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MACRS dep key, Half Year to Mid Year convention.

Former Member
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Hi Everyone!!

I am working on MACRS depreciation key and set up Half year period control method, But, mid-quarter convention is required when the total depreciable basis of MACRS property that was placed in service during the last three months of the tax year is more than 40% of the total depreciable basis of all MACRS property that was placed in service throughout the entire year. I am not able to figure out a way by which the period control method changes from Half year to mid year convention based on the rule ( 40% ), or is there some other way to manage this in SAP. 

Any input on this issue will be grately appreciated!!

Thanks

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Answers (2)

Answers (2)

Former Member
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I want to make a small correction in my query.

I am working on MACRS depreciation key and set up Half year period control method, But, mid-quarter convention is required when the total depreciable basis of MACRS property that was placed in service during the last three months of the tax year is more than 40% of the total depreciable basis of all MACRS property that was placed in service throughout the entire year. I am not able to figure out a way by which the period control method changes from Half year to mid quarter convention based on the rule ( 40% ), or is there some other way to manage this in SAP. 

Any input on this issue will be grately appreciated!!

former_member351125
Contributor
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Hello Rahul,

Are you going to update prior year assets? Is this applicable on current year assets only ( assets acquired on 2014? Or is this change should be applied on previous closed fiscal year?

I will provide you a solution once you clarify this query.

Thanks!

Jhero

Former Member
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Hi Jay-R Cruz,

Thanks for your message, highly appreciated. Its only for the current years assets. The requirement is following - If the total acquisition in last quarter is more than 40% of the total acquisition during the year, then the depreciation calculation should be based on "Mid quarter convention" rather than "half year". As of now the depreciation calculation is based on " half year" convention. I need your assistance in finding a solution by which calculation changes to "mid quarter" convention from "half year" convention depending on this 40% rule. Is there a way by which this can be managed in SAP by some sort of configuration or is there some other way to manage this.

Thanks.

former_member351125
Contributor
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There is no current automatic way to do this. The default depreciation convention on the start of the year, is half year, and at the end of the year the business will analyze what convention should be used for the assets. This usually happens on January of the next fiscal year. Example, 2014 assets will follow half year convention by default, and on Jan 2015, the business will analyze based on the total acquisitions, if 2014 assets will use half year or mid quarter convention. If at least 40% of the cost basis of all tangible personal property acquired in a year occurs in the fourth quarter of the year, you will use mid quarter, else half year. So I guess, what you want to change are those assets that are acquired on 2013. If you are asking if there is an automated way to identify if the business will use mid quarter or half year, my answer is no, unless you create a custom program to analyze asset transactions.

Now, let say the business already identified the convention to be used on the prior year, the next question will be how to change the depreciation key to midquarter?

If you understand what I am talking about, please inform me before I proceed on how to change the dep keys of prior year assets.

Thanks!

Jhero

Former Member
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HI Jhero, Thanks for your message, this is exactly what I was looking for. It would be a big help, if you can please tell me how to change the dep keys of prior year assets.

Thanks a lot

former_member351125
Contributor
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Please refer to SAP Note 646691, please also be aware of the rules before implementing this solution.

Thanks!

Jhero

Former Member
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Thanks Jhero, this was of big help.

former_member351125
Contributor
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I assume that your depreciation area is not posting to ledger. Anyway basically below are the steps:

1. Change the depreciation key of the assets to MQ

2. Open asset close fiscal year using OSS note

3. Run AFAR to recalculate asset values

4. Bring back the original close fiscal year of the asset using OSS note.

If this resolves the issue, please mark the thread as answered.

Thanks!

Jhero

Former Member
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Hi Jhero, the depreciation key has been defined at Asset class level not at the asset level, I was wondering how to change the dep key for only the assets which were acquired in current year to MQ.

Thanks

Former Member
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Hi Jhero, Can you please reply to my last query, the depreciation key has been defined at the "AssetClass" level not the "Asset" level. I dont know how to change the depreciation key ( to MQ) for only the assets which were qcquired in the current year.

It would be a huge help if you can help me find solution to this issue.

Thanks.

Former Member
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Hi

if your screen layout allow you to change your depreciation key at asset level, you can create an LSMW to update the assets that you have identified if you do not want / cannot do it manually.

If your customizing do not allow you to do this, you will have to create an new layout for depreciation area & assign it for each asset class / depreciation area couple of your chart of depreciation.

Regards,

Barthelemy

former_member351125
Contributor
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This is a mass chane of asset. You can use the asset mass substitution to change the depreciation key. I am thinking that you only need two depreciations keys here, one for UL < 15 (200 declining) and one for UL >= 15 (150 declining balance). Therefor you need to create two substitution rule for asset mass change for your requirement.

Thanks!

Jhero

former_member351125
Contributor
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Please inform me if you are not familiar with asset mass change. By the way you can search it in the forum.

Former Member
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Hi Jhero, I havent used "Asset Mass change" in past. If you can please tell me about it, it would be great. Else, I will have to check/serach it here. Thanks a lot for all the help.

Thanks

former_member351125
Contributor
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1. Go to GGB1 - create substitution

Here you can specify the prerequisite, example: company code = <somecompany code>, asset class = <Some asset class> 

     Then you define the substitution on depreciation key = <some values>

On your case you need two substitution rule, one for M200 MQ and one is for M150 MQ

2 . Go to OA02 - activate substitution rule to the company code

     Create an entry for the company code and the substitution rules  you created.

         

3. Then creat worklist (tr.AR01) using the created substitution rules.

4. Release WL (tr.AR31).

***If you fail to release WL - check Assign Workflow Tasks (tr.OAWF). Assign General Task to WS00000025.

I can not demonstrate it to you as I do not have access in SAP system.

Thanks!

Jhero

former_member351125
Contributor
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Thats another option Barthelemy, but since the change of the deprecition keys are straight forward, asset mass change substitution rule can handle it.

Thanks!

Jhero

former_member351125
Contributor
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Use period control 09 09 09 09. If not maintain this in OAVH.

FVPer. Contr.NameYearMoDyPeriodMid-Month
<your FV>9At mid-quarter    3312X
<your FV>9At mid-quarter    6305X
<your FV>9At mid-quarter    9308X
<your FV>9At mid-quarter    123111X