What is depreciation in SAP FI-AA - Asset Accounting?

SAP Term: depreciation

• Component: FI-AA

• Component Name: Asset Accounting

• Description: The reduction of the asset book value because of decline in economic usefulness or because of legal requirements for taxes. The SAP System identifies the following types of depreciation: Ordinary depreciation provides for the planned distribution of the acquisition and production costs over the useful life of the asset. Special depreciation allows for depreciation above ordinary depreciation and is based on tax specifications. Unplanned depreciation is justified by a foreseeable, lasting reduction in the value of the asset because of unplanned circumstances. In the SAP System, depreciation can either be planned automatically on the basis of keys, or manually. The SAP System can determine ordinary depreciation and special depreciation using depreciation keys. Unplanned depreciation has to be handled manually.

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• Key Concepts: 
  Depreciation is an accounting term used to describe the reduction in value of an asset over time due to wear and tear, obsolescence, or other factors. In SAP FI-AA Asset Accounting, depreciation is used to calculate the amount of an asset’s value that should be expensed each period. 
  
  How to use it: 
  In SAP FI-AA Asset Accounting, depreciation is calculated using a variety of methods, such as straight-line, declining balance, and sum-of-the-years digits. The depreciation calculation is based on the asset’s purchase price, estimated useful life, and estimated salvage value. The depreciation amount is then posted to the general ledger as an expense. 
  
  Tips & Tricks: 
  When calculating depreciation in SAP FI-AA Asset Accounting, it is important to consider the asset’s estimated useful life and salvage value. These estimates should be updated periodically to ensure that the depreciation amount is accurate. 
  
  Related Information: 
  For more information on calculating depreciation in SAP FI-AA Asset Accounting, please refer to the SAP Help documentation.