In the last post, I talked about asset retirement using sales to a customer. You can use the transaction F-92 when you need to sell the asset to a customer with some revenue. But, sometimes organizations tend to scrap an asset. Scrapping of an asset is a process where you decompose an asset without any revenue. Today, I will show you how you can retire an asset by scrapping using t-code ABAVN in SAP.
In most cases, when organizations use an asset for a specific period of time and when an asset wears out completely, they scrap that asset. Hence, they book losses on the remaining value of the asset.
Like F-92, you need a fixed asset code with acquisition and depreciation values before you can scrap an asset. Even if depreciation values are not there, you can still scrap an asset with losses amounting to the acquisition value. But, it is very rare in an organization. Usually, companies only scrap it once the asset has been used for a long period of time or till its useful life.
So without further ado, let’s begin!
Table of Contents
Step 1: Create an asset with an Acquisition Value
Like any other process in asset accounting, the first step is to have an asset master data ready. To process any kind of transaction in asset accounting, you need an asset code first. You can create a new asset master in AS01 for any asset class.
Afterward, you need to acquire that asset with acquisition value. For example, if the asset cost is $1000, then you need to acquire it for the same amount. As you already know, there are 2 ways of acquiring it: Either ABZON or F-90. ABZON allows you to post an acquisition value for an asset with a clearing account. On the other hand, F-90 allows you to acquire an asset from a vendor.
I have created one asset 1800004-0 with an acquisition value of $1000 for company code 1234.
Step 2: Post Depreciation Values for the Asset
This step is optional and you can skip it if you don’t want to post the depreciation amount for an asset. But, in an ideal scenario, scrapping happens only after posting depreciation values. You can use the transaction code AFAB to post the depreciation values.
Since asset 1800004-0 has a useful life of 4 years that translates to 48 months, and an acquisition value of $1000. The depreciation amount for each month will be (1000/48) = $20.83.
The system has posted the same depreciation amount for period 3 during the depreciation run.
Step 3: Execute ABAVN in SAP for Asset Retirement by Scrapping
Now, it’s time to execute the t-code ABAVN in SAP or navigate through the SAP easy access path to post the asset retirement by scrapping.
|Accounting -> Financial Accounting -> Fixed Assets -> Posting -> Retirement -> Retirement by Scrapping
On the initial screen, enter the company code and asset code for which you want to execute the asset retirement.
In the ‘Transaction Data‘ tab, you can enter the accounting principle or depreciation area only if you want to retire an asset for a specific depreciation area. Otherwise, you can keep it blank. You also need to enter the document date, posting date, and asset value date for the asset. This is the date on which asset retirement will take place.
Moving on to the ‘Additional Details‘ tab, you can enter the posting period and document type. If you have entered the posting date in the previous screen, then there is no need to enter the posting period. The system will automatically fetch the posting period from the posting date.
Similarly, you can specify the document type of your choice. But, if you keep it blank, then the system will use the default document type AA for posting the transaction. You can also enter additional information in the Reference and Assignment fields.
The ‘Partial Retirement‘ tab is applicable only if you want to partially retire an asset. Sometimes organizations retire the asset partially and for that purpose, you can use this tab. You can enter either the partial retirement amount in the ‘Amount Posted‘ field or enter the retirement percentage rate.
For example, if the asset acquisition value is $1000 and you want to partially retire the asset by 30% value or $300, then you can enter it here.
If you want to completely retire an asset, then you can leave all these fields empty.
Step 4: Simulate and Post the Asset Retirement by Scrapping using ABAVN in SAP
Since I have not specified any values in the Partial Retirement tab, I will be completely retiring this asset. Click on the ‘Simulate‘ button at the top to display the accounting entry that the system will post.
After viewing the accounting entry, you can click on the ‘Post‘ button to post the asset retirement accounting entry. If you are using multiple ledgers, then the system will post two separate accounting documents for each ledger.
Step 5: Display the Asset Values in AW01N or AS03
To display the asset values, you can use either the asset explorer report AW01N or AS03 transaction. In the screenshot below, now you can see the asset retirement transaction with transaction type 250.
You can double-click on this line item to display the accounting document for asset retirement. Since there is a depreciation amount of $20.83 for this asset, the system will post the same amount to the accumulated depreciation GL account during asset retirement. And, the rest of the amount will be posted to the ‘Gain/Loss of Asset’ GL Account.
The following accounting entry is posted in ABAVN in SAP:
Fixed Asset Account - Acquisition Value Cr. $1000 Accumulated Depreciation Account Dr. $20.83 Gain/Loss of Fixed Asset Disposal Dr. $979.17
I hope you liked this tutorial on the asset retirement by scrapping using ABAVN in SAP. Please feel free to drop a comment here or reach out to me using the contact form for any suggestions. Until next time, Ciao!