What is settlement value in SAP FI-AF-ARO - Asset Retirement Obligation Management?

SAP Term: settlement value

• Component: FI-AF-ARO

• Component Name: Asset Retirement Obligation Management

• Description: Expected or estimated undiscounted retirement costs on the settlement date. As asset retirement obligations are often long term obligations with settlement dates far into the future, it can be difficult to estimate the settlement value. In order to arrive at a realistic settlement value, the asset retirement costs are estimated based on current prices inflated by current inflation rates for the settlement date.

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• Key Concepts: 
  Settlement value is a term used in SAP FI-AF-ARO Asset Retirement Obligation Management. It is the amount of money that is required to be paid to settle an asset retirement obligation (ARO). This amount is calculated based on the estimated future costs associated with the retirement of an asset. 
  
  How to use it: 
  In SAP FI-AF-ARO Asset Retirement Obligation Management, the settlement value of an ARO can be calculated by entering the estimated future costs associated with the retirement of an asset. The system will then calculate the settlement value based on these costs. 
  
  Tips & Tricks: 
  When calculating the settlement value of an ARO, it is important to ensure that all estimated future costs associated with the retirement of an asset are taken into account. This will ensure that the settlement value is accurate and reflects the true cost of retiring the asset. 
  
  Related Information: 
  The settlement value of an ARO can also be used to determine the amount of money that needs to be set aside in order to cover the cost of retiring an asset. This can help organizations plan for and manage their financial obligations related to asset retirement.