Recording Asset Retirements in SAP FICO

In SAP FICO, asset retirements refer to the removal of an asset from the books when it is sold, scrapped, or disposed of. This process involves updating the asset’s value and posting the related financial transactions, including the reversal of accumulated depreciation and any gain or loss on disposal. This guide outlines the steps to record asset retirements in SAP FICO, along with examples.

1. Types of Asset Retirements

There are several scenarios for asset retirement in SAP FICO:

  • Sale of Asset: The asset is sold to an external party, and the sale proceeds are recorded.
  • Scrapping of Asset: The asset is scrapped, and no sale proceeds are received.
  • Transfer of Asset: The asset is transferred to another company code or business unit.

2. Prerequisites

Before recording an asset retirement, ensure the following:

  • The asset master record is created and contains the necessary depreciation information.
  • The retirement reason (such as sale or scrapping) is defined in the system.
  • The asset is no longer being used in operations and is ready for retirement.

3. Steps to Record an Asset Retirement

Step 1: Access the Asset Retirement Transaction

Use transaction code ABAVN to record an asset retirement. Alternatively, navigate through the following path:

SAP Menu > Accounting > Financial Accounting > Asset Accounting > Posting > Retirement > Retirement without Revenue

Step 2: Enter Asset and Retirement Details

On the initial screen, provide the following details:

  • Asset: Enter the asset number of the asset being retired.
  • Company Code: Enter the relevant company code.
  • Retirement Date: Specify the date the asset is being retired (this is important for depreciation calculations).
  • Retirement Reason: Select a reason for the retirement (e.g., sale, scrapping, or transfer).

Example:

    Asset: 100001
    Company Code: 1000
    Retirement Date: 31/12/2024
    Retirement Reason: 1001 (Scrapping)

Step 3: Choose the Retirement Type

Select the type of asset retirement:

  • Retirement without Revenue: If the asset is scrapped or written off with no proceeds.
  • Retirement with Revenue: If the asset is sold and proceeds are received.

For example, if the asset is being scrapped with no sale proceeds, select "Retirement without Revenue."

Step 4: Enter Retirement Amount

Enter the acquisition value (net book value) of the asset that is being retired. This is typically the asset's current value on the books, after accounting for depreciation.

Example:

    Acquisition Value: $30,000
    Accumulated Depreciation: $15,000
    Net Book Value: $15,000

Step 5: Simulate the Transaction

Click on the "Simulate" button to preview the postings that will be made during the retirement. The system will automatically calculate the asset’s accumulated depreciation and generate the relevant journal entries.

Example Simulation:

    Debit: 200000 (Accumulated Depreciation) - $15,000
    Credit: 100000 (Asset Acquisition Account) - $30,000
    Credit: 480000 (Gain/Loss on Retirement) - $0 (since it was scrapped)

Step 6: Post the Retirement

If the simulation is correct, click the "Post" button to complete the asset retirement. The asset will be removed from the asset register, and the corresponding journal entries will be created.

Example:

    Document Number: 1400005678
    Asset: 100001 (CNC Machine)
    Net Book Value: $15,000

4. Verifying the Retirement

After posting, verify the asset retirement using the following methods:

  • AW01N: Use the Asset Explorer to view the asset details and confirm that the asset has been retired.
  • FB03: Use the Display Document transaction to review the financial documents posted as part of the asset retirement.

Example Verification:

    Transaction: AW01N
    Asset: 100001
    Retirement Date: 31/12/2024
    Net Book Value: $0 (asset is fully retired)

5. Reporting on Retired Assets

To view retired assets and their details, use the following reports:

  • S_ALR_87011990: Asset Balances Report – Includes retired assets with zero value.
  • S_ALR_87012052: Depreciation Comparison Report – Shows the depreciation and retirement adjustments.

Example Report:

    Report: S_ALR_87011990
    Filter: Asset Status = Retired
    Result: List of retired assets with their final values.

6. Conclusion

Recording asset retirements in SAP FICO ensures that your asset management system reflects the correct asset status and accounting information. By following the steps outlined in this guide, businesses can efficiently retire assets, account for gains or losses, and maintain accurate financial records for reporting and auditing purposes.




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