What is derecognition in SAP FS-BA-PM-SFA - Smart Accounting for Financial Instruments?

SAP Term: derecognition

• Component: FS-BA-PM-SFA

• Component Name: Smart Accounting for Financial Instruments

• Description: The clearing of the balance on a subledger account in the balance sheet. &EXAMPLE& At the end of a contract, all balances are cleared.

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• Key Concepts: 
  Derecognition is a process in SAP FS-BA-PM-SFA Smart Accounting for Financial Instruments that allows a company to remove an asset or liability from its balance sheet. This is done when the asset or liability is no longer owned by the company, or when the company no longer has control over it. The derecognition process is used to ensure that the company's financial statements accurately reflect its current financial position.
  
  How to use it: 
  In order to derecognize an asset or liability, the company must first identify the asset or liability that it wishes to derecognize. Once identified, the company must then determine whether the asset or liability meets the criteria for derecognition. If it does, then the company must record the derecognition in its financial statements and adjust its balance sheet accordingly.
  
  Tips & Tricks: 
  When derecognizing an asset or liability, it is important to ensure that all relevant information is included in the financial statements. This includes any gains or losses associated with the derecognition, as well as any changes in value of the asset or liability since it was acquired. Additionally, it is important to ensure that all relevant accounting standards are followed when recording the derecognition.
  
  Related Information: 
  The process of derecognition is closely related to other accounting processes such as impairment and revaluation. Impairment occurs when an asset's value decreases due to external factors such as market conditions, while revaluation occurs when an asset's value increases due to external factors such as market conditions. Additionally, derecognition can also be used in conjunction with other accounting processes such as consolidation and equity accounting.