What is amortized cost in SAP FS-BA-PM-AFP - Accounting for Financial Products?

SAP Term: amortized cost

• Component: FS-BA-PM-AFP

• Component Name: Accounting for Financial Products

• Description: Defined as effective capital minus accrued interest. Amortized cost is the amount used to valuate a financial asset or a financial payable when making an entry for the first time.

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• Key Concepts: 
  Amortized cost is a method of accounting used to record the cost of a financial product over its lifetime. It is used in the Financial Services - Banking and Payments - Asset and Financial Products (FS-BA-PM-AFP) component of SAP. This method takes into account the cost of the product, as well as any associated fees, such as interest or other charges. The amortized cost is then spread out over the life of the product, allowing for a more accurate representation of the cost. 
  
  How to use it: 
  In order to use amortized cost in SAP, you must first set up the FS-BA-PM-AFP component. This includes setting up the necessary accounts and entering any associated fees or charges. Once this is done, you can then enter the amortized cost for each financial product into the system. This will allow you to track and report on the cost of each product over its lifetime. 
  
  Tips & Tricks: 
  When setting up amortized cost in SAP, it is important to ensure that all associated fees and charges are accurately entered into the system. This will ensure that the amortized cost is accurately calculated and reported on. Additionally, it is important to regularly review and update the amortized cost for each financial product, as this will ensure that your reports are accurate and up-to-date. 
  
  Related Information: 
  For more information on amortized cost in SAP, please refer to the official SAP documentation on FS-BA-PM-AFP Accounting for Financial Products. Additionally, there are many online resources available that provide detailed information on how to set up and use amortized cost in SAP.