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

SAP Term: depreciation calculation method

• Component: FI-AA

• Component Name: Asset Accounting

• Description: The most important characteristic of the base method when calculating depreciation. The depreciation calculation method makes it possible to carry out the numerous different types of depreciation calculation in the system. It defines which other influencing factors are to be specified in the depreciation key. Example: When choosing the depreciation calculation method “Explicit Percentage”, a percentage must be defined in the depreciation key.

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• Key Concepts: 
  Depreciation calculation method is a feature of SAP FI-AA Asset Accounting that allows users to calculate the depreciation of an asset over its useful life. This calculation is based on the asset’s purchase price, estimated useful life, and estimated salvage value. The depreciation calculation method can be used to determine the amount of depreciation for each period, as well as the total amount of depreciation over the asset’s useful life. 
  
  How to use it: 
  In order to use the depreciation calculation method, users must first enter the asset’s purchase price, estimated useful life, and estimated salvage value into SAP FI-AA Asset Accounting. Once these values have been entered, users can then select a depreciation calculation method from the available options. Depending on the selected method, users may also need to enter additional information such as the asset’s expected rate of return or expected rate of inflation. Once all of the necessary information has been entered, users can then calculate the depreciation for each period and the total amount of depreciation over the asset’s useful life. 
  
  Tips & Tricks: 
  When selecting a depreciation calculation method, it is important to consider how it will affect the asset’s value over time. For example, some methods may result in higher depreciation in earlier periods while others may result in lower depreciation in earlier periods. Additionally, it is important to consider how changes in inflation or interest rates may affect the asset’s value over time. 
  
  Related Information: 
  For more information about SAP FI-AA Asset Accounting and its features, please refer to SAP’s official documentation or contact your local SAP representative. Additionally, there are many online resources available that provide detailed information about SAP FI-AA Asset Accounting and its features.