What is inflation adjustment account in SAP FI - Financial Accounting?

SAP Term: inflation adjustment account

• Component: FI

• Component Name: Financial Accounting

• Description: A G/L account that you use for the purpose of recording inflation adjustments. An inflation adjustment is typically posted to a balance sheet account, with the offsetting posting on a profit and loss account: The balance sheet account is typically the account that is adjusted, but in some cases, you may be required to record the adjustments separately on a contra account. The profit and loss account is often known as the inflation adjustment gain or loss account. &EXAMPLE& You have UNI 1,000,000 of gold, which is to be adjusted for inflation, which is running at 20%. This gives an inflation adjustment of UNI 200 ,000, which you post to the gold account or the corresponding contra account. You make the offsetting posting to an inflation adjustment gain and loss acount.

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• Key Concepts: 
  Inflation adjustment accounts are used in SAP Financial Accounting (FI) to adjust the value of an asset or liability for inflation. This is done by creating a separate account for each asset or liability and then adjusting the value of the account based on the inflation rate. This allows companies to accurately reflect the current value of their assets and liabilities in their financial statements.
  
  How to use it: 
  In SAP FI, inflation adjustment accounts are created by entering the asset or liability account number and selecting “Inflation Adjustment Account” from the drop-down menu. The system will then create a separate account for each asset or liability and adjust its value based on the inflation rate. The adjusted value will be reflected in the financial statements.
  
  Tips & Tricks: 
  When creating an inflation adjustment account, it is important to ensure that the correct inflation rate is used. This can be done by entering the correct rate in the “Inflation Rate” field when creating the account. Additionally, it is important to ensure that all assets and liabilities are included in the inflation adjustment accounts, as this will ensure that all assets and liabilities are accurately reflected in the financial statements.
  
  Related Information: 
  For more information on inflation adjustment accounts in SAP FI, please refer to SAP Help documentation or contact your local SAP support team. Additionally, there are many online resources available that provide detailed information on how to use inflation adjustment accounts in SAP FI.