groups for G/L Accounting
When G/L accounts are cleared, tolerance groups are used to define limits which differences are accepted and posted automatically to predefined accounts. The groups which are defined here are assigned in the G/L account master record.
Financial Accounting (NEW) > General Ledger Accounting (NEW) > Business Transactions > Open Item Clearing > Clearing Differences > Define Tolerance Groups for G/L Accounting
24. Define Posting Key for Incoming Invoices/Credit Memos
When you enter incoming invoices and credit memos, the posting keys for the open items and G/L account items are generated automatically by the system. You cannot change these keys when entering invoices and credit memos.
Financial Accounting (NEW) > Accounts Receivable/Accounts Payable > Business Transactions > Incoming Invoices/Credit Memos > Incoming Invoices/Credit Memo – Enjoy > Define Posting Key for Incoming Invoices/Credit Memos
Make the following entries for transaction EGX (Vendor item with special G/L indicator):
Post. Key Debit Posting Key Credit
29 39
25. Set country-specific check
For all countries, which maintain business relationships with your company, you have to include rules for checking the following data.
SAP Net Weaver > General Settings > Set Countries > Set country-specific check
Country Bank Key Length of Bank Key Checking rule (VAT registration no.) Other Data
FR 4 11 3 X
US 4 11 3 X
26. Create Dummy Profit Center - KE59
The dummy profit center receives postings concerning objects for which no profit center assignment exists. This ensures that your data will be complete in Profit Center Accounting.
In this IMG activity, you have to activate document splitting. The splitting method used is the SAP standard one, which contains the splitting rules for the different business transactions. If this splitting method does not meet your requirements, you can first define and then select your own method in Customizing for document splitting. You can do this choosing Extended Document Splitting > Assign Splitting Method.
The activation then applies for the entire client. You can explicitly exclude individual company codes from document splitting. This means, however, that you are then no longer able to create any cross-company-code transactions containing company codes that have divergent settings for document splitting.
Financial Accounting (NEW) > General ledger accounting (NEW) > Business transactions > Document splitting > Activate Document Splitting
Field name User action and values
Document Splitting √
Inheritance √
Standard A/C Assignment √
Constant ZBP01
23. Define Tolerance Groups for G/L Accounting
When G/L accounts are cleared, tolerance groups are used to define limits which differences are accepted and posted automatically to predefined accounts. The groups which are defined here are assigned in the G/L account master record.
Financial Accounting (NEW) > General Ledger Accounting (NEW) > Business Transactions > Open Item Clearing > Clearing Differences > Define Tolerance Groups for G/L Accounting
24. Define Posting Key for Incoming Invoices/Credit Memos
When you enter incoming invoices and credit memos, the posting keys for the open items and G/L account items are generated automatically by the system. You cannot change these keys when entering invoices and credit memos.
Financial Accounting (NEW) > Accounts Receivable/Accounts Payable > Business Transactions > Incoming Invoices/Credit Memos > Incoming Invoices/Credit Memo – Enjoy > Define Posting Key for Incoming Invoices/Credit Memos
Make the following entries for transaction EGX (Vendor item with special G/L indicator):
Post. Key Debit Posting Key Credit
29 39
25. Set country-specific check
For all countries, which maintain business relationships with your company, you have to include rules for checking the following data.
SAP Net Weaver > General Settings > Set Countries > Set country-specific check
Country Bank Key Length of Bank Key Checking rule (VAT registration no.) Other Data
FR 4 11 3 X
US 4 11 3 X
26. Create Dummy Profit Center - KE59
The dummy profit center receives postings concerning objects for which no profit center assignment exists. This ensures that your data will be complete in Profit Center Accounting.
SAP ECC 6.0: New GL Configuration Steps
1.Activate the New General Ledger Accounting by a single click on the clock icon.
2.You will reach to change view "activation of New GL A/cg" detail screen and tick the checkbox and save.
3. After activation of New General Ledger Accounting, you exit the IMG screen When you re enter , you find that a new node is added Financial Accounting (New)
4.After activation of New General Ledger Accounting , a new sub node appears in the IMG structure.
This sub node is Define Segment: The menu path is:
SAP Customizing IMG Enterprise Structure Definition Financial Accounting Define Segment
In this IMG activity, you define your segments.
5. If you then define your profit centers, you can enter an associated segment in the master record of a profit center. The segment is then derived from the assigned profit center during posting. Activation has created a new field in Profit Center Master Record: the SEGMENT.
6. Leading and Non- Leading Ledgers
The menu path is: SAP Customizing IMG Financial Accounting ( New ) Financial Accounting Basic Settings (New) Ledgers Ledger Define Ledgers for General Ledger Accounting
Clicking on the checkbox identifies one of your ledgers as the Leading Ledger.
You must designate one of your ledgers as the Leading Ledger. It is not possible to designate more than one ledger as the leading ledger.
In General Ledger Accounting, you can use several Ledgers in parallel. This allows you to produce financial statements according to different accounting principles. A ledger uses several dimensions from the totals table it is based upon. When defining Ledgers, one must be defined as the Leading Ledger. The Leading Ledger is based on the same accounting principles as that of the consolidated financial statements. It is integrated with all subsidiary ledgers and is updated in all company codes. This means that it is automatically assigned to all company codes. In each company code, the Leading Ledger receives exactly the same settings that apply to that company code: the currencies, the fiscal year variant and posting period variant.
7. Activation of Non Leading Ledgers
SAP Customizing IMG Financial Accounting (New Financial Accounting Basic Settings (New) Ledgers Ledger Define and Activate Non -Leading Ledgers
Non Leading Ledgers are parallel ledgers to the Leading Ledger. They can be based on local accounting principle, for example. You have to activate a non- Leading Ledger for individual company codes. Non- Leading Ledgers can have different fiscal year variants and posting period variants per company code to the Leading Ledger of this company code.
8. Assign scenarios and customer fields to ledgers
PathFinancial accounting (New)Financial accounting basic Settings (New) Ledgers FieldsDisplay Scenarios for General Ledger Accounting. Or
Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Ledgers > Ledger > Assign scenarios and customer fields to ledgers
a. Scenarios: determines what fields in a ledger are updated when it receives posting from other application components
b. A Scenario combines Customizing settings from different business views. Each business view specifies which posting data is transferred from different application components in General Ledger accounting, such as cost Center update or Profit Center update .You assign the desired scenarios to your ledgers. For each ledger, you define which fields are filled with posting data from other application components.
c. Custom Fields: you can add custom fields (that you have already defined) to the ledger.
d. Versions: this enables you to make general version settings for the ledger that depend on the fiscal year. In the versions, you specify whether actual data is recorded, whether manual planning is allowed, and whether planning integration with Controlling is activated.
e. SAP delivers a number of scenarios in the standard system. It is not possible to create additional scenarios.
Example: Scenario for General Ledger Accounting:
FIN_PCA Profit Centre Update, FIN_SEGM Segmentation
9. Cost of sales accounting
We can activate Cost of Sales Accounting by the following menu path :
SAP Customizing IMG Financial Accounting ( New ) Financial Accounting Basic Settings (New) Ledgers Ledger Activate Cost of Sales Accounting
Cost of sales accounting is a way to create a profit and loss statement (P&L) for a company by comparing the revenues to the costs or expenses incurred to obtain these revenues.
The expenses are mainly divided by functional area such as:
Manufacturing, Administration, Sales, and Research and Development
10. Define Field Status Variants
Path Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Ledgers > Fields > Define Field Status Variants
In this activity you create a field status variant with the corresponding field status groups
10a. Assign Company Code to Field Status Variants
Path Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Ledgers > Fields > Assign Company Code to Field Status Variants
11. Define Currencies of Leading Ledger
PathFinancial Accounting (NEW) > Financial Accounting Global Settings (New) > Ledgers > Ledger > Define Currencies of Leading Ledger
In this IMG activity, you specify the currencies to be applied in the leading ledger. You can make the following settings for each company code:
oThe local currency (as company code currency) is specified in the company code settings.
oYou can define one or two additional local currencies that you store per company code parallel to the first local currency.
12. Assign Posting Periods Variants to Company Code
PathFinancial Accounting (NEW) > Financial Accounting Global Settings (New) > Ledgers > Fiscal Year and Posting Periods > Posting Periods > Assign Variants to Company Code
In this activity, you make the specification that is necessary to be able to work in several company codes with the same variant for open posting periods.
13. Define Accounting Principles
PathFinancial Accounting (New) > Financial Accounting Global Settings (New) > Ledgers > Parallel Accounting > Define Accounting Principles
In this activity, you define your accounting principles. Then you can assign the desired ledger group to the accounting principles.
For performance reasons, you can combine several different accounting principles in one entry; for example, you create one accounting principle for IAS/US-GAAP.
Accounting Principles Name
HGB Local GAAP Germany
13a. Assign Accounting Principle to Ledger Groups
PathFinancial Accounting (New) > Financial Accounting Global Settings (New) > Ledgers > Parallel Accounting > Assign Accounting Principle to Ledger Groups
Accounting Principles Target Ledger Group
HGB 0L
14. Assign Variants for Real-Time Integration to Company Codes
PathFinancial Accounting (New) > Financial Accounting Global Settings (New) > Ledgers > Real-Time Integration of Controlling with Financial Accounting > Assign Variants for Real-Time Integration to Company Codes
In this IMG activity, you assign the variants to one or more company codes in which you have combined customizing settings for the real-time integration of Controlling with Financial Accounting. If you assign no variant to a company code, no real-time integration is activated for that company code.
15. Define Document Number Ranges for General Ledger View
Only one document number interval can be defined for each document type in a company code. The document number intervals in a company code must not overlap.
In this activity you define the number ranges which are to be used for the document types.
16. Define Document Number Ranges for Entry View
Only one document number interval can be defined for each document type in a company code.
Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Document > Document Number Ranges > Documents in Entry View > Define Document Number Ranges for Entry View
17. Define Document Types for Entry View
In this IMG activity, you have to define for your leading ledger the document types for the documents. You do this in the entry view and assign at the same time a number range interval to the document types.
Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Document > Document Types > Define Document Types for Entry View
18. Change Message Control for Document Processing
In this activity, you can configure the appearance of system messages according to requirements.
Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Document > Default Values > Change Message Control for Document Processing
Work Area Message Online Batch Input
F5 671 W W
F2 145 I I
F2 144 I I
19. Classify Document Types for Document Splitting
Every business transaction that is entered is analyzed during the document splitting process. In this process, the system determines which splitting rule is applied to the document. In order that the system can determine the splitting rule, you have to assign a business transaction variant to each document type.
To ensure that a splitting rule is used appropriately, the relevant documents have to meet certain requirements. These requirements relate in particular to certain item categories that either must or must not be available. This information is specified for each business transaction variant and is checked against the current document during posting. If the document does not meet these requirements, the system rejects the posting.
Financial Accounting (NEW) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Classify Document Types for Document Splitting
Document Type Transaction Type Variant
DV 0200 0001
KZ 0000 0001
20. Define Document Splitting Characteristics for General Ledger Accounting
In this step, you specify an input tax indicator per company code.
Then the system uses this indicator when you post acquisitions that are not subject to tax.
Financial Accounting (NEW) > General ledger accounting (NEW) > Business transactions > Document splitting > Define Document Splitting Characteristics for General Ledger Accounting
Field Zero Balance Partner Field Mandatory
SEGMENT Segment √ PSEGMENT Partner Segment √
21. Define Document Splitting Characteristics for Controlling
In this IMG activity, you specify which additional characteristics you intend to apply for document splitting.
The additional characteristics are not relevant for General Ledger Accounting.
Instead, they are relevant for other application components (such as subcomponents in CO) that use documents transferred from General Ledger Accounting.
Financial Accounting (NEW) > General ledger accounting (NEW) > Business transactions > Document splitting > Define Document Splitting Characteristics for Controlling
Field
AUFNR Order
KOSTL Cost Center
2.You will reach to change view "activation of New GL A/cg" detail screen and tick the checkbox and save.
3. After activation of New General Ledger Accounting, you exit the IMG screen When you re enter , you find that a new node is added Financial Accounting (New)
4.After activation of New General Ledger Accounting , a new sub node appears in the IMG structure.
This sub node is Define Segment: The menu path is:
SAP Customizing IMG Enterprise Structure Definition Financial Accounting Define Segment
In this IMG activity, you define your segments.
5. If you then define your profit centers, you can enter an associated segment in the master record of a profit center. The segment is then derived from the assigned profit center during posting. Activation has created a new field in Profit Center Master Record: the SEGMENT.
6. Leading and Non- Leading Ledgers
The menu path is: SAP Customizing IMG Financial Accounting ( New ) Financial Accounting Basic Settings (New) Ledgers Ledger Define Ledgers for General Ledger Accounting
Clicking on the checkbox identifies one of your ledgers as the Leading Ledger.
You must designate one of your ledgers as the Leading Ledger. It is not possible to designate more than one ledger as the leading ledger.
In General Ledger Accounting, you can use several Ledgers in parallel. This allows you to produce financial statements according to different accounting principles. A ledger uses several dimensions from the totals table it is based upon. When defining Ledgers, one must be defined as the Leading Ledger. The Leading Ledger is based on the same accounting principles as that of the consolidated financial statements. It is integrated with all subsidiary ledgers and is updated in all company codes. This means that it is automatically assigned to all company codes. In each company code, the Leading Ledger receives exactly the same settings that apply to that company code: the currencies, the fiscal year variant and posting period variant.
7. Activation of Non Leading Ledgers
SAP Customizing IMG Financial Accounting (New Financial Accounting Basic Settings (New) Ledgers Ledger Define and Activate Non -Leading Ledgers
Non Leading Ledgers are parallel ledgers to the Leading Ledger. They can be based on local accounting principle, for example. You have to activate a non- Leading Ledger for individual company codes. Non- Leading Ledgers can have different fiscal year variants and posting period variants per company code to the Leading Ledger of this company code.
8. Assign scenarios and customer fields to ledgers
PathFinancial accounting (New)Financial accounting basic Settings (New) Ledgers FieldsDisplay Scenarios for General Ledger Accounting. Or
Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Ledgers > Ledger > Assign scenarios and customer fields to ledgers
a. Scenarios: determines what fields in a ledger are updated when it receives posting from other application components
b. A Scenario combines Customizing settings from different business views. Each business view specifies which posting data is transferred from different application components in General Ledger accounting, such as cost Center update or Profit Center update .You assign the desired scenarios to your ledgers. For each ledger, you define which fields are filled with posting data from other application components.
c. Custom Fields: you can add custom fields (that you have already defined) to the ledger.
d. Versions: this enables you to make general version settings for the ledger that depend on the fiscal year. In the versions, you specify whether actual data is recorded, whether manual planning is allowed, and whether planning integration with Controlling is activated.
e. SAP delivers a number of scenarios in the standard system. It is not possible to create additional scenarios.
Example: Scenario for General Ledger Accounting:
FIN_PCA Profit Centre Update, FIN_SEGM Segmentation
9. Cost of sales accounting
We can activate Cost of Sales Accounting by the following menu path :
SAP Customizing IMG Financial Accounting ( New ) Financial Accounting Basic Settings (New) Ledgers Ledger Activate Cost of Sales Accounting
Cost of sales accounting is a way to create a profit and loss statement (P&L) for a company by comparing the revenues to the costs or expenses incurred to obtain these revenues.
The expenses are mainly divided by functional area such as:
Manufacturing, Administration, Sales, and Research and Development
10. Define Field Status Variants
Path Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Ledgers > Fields > Define Field Status Variants
In this activity you create a field status variant with the corresponding field status groups
10a. Assign Company Code to Field Status Variants
Path Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Ledgers > Fields > Assign Company Code to Field Status Variants
11. Define Currencies of Leading Ledger
PathFinancial Accounting (NEW) > Financial Accounting Global Settings (New) > Ledgers > Ledger > Define Currencies of Leading Ledger
In this IMG activity, you specify the currencies to be applied in the leading ledger. You can make the following settings for each company code:
oThe local currency (as company code currency) is specified in the company code settings.
oYou can define one or two additional local currencies that you store per company code parallel to the first local currency.
12. Assign Posting Periods Variants to Company Code
PathFinancial Accounting (NEW) > Financial Accounting Global Settings (New) > Ledgers > Fiscal Year and Posting Periods > Posting Periods > Assign Variants to Company Code
In this activity, you make the specification that is necessary to be able to work in several company codes with the same variant for open posting periods.
13. Define Accounting Principles
PathFinancial Accounting (New) > Financial Accounting Global Settings (New) > Ledgers > Parallel Accounting > Define Accounting Principles
In this activity, you define your accounting principles. Then you can assign the desired ledger group to the accounting principles.
For performance reasons, you can combine several different accounting principles in one entry; for example, you create one accounting principle for IAS/US-GAAP.
Accounting Principles Name
HGB Local GAAP Germany
13a. Assign Accounting Principle to Ledger Groups
PathFinancial Accounting (New) > Financial Accounting Global Settings (New) > Ledgers > Parallel Accounting > Assign Accounting Principle to Ledger Groups
Accounting Principles Target Ledger Group
HGB 0L
14. Assign Variants for Real-Time Integration to Company Codes
PathFinancial Accounting (New) > Financial Accounting Global Settings (New) > Ledgers > Real-Time Integration of Controlling with Financial Accounting > Assign Variants for Real-Time Integration to Company Codes
In this IMG activity, you assign the variants to one or more company codes in which you have combined customizing settings for the real-time integration of Controlling with Financial Accounting. If you assign no variant to a company code, no real-time integration is activated for that company code.
15. Define Document Number Ranges for General Ledger View
Only one document number interval can be defined for each document type in a company code. The document number intervals in a company code must not overlap.
In this activity you define the number ranges which are to be used for the document types.
16. Define Document Number Ranges for Entry View
Only one document number interval can be defined for each document type in a company code.
Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Document > Document Number Ranges > Documents in Entry View > Define Document Number Ranges for Entry View
17. Define Document Types for Entry View
In this IMG activity, you have to define for your leading ledger the document types for the documents. You do this in the entry view and assign at the same time a number range interval to the document types.
Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Document > Document Types > Define Document Types for Entry View
18. Change Message Control for Document Processing
In this activity, you can configure the appearance of system messages according to requirements.
Financial Accounting (NEW) > Financial Accounting Global Settings (New) > Document > Default Values > Change Message Control for Document Processing
Work Area Message Online Batch Input
F5 671 W W
F2 145 I I
F2 144 I I
19. Classify Document Types for Document Splitting
Every business transaction that is entered is analyzed during the document splitting process. In this process, the system determines which splitting rule is applied to the document. In order that the system can determine the splitting rule, you have to assign a business transaction variant to each document type.
To ensure that a splitting rule is used appropriately, the relevant documents have to meet certain requirements. These requirements relate in particular to certain item categories that either must or must not be available. This information is specified for each business transaction variant and is checked against the current document during posting. If the document does not meet these requirements, the system rejects the posting.
Financial Accounting (NEW) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Classify Document Types for Document Splitting
Document Type Transaction Type Variant
DV 0200 0001
KZ 0000 0001
20. Define Document Splitting Characteristics for General Ledger Accounting
In this step, you specify an input tax indicator per company code.
Then the system uses this indicator when you post acquisitions that are not subject to tax.
Financial Accounting (NEW) > General ledger accounting (NEW) > Business transactions > Document splitting > Define Document Splitting Characteristics for General Ledger Accounting
Field Zero Balance Partner Field Mandatory
SEGMENT Segment √ PSEGMENT Partner Segment √
21. Define Document Splitting Characteristics for Controlling
In this IMG activity, you specify which additional characteristics you intend to apply for document splitting.
The additional characteristics are not relevant for General Ledger Accounting.
Instead, they are relevant for other application components (such as subcomponents in CO) that use documents transferred from General Ledger Accounting.
Financial Accounting (NEW) > General ledger accounting (NEW) > Business transactions > Document splitting > Define Document Splitting Characteristics for Controlling
Field
AUFNR Order
KOSTL Cost Center
Saturday, January 23, 2010
IFRS Implementation Issues
1. What is the role of SAP during conversion to IFRS reporting?
1. SAP can support the configuration changes and various reporting options
-landscape design and changes
- SAP ERP Financials fully supports the IFRS requirements
-IFRS project will be driven by company size, industry, and country.
(For example, having multiple instances spanning various locations, different enterprise resource planning (ERP) systems or various SAP software releases in place will all add complexity to the Overall project.)
- End of fiscal year is strongly recommended, as noted within IFRS 1 First-Time adoption.
2. What is the high-level overview of the project steps we should follow in an IFRS conversion project?
In 4.7 or 4.6C environment:
– Define customer-specific IFRS requirements
– Upgrade to SAP ERP 6.0
– Migrate to New GL
– Begin IFRS project
In you are on SAP ERP 6.0:
– Define customer-specific IFRS requirements
– Migrate to New GL
– Begin IFRS project
Once the upgrade or migration is complete, the IFRS project could start immediately.
Phase 1
System redesigns (6–12 months)
• Upgrade to SAP ERP 6.0
• General ledger (GL) migration
• Install central process scheduling as required
Phase 2
Ensure system is stable after upgrades or migration as required
Complete validation period after GL migration project
Phase 3 – Begin IFRS implementation project
• IFRS reporting must begin at start of a new fiscal year
• Configure/design SAP General Ledger and sub ledgers as required
• Configure/design reporting and consolidation tools as required
Phase 4
Various system landscape optimization projects as required.
1. SAP can support the configuration changes and various reporting options
-landscape design and changes
- SAP ERP Financials fully supports the IFRS requirements
-IFRS project will be driven by company size, industry, and country.
(For example, having multiple instances spanning various locations, different enterprise resource planning (ERP) systems or various SAP software releases in place will all add complexity to the Overall project.)
- End of fiscal year is strongly recommended, as noted within IFRS 1 First-Time adoption.
2. What is the high-level overview of the project steps we should follow in an IFRS conversion project?
In 4.7 or 4.6C environment:
– Define customer-specific IFRS requirements
– Upgrade to SAP ERP 6.0
– Migrate to New GL
– Begin IFRS project
In you are on SAP ERP 6.0:
– Define customer-specific IFRS requirements
– Migrate to New GL
– Begin IFRS project
Once the upgrade or migration is complete, the IFRS project could start immediately.
Phase 1
System redesigns (6–12 months)
• Upgrade to SAP ERP 6.0
• General ledger (GL) migration
• Install central process scheduling as required
Phase 2
Ensure system is stable after upgrades or migration as required
Complete validation period after GL migration project
Phase 3 – Begin IFRS implementation project
• IFRS reporting must begin at start of a new fiscal year
• Configure/design SAP General Ledger and sub ledgers as required
• Configure/design reporting and consolidation tools as required
Phase 4
Various system landscape optimization projects as required.
Other IAS handled by SAP
IAS 14: Segment Reporting. SAP applications have the financial accounting and profit-center accounting functionality needed to provide a robust and flexible basis for both your management reporting and segment reporting needs. Enhanced consolidation systems functionality in SAP.
Business Objects Business Planning and Consolidation supports all management consolidations for segment reporting purposes.
IAS 22: Business Combinations: SAP ERP Financials supports a broad variety of consolidation methods compatible with IFRS. Additional functionality within SAP Business Objects Business Planning and Consolidation enables analysis of potential business impacts from all IFRS-related decisions.
IAS 21: Foreign Currency: SAP software fully supports multiple currencies so that business transactions can be recorded in both transaction and functional currencies as they occur, rather than after the fact. Comprehensive drill-down functions ensure that the original currency and the exchange rate employed are always available. SAP software also provides functions for the revaluation of foreign currency items at market rates on the balance sheet date – and supports the translation of foreign currency financial statements in consolidation.
Business Objects Business Planning and Consolidation supports all management consolidations for segment reporting purposes.
IAS 22: Business Combinations: SAP ERP Financials supports a broad variety of consolidation methods compatible with IFRS. Additional functionality within SAP Business Objects Business Planning and Consolidation enables analysis of potential business impacts from all IFRS-related decisions.
IAS 21: Foreign Currency: SAP software fully supports multiple currencies so that business transactions can be recorded in both transaction and functional currencies as they occur, rather than after the fact. Comprehensive drill-down functions ensure that the original currency and the exchange rate employed are always available. SAP software also provides functions for the revaluation of foreign currency items at market rates on the balance sheet date – and supports the translation of foreign currency financial statements in consolidation.
Accounting Change as per IFRS
10. Cash-Flow Statements
The statement of cash flows is a mandatory component of financial statements under IFRS, as an equal partner to the balance sheet and the statement of income. Impact: IFRS will require an analysis of existing corporate cash-flow reporting for regulatory purposes. Companies preparing a cash-flow statement for the regulators for the first time will have to decide 1) whether to use the direct or indirect method and 2) how to classify their activities (operating, investment, or financing) according to the categories in IAS 7. Many companies may want to consider changing their chart of accounts and the accounting entry logic in their software programs to obtain the right classification and level of detail.
SAP Solution - The cash-flow statement is an integral part of SAP software’s financial statement reporting functionality. Direct and indirect cash-flow methods are supported. SAP applications also provide standard cash-flow reporting templates.
The statement of cash flows is a mandatory component of financial statements under IFRS, as an equal partner to the balance sheet and the statement of income. Impact: IFRS will require an analysis of existing corporate cash-flow reporting for regulatory purposes. Companies preparing a cash-flow statement for the regulators for the first time will have to decide 1) whether to use the direct or indirect method and 2) how to classify their activities (operating, investment, or financing) according to the categories in IAS 7. Many companies may want to consider changing their chart of accounts and the accounting entry logic in their software programs to obtain the right classification and level of detail.
SAP Solution - The cash-flow statement is an integral part of SAP software’s financial statement reporting functionality. Direct and indirect cash-flow methods are supported. SAP applications also provide standard cash-flow reporting templates.
Accounting Change as per IFRS
10. Cash-Flow Statements
The statement of cash flows is a mandatory component of financial statements under IFRS, as an equal partner to the balance sheet and the statement of income. Impact: IFRS will require an analysis of existing corporate cash-flow reporting for regulatory purposes. Companies preparing a cash-flow statement for the regulators for the first time will have to decide 1) whether to use the direct or indirect method and 2) how to classify their activities (operating, investment, or financing) according to the categories in IAS 7. Many companies may want to consider changing their chart of accounts and the accounting entry logic in their software programs to obtain the right classification and level of detail.
SAP Solution - The cash-flow statement is an integral part of SAP software’s financial statement reporting functionality. Direct and indirect cash-flow methods are supported. SAP applications also provide standard cash-flow reporting templates.
The statement of cash flows is a mandatory component of financial statements under IFRS, as an equal partner to the balance sheet and the statement of income. Impact: IFRS will require an analysis of existing corporate cash-flow reporting for regulatory purposes. Companies preparing a cash-flow statement for the regulators for the first time will have to decide 1) whether to use the direct or indirect method and 2) how to classify their activities (operating, investment, or financing) according to the categories in IAS 7. Many companies may want to consider changing their chart of accounts and the accounting entry logic in their software programs to obtain the right classification and level of detail.
SAP Solution - The cash-flow statement is an integral part of SAP software’s financial statement reporting functionality. Direct and indirect cash-flow methods are supported. SAP applications also provide standard cash-flow reporting templates.
Accounting Change as per IFRS
7. Income Taxes
Taxes payable based on current and prior period business activity must be recorded as a liability to the extent that they remain unpaid on the balance sheet date (IAS 12.12). Deferred tax liabilities are also required to be recognized (IAS 12.15).
Impact: Income tax liabilities based on capital expenditures will be especially complex to track and record. “Taxable temporary differences” have limited exceptions related to goodwill and other business combination issues, but they will generally require careful tracking of all differences between carrying amounts and related tax bases. These amounts will be required to appear on IFRS financial statements.
SAP Solution- All capital expenditures and related asset- and project-tracking systems should be reviewed to confirm all necessary IFRS data is being captured. Research should be conducted to confirm all deferred tax liabilities, and proper entries should be made to reflect them if they do not already exist. Audits may be useful to ensure that updates to the tax basis are well coordinated with changes in the underlying asset and project systems. Sophisticated asset accounting functionality from SAP enables correct tax application of various cost bases, depreciation methods, and useful lives.
8. Leasing
Issue: IAS 17 currently distinguishes between “finance leases” and “operating leases,” though the IASB November 2008 discussion paper is intended to eliminate operating leases as a class and require all leases to be recorded as finance leases by 2011. Finance leases transfer all risks and rewards to the lessee and are recorded as an asset on the balance sheet. Lessors record leases as liabilities on their balance sheets (IAS 17.4, 20 and 25). Operating leases, while they are still allowed, recognize lease payments as expenses over the time period that the asset is used (IAS 17.33).
Impact: Companies will need to review all existing lease agreements to determine their treatment under IFRS. As with depreciation, the standard may have a material effect on production inventory costs. Leasing rules under IFRS could also influence the structure of future lease agreements.
SAP Solution – (IAS 17) Updated lease management and tracking systems may prove necessary as IFRS regulations move toward full “finance lease” treatment for all leases. Review of impacts to production and inventory costing is necessary as well. Through its asset-accounting functions for lessees, SAP software supports accounting for both operating and finance leases. It further offers a complete leasing solution (the SAP Leasing application) that includes contract management and accounting for lessors that can help automate the administration of all agreements.
9. Valuations
Regarding projects and other intangible assets, IFRS specifies that research costs remain as expenses, while development costs must be capitalized once technical or commercial feasibility is established (IAS 38). Marketable securities and hedge accounting require assignment to one of four holding categories that determine presentation on the balance sheet as well as treatment of unrealized gains and losses (IAS 39). Derivative instruments must be tracked on the balance sheet at fair market value, and any other special treatment will require extensive and careful documentation including risk measurement and effectiveness assessment. Long-term contracts, or any agreement extending beyond the term of the reporting period, must be tracked according to percentage of completion (POC) for both construction and service contracts (IAS 11).
Impact: Any significant investment in internally developed projects, from computer software to revenue-producing assets, will need to be treated carefully under IFRS. Project management systems must be checked to ensure they generate the necessary accounting information for proper capitalization and amortization based on feasibility and other project milestones that might be relevant. Hedge accounting and handling of all marketable securities will be especially complex. New applications are often required to meet IFRS criteria in this area, and extensive and careful documentation of all transactions and treatments is required. This is generally regarded as the single most complex area of the new regulations for adopting businesses.
SAP Solution - (IAS 38 & 39). Controlling and project-system functionality enables SAP software to handle long-term construction contracts using the POC method – and to apply a parallel completed-contract method of valuation if needed. SAP treasury applications provide multiple valuation methods for a wide range of financial instruments. In addition, there are options to set up multi-GAAP accounting, using predefined rules in parallel valuation areas. Also supported are comprehensive functions for hedge accounting under IFRS 39 and FASB 133.
Taxes payable based on current and prior period business activity must be recorded as a liability to the extent that they remain unpaid on the balance sheet date (IAS 12.12). Deferred tax liabilities are also required to be recognized (IAS 12.15).
Impact: Income tax liabilities based on capital expenditures will be especially complex to track and record. “Taxable temporary differences” have limited exceptions related to goodwill and other business combination issues, but they will generally require careful tracking of all differences between carrying amounts and related tax bases. These amounts will be required to appear on IFRS financial statements.
SAP Solution- All capital expenditures and related asset- and project-tracking systems should be reviewed to confirm all necessary IFRS data is being captured. Research should be conducted to confirm all deferred tax liabilities, and proper entries should be made to reflect them if they do not already exist. Audits may be useful to ensure that updates to the tax basis are well coordinated with changes in the underlying asset and project systems. Sophisticated asset accounting functionality from SAP enables correct tax application of various cost bases, depreciation methods, and useful lives.
8. Leasing
Issue: IAS 17 currently distinguishes between “finance leases” and “operating leases,” though the IASB November 2008 discussion paper is intended to eliminate operating leases as a class and require all leases to be recorded as finance leases by 2011. Finance leases transfer all risks and rewards to the lessee and are recorded as an asset on the balance sheet. Lessors record leases as liabilities on their balance sheets (IAS 17.4, 20 and 25). Operating leases, while they are still allowed, recognize lease payments as expenses over the time period that the asset is used (IAS 17.33).
Impact: Companies will need to review all existing lease agreements to determine their treatment under IFRS. As with depreciation, the standard may have a material effect on production inventory costs. Leasing rules under IFRS could also influence the structure of future lease agreements.
SAP Solution – (IAS 17) Updated lease management and tracking systems may prove necessary as IFRS regulations move toward full “finance lease” treatment for all leases. Review of impacts to production and inventory costing is necessary as well. Through its asset-accounting functions for lessees, SAP software supports accounting for both operating and finance leases. It further offers a complete leasing solution (the SAP Leasing application) that includes contract management and accounting for lessors that can help automate the administration of all agreements.
9. Valuations
Regarding projects and other intangible assets, IFRS specifies that research costs remain as expenses, while development costs must be capitalized once technical or commercial feasibility is established (IAS 38). Marketable securities and hedge accounting require assignment to one of four holding categories that determine presentation on the balance sheet as well as treatment of unrealized gains and losses (IAS 39). Derivative instruments must be tracked on the balance sheet at fair market value, and any other special treatment will require extensive and careful documentation including risk measurement and effectiveness assessment. Long-term contracts, or any agreement extending beyond the term of the reporting period, must be tracked according to percentage of completion (POC) for both construction and service contracts (IAS 11).
Impact: Any significant investment in internally developed projects, from computer software to revenue-producing assets, will need to be treated carefully under IFRS. Project management systems must be checked to ensure they generate the necessary accounting information for proper capitalization and amortization based on feasibility and other project milestones that might be relevant. Hedge accounting and handling of all marketable securities will be especially complex. New applications are often required to meet IFRS criteria in this area, and extensive and careful documentation of all transactions and treatments is required. This is generally regarded as the single most complex area of the new regulations for adopting businesses.
SAP Solution - (IAS 38 & 39). Controlling and project-system functionality enables SAP software to handle long-term construction contracts using the POC method – and to apply a parallel completed-contract method of valuation if needed. SAP treasury applications provide multiple valuation methods for a wide range of financial instruments. In addition, there are options to set up multi-GAAP accounting, using predefined rules in parallel valuation areas. Also supported are comprehensive functions for hedge accounting under IFRS 39 and FASB 133.
Accounting Change as per IFRS
5. Revenue
Revenue is always to be measured at fair value of receipt or receivable (IAS 18.9). Under IFRS, revenue
can only be recognized after the significant risks or rewards of ownership of goods has been transferred (IAS 18.14), and revenues for services are recognized only according to the extent of completion and whenever they can be measured reliably (IAS 18.20).
Impact: Revenue recognition rules will certainly have a direct impact on many revenue transactions. They may also alter the way companies decide to compensate sales and other personnel.
SAP Solution - SAP software to fulfill various rules of revenue reporting according to IFRS and U.S. GAAP. Revenue recognition provides unlimited flexibility by decoupling the realization of revenues from invoicing and automates the process of revenue reporting. The incentive compensation applications from SAP can further be coordinated to this process to help ensure timely and accurate payments based on governing corporate reporting practices.
6. Employee Costs and Share-Based Payments
Employee costs are to be recognized during the accounting period in which services have been rendered (IAS 19.10). Accruals are necessary for absences, holidays, and vacations (IAS 19.11), and profit sharing and bonus plans also require an accrual (IAS 19.17). Whenever goods or services are received in return for the issue of shares or other equity instruments, fair value must be accounted as either an expense or an asset (IFRS 2.7). In the case of options or other share based incentives, market value of the instruments must be charged as an expense over the period in which the benefits vest (IFRS 2.10).
Impact: North American companies will continue to be required to verify amounts of unrecorded sick time and vacation accumulations, as well as investigate potential for significant equity compensation liabilities that must be brought onto their expense books under IFRS. Updating personnel, benefit, and compensation systems to accommodate the new rules will be necessary to ensure documentation of compliance, as will planning for the orderly transition of the additional expenses to the income statement in cases where equity compensation programs are not currently treated according to IFRS regulation.
SAP Solution - current accounting practices for accrued absences, holidays, and vacations can be confirmed in compliance with IFRS, the major remaining concerns will center on ensuring that shared-based incentives are being properly expensed as they occur. A full assessment of all outstanding obligations will need to be tested against both the balance sheet and income statement to ensure first reporting under IFRS does not produce a sudden difference that might be of concern to investors.
Revenue is always to be measured at fair value of receipt or receivable (IAS 18.9). Under IFRS, revenue
can only be recognized after the significant risks or rewards of ownership of goods has been transferred (IAS 18.14), and revenues for services are recognized only according to the extent of completion and whenever they can be measured reliably (IAS 18.20).
Impact: Revenue recognition rules will certainly have a direct impact on many revenue transactions. They may also alter the way companies decide to compensate sales and other personnel.
SAP Solution - SAP software to fulfill various rules of revenue reporting according to IFRS and U.S. GAAP. Revenue recognition provides unlimited flexibility by decoupling the realization of revenues from invoicing and automates the process of revenue reporting. The incentive compensation applications from SAP can further be coordinated to this process to help ensure timely and accurate payments based on governing corporate reporting practices.
6. Employee Costs and Share-Based Payments
Employee costs are to be recognized during the accounting period in which services have been rendered (IAS 19.10). Accruals are necessary for absences, holidays, and vacations (IAS 19.11), and profit sharing and bonus plans also require an accrual (IAS 19.17). Whenever goods or services are received in return for the issue of shares or other equity instruments, fair value must be accounted as either an expense or an asset (IFRS 2.7). In the case of options or other share based incentives, market value of the instruments must be charged as an expense over the period in which the benefits vest (IFRS 2.10).
Impact: North American companies will continue to be required to verify amounts of unrecorded sick time and vacation accumulations, as well as investigate potential for significant equity compensation liabilities that must be brought onto their expense books under IFRS. Updating personnel, benefit, and compensation systems to accommodate the new rules will be necessary to ensure documentation of compliance, as will planning for the orderly transition of the additional expenses to the income statement in cases where equity compensation programs are not currently treated according to IFRS regulation.
SAP Solution - current accounting practices for accrued absences, holidays, and vacations can be confirmed in compliance with IFRS, the major remaining concerns will center on ensuring that shared-based incentives are being properly expensed as they occur. A full assessment of all outstanding obligations will need to be tested against both the balance sheet and income statement to ensure first reporting under IFRS does not produce a sudden difference that might be of concern to investors.
Accounting Change as per IFRS
3. Inventory and Stock Valuations
Inventory and stock are to be valued at “net realizable value,” which must net estimated selling prices with costs to complete, transport, and sell (IAS 2.9 and 10). LIFO is specifically not allowed, and FIFO may only be applied where items cannot be individually identified.
SAP Solution – (IAS 2): Inventories. With financial accounting, controlling, materials management, and production planning functionality, SAP applications can calculate product costs in the form required by IFRS as well as those that may be required under U.S. and Canadian national accounting standards. It is possible to store multiple versions of the costs for a single material by using the material ledger function. SAP software also offers the ability to calculate the actual costs for each period, required by some other jurisdictions in parallel with IFRS. In addition, it is possible to calculate work in process according to different accounting approaches and to create the appropriate postings for these at period close.
4. Receivables, Payables and Borrowing
Receivables and payables are to be recorded at fair value (IAS 39.43). Subsequent assessments are to be at amortized cost, and anything with a significant credit duration must be discounted (IAS 18.11 contains an example for revenue accounting). Receivables and payables are to be recorded at fair value (IAS 39.43). Subsequent assessments are to be at amortized cost, and anything with a significant credit duration must be discounted (IAS 18.11 contains an example for revenue accounting). If a receivable is in default, its carrying amount is to be written down to its recoverable amount, which can be either “value in use” or fair value less costs to factor (IAS 36.9 and 59). All borrowing is recorded at amortized cost, using the “effective interest rate” method, which deducts borrowing costs from the principal and amortizes them over the period of the debt (IAS 39.46).
Impact: IFRS regulations will require careful review and revaluation of payables and receivables, as credit situations are known. Factoring and borrowing costs, along with related tax and other advantages, will require specific treatments and reporting. This is especially important where different currencies complicate the process and proper translation and revaluation techniques must be maintained.
SAP Solution - a unified approach to producing required cash-flow statements, as well as correctly recording all current asset values according to IFR S, will be in order. SAP software fully supports multiple currencies so that business transactions can be recorded in both transaction and functional currencies as they occur, rather than after the fact. Comprehensive drill-down functions help ensure that the original currency and the exchange rate employed are always available. SAP applications also provide functions for the revaluation of foreign currency items at market rates on the balance sheet date – and support the translation of foreign currency financial statements in consolidation.
Inventory and stock are to be valued at “net realizable value,” which must net estimated selling prices with costs to complete, transport, and sell (IAS 2.9 and 10). LIFO is specifically not allowed, and FIFO may only be applied where items cannot be individually identified.
SAP Solution – (IAS 2): Inventories. With financial accounting, controlling, materials management, and production planning functionality, SAP applications can calculate product costs in the form required by IFRS as well as those that may be required under U.S. and Canadian national accounting standards. It is possible to store multiple versions of the costs for a single material by using the material ledger function. SAP software also offers the ability to calculate the actual costs for each period, required by some other jurisdictions in parallel with IFRS. In addition, it is possible to calculate work in process according to different accounting approaches and to create the appropriate postings for these at period close.
4. Receivables, Payables and Borrowing
Receivables and payables are to be recorded at fair value (IAS 39.43). Subsequent assessments are to be at amortized cost, and anything with a significant credit duration must be discounted (IAS 18.11 contains an example for revenue accounting). Receivables and payables are to be recorded at fair value (IAS 39.43). Subsequent assessments are to be at amortized cost, and anything with a significant credit duration must be discounted (IAS 18.11 contains an example for revenue accounting). If a receivable is in default, its carrying amount is to be written down to its recoverable amount, which can be either “value in use” or fair value less costs to factor (IAS 36.9 and 59). All borrowing is recorded at amortized cost, using the “effective interest rate” method, which deducts borrowing costs from the principal and amortizes them over the period of the debt (IAS 39.46).
Impact: IFRS regulations will require careful review and revaluation of payables and receivables, as credit situations are known. Factoring and borrowing costs, along with related tax and other advantages, will require specific treatments and reporting. This is especially important where different currencies complicate the process and proper translation and revaluation techniques must be maintained.
SAP Solution - a unified approach to producing required cash-flow statements, as well as correctly recording all current asset values according to IFR S, will be in order. SAP software fully supports multiple currencies so that business transactions can be recorded in both transaction and functional currencies as they occur, rather than after the fact. Comprehensive drill-down functions help ensure that the original currency and the exchange rate employed are always available. SAP applications also provide functions for the revaluation of foreign currency items at market rates on the balance sheet date – and support the translation of foreign currency financial statements in consolidation.
Accounting Change as per IFRS
1. Acquisition Accounting, Joint Ventures, and Goodwill:
IFRS requires the identification of an acquirer and measurement of fair value (IFRS 3.17). Measurement of these acquired businesses must be by the IFR S “acquisition method,” including identification of any non controlling interests and goodwill, and fair value valuation for all assets (IFRS 3.36).
SAP Solution – (IAS3) SAP ER P Financials supports a broad variety of consolidation and business combination methods compatible with IFRS.
2. Property, Plant, and Equipment Valuation
All values must be at cost, and though total costs can include things like borrowing, acquisition, and construction or production costs under certain circumstances, these can only be in cases where valuation policies can be shown to be consistent across the entity (IAS 16.15, IAS 23.11). Classes of assets may be revalued, if applied consistently across the entity (IAS 16.3 and 36). Depreciation charged to write off the value of assets over their estimated useful life, down to their salvage value (recoverable amount), must be straight-line.
Impact: Because companies have often used multiple tax, cost, and other management depreciation methods for financial accounting purposes, the transition to IFRS will require extensive analysis and careful planning to smooth the economic impact of potential revaluations.
SAP Solution -– (IAS16): Once a thorough evaluation of all new depreciation methods and their impacts is made, a review of asset tracking and valuation systems is in order, to determine their suitability under the company’s chosen approach to the new regulations.
IFRS requires the identification of an acquirer and measurement of fair value (IFRS 3.17). Measurement of these acquired businesses must be by the IFR S “acquisition method,” including identification of any non controlling interests and goodwill, and fair value valuation for all assets (IFRS 3.36).
SAP Solution – (IAS3) SAP ER P Financials supports a broad variety of consolidation and business combination methods compatible with IFRS.
2. Property, Plant, and Equipment Valuation
All values must be at cost, and though total costs can include things like borrowing, acquisition, and construction or production costs under certain circumstances, these can only be in cases where valuation policies can be shown to be consistent across the entity (IAS 16.15, IAS 23.11). Classes of assets may be revalued, if applied consistently across the entity (IAS 16.3 and 36). Depreciation charged to write off the value of assets over their estimated useful life, down to their salvage value (recoverable amount), must be straight-line.
Impact: Because companies have often used multiple tax, cost, and other management depreciation methods for financial accounting purposes, the transition to IFRS will require extensive analysis and careful planning to smooth the economic impact of potential revaluations.
SAP Solution -– (IAS16): Once a thorough evaluation of all new depreciation methods and their impacts is made, a review of asset tracking and valuation systems is in order, to determine their suitability under the company’s chosen approach to the new regulations.
Friday, January 22, 2010
IFRS and US GAAP: similarities and differences
• Adoption of IFRS includes revenue recognition and provisions & contingencies.
• Noncurrent assets make up a significant portion of many companies' balance sheets, and are a critical part of the operations of a business. Adopting IFRS may have a significant impact on how those amounts are reported, as well as affecting how they are measured for impairment.
• Business transactions are an important part of many companies' business strategies.
Business transactions including business combinations, leasing arrangements and investing activities while discussing the key differences between US GAAP and IFRS in these areas.
• The benefits employees receive can take many different forms including cash, deferred compensation, non-cash awards and post-employment benefits. Accounting under IFRS, defers from US GAAP in the most common types of employee benefits: pensions and share-based payments.
• Noncurrent assets make up a significant portion of many companies' balance sheets, and are a critical part of the operations of a business. Adopting IFRS may have a significant impact on how those amounts are reported, as well as affecting how they are measured for impairment.
• Business transactions are an important part of many companies' business strategies.
Business transactions including business combinations, leasing arrangements and investing activities while discussing the key differences between US GAAP and IFRS in these areas.
• The benefits employees receive can take many different forms including cash, deferred compensation, non-cash awards and post-employment benefits. Accounting under IFRS, defers from US GAAP in the most common types of employee benefits: pensions and share-based payments.
Major areas of treatment under IFRS Reporting
• Acquisition accounting and goodwill (requires purchase method)
• Property, plant, and equipment valuation, including depreciation (primarily “straight line”)
• Joint ventures, associates, and other investments (by rule at either equity method or fair value)
• Inventory and stock (similar to U.S. GAAP lower of cost or market, or LOCO M, and LIFO is not allowed)
• Receivables and payables (all at fair value, with amortized costs)
• Borrowing (amortized cost using effective interest rate method)
• Revenue (at fair value, with specific conditions for recognition)
• Employee costs (accruals for vacations and holidays, profit sharing, expected bonuses, and the like)
• Share-based payment (fair value taken as an expense or as an asset upon first granting)
• Income taxes (taken as a liability if unpaid upon balance sheet date, with other deferral rules)
• Leasing (all leases to eventually be classified as “finance leases” with all risk or reward to lessee)
• Valuations (specifications for fair value, amortized costs, and so forth)
• Property, plant, and equipment valuation, including depreciation (primarily “straight line”)
• Joint ventures, associates, and other investments (by rule at either equity method or fair value)
• Inventory and stock (similar to U.S. GAAP lower of cost or market, or LOCO M, and LIFO is not allowed)
• Receivables and payables (all at fair value, with amortized costs)
• Borrowing (amortized cost using effective interest rate method)
• Revenue (at fair value, with specific conditions for recognition)
• Employee costs (accruals for vacations and holidays, profit sharing, expected bonuses, and the like)
• Share-based payment (fair value taken as an expense or as an asset upon first granting)
• Income taxes (taken as a liability if unpaid upon balance sheet date, with other deferral rules)
• Leasing (all leases to eventually be classified as “finance leases” with all risk or reward to lessee)
• Valuations (specifications for fair value, amortized costs, and so forth)
International Financial Reporting Standards (IFRS) Reporting
International Financial Reporting Standards (IFRS) Reporting
The SEC is considering measures that could lead to retiring US GAAP and adopting IFRS in the US. The effects of global reporting standards on US companies will accelerate over the next few years, regardless of how the SEC proceeds.
Starting in January 2012 it will be necessary to present an IFRS compliant balance sheet.
In view of the above, requirements are coming up from many Companies for the SAP FICO Consultants with IFRS reporting exposure. So the given below information which I have gathered from various recourses will help the SAP FICO Consultants during their interview process.
But in the present client environment, those who are in SAP EEC 6.0 with New GL might have a Leading Ledger with US GAAP reporting and linked with Depreciation area 01 & Asset valuation area 0, as IFRS reporting is
• Two-year dual-reporting periods will be 2012 and 2013 for most customers.
• IFRS-only reporting will be required in 2014.
Beginning in 2011, configure additional non-leading ledgers and additional asset valuation areas:
During this configuration step, both the leading ledger and new non-leading ledger must have the same fiscal-year date settings, and also
• 0L – Leading ledger set to report the local GAAP
• Depreciation area 01 – Asset valuation area 01 (link to the LL)
• Z1 – Non Leading Ledger (NL) set to report IFRS
• Depreciation area 02 – Tied to NL Z1 and reporting IFRS
• Depreciation area 12 – Set to record the delta between the local GAAP and IFRS total; this depreciation area is also tied to NL Z1
The SEC is considering measures that could lead to retiring US GAAP and adopting IFRS in the US. The effects of global reporting standards on US companies will accelerate over the next few years, regardless of how the SEC proceeds.
Starting in January 2012 it will be necessary to present an IFRS compliant balance sheet.
In view of the above, requirements are coming up from many Companies for the SAP FICO Consultants with IFRS reporting exposure. So the given below information which I have gathered from various recourses will help the SAP FICO Consultants during their interview process.
But in the present client environment, those who are in SAP EEC 6.0 with New GL might have a Leading Ledger with US GAAP reporting and linked with Depreciation area 01 & Asset valuation area 0, as IFRS reporting is
• Two-year dual-reporting periods will be 2012 and 2013 for most customers.
• IFRS-only reporting will be required in 2014.
Beginning in 2011, configure additional non-leading ledgers and additional asset valuation areas:
During this configuration step, both the leading ledger and new non-leading ledger must have the same fiscal-year date settings, and also
• 0L – Leading ledger set to report the local GAAP
• Depreciation area 01 – Asset valuation area 01 (link to the LL)
• Z1 – Non Leading Ledger (NL) set to report IFRS
• Depreciation area 02 – Tied to NL Z1 and reporting IFRS
• Depreciation area 12 – Set to record the delta between the local GAAP and IFRS total; this depreciation area is also tied to NL Z1
Monday, May 4, 2009
Transport Request
Transfer the data from sand box to development clientà Whatever Configuration changes you made and save gets saved as task in the change request. There is a Change request sub number below the main CR number. The tasks are stored in the sub request number. You have to release the sub request first and with its release the objects also get released. So you can’t release request without releasing the objects in it.
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