Handling Asset Scrapping Transactions in SAP FICO

Asset scrapping is the process of removing an asset from the books when it is no longer in use or has no residual value. In SAP FICO, scrapping involves removing the asset’s value, reversing the accumulated depreciation, and recording the transaction in the General Ledger (G/L). This article provides a step-by-step guide on how to handle asset scrapping transactions in SAP FICO with examples.

1. Prerequisites for Asset Scrapping

Before you can scrap an asset, ensure the following prerequisites are met:

  • Asset Master Record: The asset to be scrapped must have a valid asset master record, with accurate acquisition values and depreciation settings.
  • Depreciation Areas: The depreciation areas (e.g., book depreciation, tax depreciation) should be configured for the asset.
  • Scrapping Reason: The reason for scrapping the asset must be defined in the system.
  • Open Posting Period: Ensure that the posting period for the scrapping transaction is open in the system.

2. Types of Asset Scrapping

There are two main types of asset scrapping:

  • Scrapping with No Proceeds: The asset is scrapped, and no sale proceeds are received (e.g., destroyed or obsolete assets).
  • Scrapping with Proceeds: The asset is sold or transferred, and proceeds from the sale are recorded (e.g., when the asset is sold for scrap value).

3. Steps to Scrap an Asset in SAP FICO

Step 1: Access the Asset Scrapping Transaction

Use transaction code ABAVN to scrap an asset in SAP FICO. You can also navigate through the following menu path:

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

Step 2: Enter the Asset and Company Code Details

In the asset scrapping screen, enter the following details:

  • Asset Number: Enter the asset number of the asset to be scrapped.
  • Company Code: Specify the relevant company code.
  • Scrapping Date: Enter the date on which the asset is to be scrapped (this date will be used for depreciation calculation).

Example:

    Asset Number: 100001
    Company Code: 1000
    Scrapping Date: 31/12/2024

Step 3: Select Scrapping Reason

Choose the appropriate scrapping reason, such as asset destruction or obsolescence. This will help track the reason for scrapping in reports and records.

Example Reason:

    Scrapping Reason: 1001 (Asset Destroyed)

Step 4: Enter Asset Scrapping Amount

If the asset has no sale proceeds, enter a value of 0 for the scrapping amount. If the asset is sold for scrap, enter the proceeds received. Typically, for scrapping with no proceeds, the amount will be 0, and the system will reverse the full asset value.

Example:

    Scrapping Amount: 0 (No Proceeds)

Step 5: Simulate the Scrapping Transaction

Before posting, simulate the scrapping transaction to verify the correctness of the calculations. The simulation will show how the asset’s value, accumulated depreciation, and any potential gain or loss on the scrapping are recorded.

Example Simulation:

    Debit: 100000 (Asset Acquisition Account) - $30,000 (Original Value)
    Credit: 200000 (Accumulated Depreciation) - $20,000 (Total Depreciation)
    Credit: 480000 (Gain/Loss on Scrapping) - $10,000 (Loss on Scrapping)

Step 6: Post the Scrapping Transaction

If the simulation looks correct, click the "Post" button to execute the asset scrapping transaction. This will update the asset register, reverse the accumulated depreciation, and record any gain or loss in the General Ledger.

Example Posting:

    Document Number: 1400001234
    Asset Number: 100001
    Scrapping Date: 31/12/2024
    Acquisition Value: $30,000
    Accumulated Depreciation: $20,000
    Net Book Value: $10,000 (Loss on Scrapping)

4. Verifying the Asset Scrapping

After posting, you can verify the scrapping transaction using the following methods:

  • AW01N: Use the Asset Explorer to check the asset details and confirm that the asset has been scrapped.
  • FB03: Use the Display Document transaction to review the accounting document generated for the scrapping.

Example Verification:

    Transaction: AW01N
    Asset: 100001 (CNC Machine)
    Status: Scrapped
    Net Book Value: $0

5. Reporting on Scrapped Assets

To report on scrapped assets and their transactions, use the following reports in SAP FICO:

  • S_ALR_87011990: Asset Balances Report – Displays all assets, including those that have been scrapped, and their updated values.
  • S_ALR_87012052: Depreciation Comparison Report – Shows the depreciation calculations, including adjustments made for asset scrapping.

Example Report:

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

6. Conclusion

Handling asset scrapping transactions in SAP FICO is essential for maintaining accurate asset records and financial reporting. By following the steps outlined in this guide, businesses can efficiently manage asset scrapping, ensuring that depreciation is properly accounted for and any gain or loss on disposal is reflected in the financial statements.




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