I work for a power generator and our inventory mostly consists of spare parts - not items for sale.
For accounting purposes, we are required to classify some of these spare parts as fixed assets (rather than inventory) as these parts will not be used in the next financial year.
These spare parts sit in the store and from time to time are purchased or issued to maintenance orders or into assets.
We wish to record depreciation/provision for obsolescence on the spare parts.
I would appreciate some advice on the best way to treat these items in SAP is (from someone who has worked with Utility companies with similar issues). Is it:
- record them in MM but have posting to fixed assets g/l code and manually record depreciation/obsolescence?
- record in AA and have partial disposal when some spare parts are used?
- record quantities in MM and values in AA?
These spare parts have to be created as Assets seperately. In MM you can classify these assets under a non valuating class
as the valuation/depreciation will be done in Asset Management Area. While procurement, use the account assignment category
as A and post in the respective Asset Class/Asset Master. This will post the respective values in Asset Master keeping
the quantity posted to Material Master. The asset can be partially disposed through sales or as scrap over a period through
thanks Sadashivan - that's helpful!
Just another question - when the inventory is issued, presumably it will be issued at zero value. Is there a way to link in with the AM record to automate the disposal of the value from AM?
Edited by: CJ7777777 on Aug 21, 2009 5:00 AM
When Asset Material Stock are withdrawn from warehouse, as you have created these materials under a seperate material group under nonvaluating class, you post goods issue through movement type 241 - consumption of warehouse goods for assets
by mentioning the Material and Asset in the next screen. Rest of the transactions will be taken care in Asset Management
whether to capitalize it on Main Asset or to dispose off. In MM there will be change in quantity/ nos. where as in asset
management area there will be change in quantity/nos. as well as the value.
As per my understanding spare parts, even if to be used in fixed assets for replacements, should be treated as inventory only.
Therefore, you should inventories them and as and when they are issued, you should charge them off to profit and loss account (This is as per Accounting standard 10).
But, if you want to know a way out to transfer them as an asset, then also you need to keep it as inventory only till you utilise it. Once it is required to be capitalise, you can do so with transfer posting with a appropriate movement type, so that quantity shall be reduced from inventory and shall be capitalised.