What is capital lease method in SAP FI-AA - Asset Accounting?

SAP Term: capital lease method

• Component: FI-AA

• Component Name: Asset Accounting

• Description: The capitalization of a leased asset in the amount of the present value of the future lease payments. When you use this procedure, the leased asset must be shown in the balance sheet of the lessee, not the lessor. The periodic lease payments are not shown in the profit and loss statement of the lessee. Instead, periodic depreciation from the present value of the asset, including the interest resulting from the determination of the present value, is posted to profit and loss.

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• Key Concepts: 
  The capital lease method is a way of accounting for leased assets in SAP's FI-AA Asset Accounting component. It is based on the International Financial Reporting Standards (IFRS) 16 and is used to record the acquisition of leased assets. Under this method, the leased asset is recorded as an asset in the company's balance sheet and the lease payments are recorded as liabilities. 
  
  How to use it: 
  In order to use the capital lease method, you must first set up a capital lease contract in SAP. This involves entering the details of the contract, such as the start date, end date, and payment terms. Once this is done, you can then record the acquisition of the leased asset in SAP using the capital lease method. This involves recording the asset in the company's balance sheet and recording the lease payments as liabilities. 
  
  Tips & Tricks: 
  When setting up a capital lease contract in SAP, it is important to ensure that all of the details are entered correctly. This will ensure that all of the necessary information is recorded accurately and that any potential errors are avoided. Additionally, it is important to ensure that all of the payments are recorded correctly so that they can be tracked and accounted for properly. 
  
  Related Information: 
  For more information on how to set up a capital lease contract in SAP, please refer to SAP's documentation on FI-AA Asset Accounting. Additionally, there are many online resources available that provide detailed information on how to use this method of accounting for leased assets in SAP.