What is pledged in SAP FI - Financial Accounting?

SAP Term: pledged

• Component: FI

• Component Name: Financial Accounting

• Description: Used as a short-term loan and a promise for payment. Applies to bills of exchange.

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• Key Concepts: 
  Pledged is a term used in SAP Financial Accounting (FI) to refer to an asset that has been given as security for a loan or other debt. The asset is held by the lender until the debt is repaid. This type of arrangement is also known as a collateralized loan. 
  
  How to use it: 
  In SAP FI, pledged assets are recorded in the Asset Accounting module. The asset is assigned to a special account called a “pledged asset account” and the loan amount is recorded in the corresponding liability account. When the loan is repaid, the asset is released from the pledged asset account and returned to its original owner. 
  
  Tips & Tricks: 
  When recording a pledged asset in SAP FI, it is important to ensure that all relevant information about the loan and asset are accurately recorded. This includes the loan amount, interest rate, repayment terms, and any other relevant details. 
  
  Related Information: 
  Pledged assets are similar to collateralized loans, but there are some key differences between the two. Collateralized loans involve an agreement between two parties, while pledged assets involve only one party (the lender). Additionally, collateralized loans typically involve more complex legal documents than pledged assets.