What is acquisition cost in SAP FI-AA - Asset Accounting?

SAP Term: acquisition cost

• Component: FI-AA

• Component Name: Asset Accounting

• Description: The upper limit for valuation of an asset in the balance sheet. For external acquisitions, acquisition costs include all expenses for the acquisition including incidental acquisition costs, minus reductions to the purchase price. Incidental costs include: Freight charges Forwarding costs Commissions Costs for building a foundation, and so on Reductions in purchase price can be: Rebates Cash discounts Bonuses Price reductions because of defects Subsidies granted by a third party, and so on For in-house acquisitions, production costs include: Direct and indirect costs, including materials handling overhead Direct labor costs, including payroll overhead Special production costs Fair administrative expense can be included

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• Key Concepts: 
  Acquisition cost is the total cost of an asset when it is purchased or otherwise acquired. This cost includes the purchase price, any taxes, and any additional costs associated with the acquisition of the asset. In SAP FI-AA Asset Accounting, acquisition cost is used to calculate the depreciation of an asset over its useful life. 
  
  How to use it: 
  In SAP FI-AA Asset Accounting, acquisition cost is used to calculate the depreciation of an asset over its useful life. When an asset is acquired, the acquisition cost should be entered into the system. This cost will then be used to calculate the depreciation of the asset over its useful life. 
  
  Tips & Tricks: 
  When entering the acquisition cost into SAP FI-AA Asset Accounting, make sure to include all costs associated with the acquisition of the asset. This includes any taxes or additional costs associated with the purchase. 
  
  Related Information: 
  The depreciation of an asset in SAP FI-AA Asset Accounting is calculated using a variety of methods, including straight-line depreciation and declining balance depreciation. The acquisition cost is used in all methods to calculate the depreciation of an asset over its useful life.