What is decrease in capitalization in SAP FI-LC - Consolidation?

SAP Term: decrease in capitalization

• Component: FI-LC

• Component Name: Consolidation

• Description: A consolidation activity that reduces the capital stock of an investee unit and simultaneously reduces the investment book value equity in earnings of affiliates of the immediate parent companies, without affecting the respective percentages of each investment share.

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• Key Concepts: 
  Decrease in capitalization is a term used in SAP FI-LC Consolidation to describe the decrease in the value of an asset due to depreciation, amortization, or other factors. It is a non-cash expense that reduces the value of an asset over time. 
  
  How to use it: 
  In SAP FI-LC Consolidation, decrease in capitalization is used to calculate the value of an asset over time. It is calculated by subtracting the current value of the asset from its original value. The resulting difference is then divided by the number of years that the asset has been in use. 
  
  Tips & Tricks: 
  When calculating decrease in capitalization, it is important to consider any additional expenses associated with the asset such as maintenance costs or taxes. These should be taken into account when calculating the total decrease in capitalization. 
  
  Related Information: 
  Decrease in capitalization is related to other terms such as depreciation and amortization. Depreciation is a non-cash expense that reduces the value of an asset over time due to wear and tear, while amortization is a non-cash expense that reduces the value of an asset over time due to interest payments or other factors.