Depreciation Key - Calculation Method

[Former Member]

Hello!

It have basic understanding problem between Depreciation Key and Calculation Method. I'm familiar with concepts related to this as silos, but this question is about final result after assigning multiple calculation methods to 1 depreciation key.

I see there are multiple Cal. methods (For example, Baseline M, Declining Balance Method ....) are assigned to a single key. This key is assigned to depreciation areas and which has indirect effect of calculating depreciation for respective asset.

Q: My question is this depreciation key should calculate different values for respective calculation method for assigned asset. For example, for Baseline M one value and for Dec. Bal. M one value. If i'm thinking this in correct way, i don't see anything as such in Asset Explorer.

I would appreciate if some one get my understanding straight.

Thanks

[Former Member · Accepted solution]

Thanks for your great response folks. Considering Krishna and Malhar posts above, these two contradicts. Can someone take on this?

[nishan_dev · Accepted solution]

Sreenath,

Malhar, made it very clear. So hope you are good !

Depreciation Key has assignment of Calculation method.

Base method - Base method of the depreciation key for calculating depreciation or imputed interest
Declining balance method- Declining-balance method of the depreciation key for calculating depreciation or imputed interest

Period Control Method-Period control method of the depreciation key for calculating depreciation or imputed interest.

Multilvel Method-Multi-level method of the depreciation key for calculating depreciation or imputed interest.

Any question on this ?

Thanks,

Nishan Dev

[Former Member · Accepted solution]

Hello! my question is not about explaining what each method does. It's about assinging multiple calculation methods assigned to single Depreciation Key.

Per Krishna, most often we assign multiple calc. methods to single key. But per Malhar Depreciation Key can have only one method assigned to it.

Hope you understand what i'm asking about and respond accordingly.

Thanks!

[Former Member · Accepted solution]

Hi Sreenath,

Please if the below link throws some light on this discussion.

http://help.sap.com/saphelp_46c/helpdata/en/4f/71dd6b448011d189f00000e81ddfac/content.htm

And this below explanation, which I have found for you

Depreciation keys = depreciation method + depreciation rate.

depreciation method could be slm(straight line method),

wdv(written down value method)etc

depreciation rate is nothing but the percentate like 5%, 6%,etc

hence dep key = slm + 5 %

A Depreciation key can be considered as a

box which houses all the depreciation methods

You are aware that every fixed asset keeps losing value as

time progresses and the loss of value is called as depreciation.

Depreciation Keys are pre-defined mathematical functions

which perform number crunching so as to reduce the value of

asset (usually) with the passage of time.

A Depreciation Key is a bundle of various methods of

standardized depreciation.  A depreciation key contains

a.  Base method (such as straight line depreciation etc.)

b. Declining Balance Method ( more affectionately known as

WDV method, Written Down Value Method)

this menthod includes both the declineing balance method sum of the years digits method. the normar declining balance method of dep mutiplies the straight line % by a given factor usually the factor would be 2/2.5/3 which means that your depreciation would be 2/2.5/3 times more under this method as compared to SLM this is just to accelerate the intial depreciation so that you have earmarked a sizable portion of your intial profits.

c. Maximum Amount Method ( an arbitrary pre-defined  amount

up to which depreciation of an asset can be carried out)

d. Multi-level method ( which is a mixed bag of one or more

of the aforesaid methods ) . Usually it has been

mathematically proved that the Declining Balance Method

cannot be effective in writing off the value of an asset in

full ( viz. reduce to zero balance) in a finite period of

time. In order to avoid this complication, you can use

multi-level method which effects a change-over from

declining balance method to straight line method under

certain conditions pre-defined in the depreciation methods/

keys)

each level represents a validity period for a given percentage rate.

e. Period Control Method ( this tells you the date on which

capitalization / de-activation, start of depreciation could

commence with regard to asset acquisition, additions to it,

retirement and transfer ).

All these depreciation methods are bundled into a

depreciation key which is assigned to the asset master record.

In the class field of dep key we select the actual method

There are many depreciation keys available and you can

create them too. Usually they are country-specific.

Assignment of a suitable depreciation key to the asset

master helps in the fair valuation of assets and profits /

losses ( through fair estimation of depreciation of assets).

Hope it is clear.

[nishan_dev · Accepted solution]

Sreenath,

There is nothing called mutiple calculation method, it is mutlilevel method.

You can only assign one method to one key. 1 to 1 relation

You can never have one key doing both job like Straight line or double decline, How the system will understand the key attributes.

Best Luck,

Nishan Dev

[Former Member · Accepted solution]

I agree with Nishan comment,

This is system hope not harry potter !!! Sorry not to be funny, but this thread made be laugh...

RS

[Former Member · Accepted solution]

I guess, Sreenath has asked if more than one "Calculation Methods" can be assigned to a Depreciation Key.

Most of you are interpreting the question as,  if more than one "Depreciation Methods" can be assigned to a Depreciation key.

There is a difference between Depreciation Methods ( They are Actual depreciation methods SLM, DBM) and Calculation Methods ( They are Control Functions).

Yes there can be more than one Calculation Methods assigned to a Depreciation key.

Guess my previous post clarifies this.

But, Sreenath, as you have assumed, each of this calculation methods do not generate a separate depreciation value.

A depreciation value which is output from a Dep. Key would be one only and not one each for each Calculation method.

I guess this clarifies.

[Former Member · Accepted solution]

Thanks Krishna. Looks like, you are the only one who understood the question properly.

[narasimhulu_konnipati]

At any point of time, the depreciation key assignment to depreciation area one to one relationship.

Here, as you know, if the dep. method is Straight line, then you see the same depreciation for every year until it get fully depreciated.

If it is Declining method, it shows you the depreciation on Net book value after passing every year.

In Asset Explorer, what ever asset you see values and calculations, that will be from your Asset master - depreciation key settings.

So, if you still have any doubt, come with screen shots and will guide you

Thanks

[Former Member]

Thanks for both of you! But, I already the know the concepts around what you guys are saying.

As i said above, is there would be any scenario where we will assign multiple calculations methods to single key?

[former_member212063]

This message was moderated.

[Former Member]

Hi,

Actually a Depreciation Key can have only one method assigned to it.

So you can keep either SLM or Declining method or Multi Level Method but in no case you can keep more then one Method in a particular Depreciation key.

So in your case where you want to have depreciation key for Different methods, then you can create different depreciation keys for different purposes.

Regards,

Malhar.

[Former Member]

Hi,

The calculation methods in SAP FI-AA are to be seen as Rules defining the behaviour of the Depreciation key.

They are not to be confused with the conventional methods like Straight line / Declining balance etc..

If you view the Calculation methods(For example, Baseline M, Declining Balance Method), in this context, there is  every possibility that you almost always assign more than one Calculation method to each depreciation key, in most scenarios.

For a Depreciation key, for example,

Baseline method - Defines the Type of Depreciation and the Depreciation method (St. Line / Dec bal/stated percentace etc...)

Declining Balance method - Defines the Declining factor and Max. and Min. percentage limits

Maximum amount method - Defines the maximum amount allowed with in certain date.

Multi-Level method - Defines the levels and % at each level, in case an asset has to change the Depreciation % within the course of its life.

Period control method - Defines the period control i.e. if the asset is acquired in the mid month, when should the depreciation calculation start from, if an asset has an addition sometime in the middle of the year, which period should be considered for calculation etc...

If you observe the above, each Depreiciation Key has to be specified with more than one Calculation method in many scenarios.

Please analyse from this perspective and revert if you need any more examples.

All the best.

Krishna

[basappa_allannavar]

Hello Sreenath,

Please find the below mentioned links it may help you,

http://help.sap.com/saphelp_46c/helpdata/en/4f/71dd78448011d189f00000e81ddfac/content.htm

http://help.sap.com/saphelp_470/helpdata/en/4f/71dd5e448011d189f00000e81ddfac/content.htm

Regards,

Basappa

[nishan_dev]

Sreenath,

Depreciation Key always calculated the way it is configured, if it is used for Straight line, then it will calculated based on Straight line. If it used for Double Decline, the accordingly it will calculate. and you assign this key at depreciation area. on asset master data.

Hope it is clear now.

Thanks

Nishan Dev