What are the best practices for a fixed asset revaluation? I asked Nathan Genez, a Financials Expert advisor and a managing partner at Serio Consulting, to comment on the processes involved when a company revaluates its fixed assets and to explain how SAP’s new program, RAAUFW02, facilitates this process.

What step during a fixed asset revaluation is the most complicated?

Validating and reconciling the data are probably the most intensive steps. The process of configuration and execution of the revaluation within SAP ERP is not overly complex, but the management of the values and ensuring that each asset is properly adjusted can be difficult. In addition, getting the asset to depreciate on a go-forward basis that is consistent with the revaluation can also prove tricky.

If an organization is preparing for a merger or acquisition, is a revaluation of fixed assets necessary before and after an M&A?

The revaluation is necessary after the M&A with the values baselined from the date of the M&A.

What question with regard to fixed asset revaluation do you receive most often from clients?

The most frequently asked question that I hear has to do with the adjustments of the asset’s value and how best to ensure that the go-forward depreciation is correct. A revaluation is similar to other types of fixed asset adjustments in that each debit or credit to the asset’s acquisition cost or depreciation reserve can cause the calculated amounts to behave differently depending on the configuration of the subledger. This topic area tends to require the most work and generates the most questions.

Is a year-end fixed asset revaluation more complicated than other revaluations? Are there traps to look out for related to managing fiscal year data?

The fixed asset revaluation should be done at year end or at the beginning of the year. 

Technically, the revaluation can be executed at any time; there is no program limitation regarding the fiscal year. However, a revaluation done in the middle of the year can cause the results for accumulated depreciation to not be correct depending on how strictly you follow the GAAP [Generally Accepted Accounting Principles] regulation. In this scenario, a hybrid approach might be preferable; using transaction codes ABAW and ABNA to adjust the asset’s values rather than using AR29N. This situation arises because depreciation will have been posted in the current year and an accumulated depreciation amount stored in the subledger. In this situation where depreciation was posted past the revaluation date, the depreciation will have to be reversed prior to running AR29N. This step is not easily done, but is possible via a correction program and a mass change process. Because of this, an end-of-year revaluation is strongly recommended.

Can you explain what functionalities SAP’s new revaluation program, RAAUFW02, offers to users that the previous program, RAAUFW01, did not?

The new version of the program has several key benefits: 

• The new program is similar to the other major periodic programs in FI-AA in how it is executed, how the results are simulated and analyzed, and how it is reported.

• The old program was executed as a batch program, whereas the new one posts directly to the GL. The new approach is safer because the batch data could be changed manually during execution, which would cause a reconciliation issue between the GL and the asset subledger. With the new approach, this reconciliation issue is no longer a risk.

• The new program has its own method to directly upload data from an Excel file. This method lets you process far greater amounts of data more easily than the old program.
• The new program uses a BAdI [Business Add-In] to provide an additional enhancement point for situations where the standard logic is not sufficient.

In SAP’s documentation for fixed asset revaluation, it states that users go to the selection screen to “define the main report and posting parameters, as well as the processing mode of the program.” Could you describe the selection screen of the SAP fixed asset revaluation program? Is this screen different in SAP program RAAUFW02? Could any of the steps involved in using the selection screen be confusing to new users?

The selection screen uses the same logical database (ADA) that most every other fixed asset program uses, so it looks very similar. The one difference is that the selection screen has a series of five tabs that are used to execute the program in a variety of different ways. They are:

• Standard Revaluation
• Depreciation Adjustments. This tab can be used to upload an .xls file to post depreciation adjustments such as write-ups or unplanned depreciation.
• New Valuation of an Asset. This tab is used to revalue a single asset record.
• New Valuation Multiple Assets. It allows you to point the program to an .xls file to upload multiple asset revaluation changes. This is the most comprehensive revaluation because you are adjusting both the asset’s acquisition cost and depreciation reserve.
• Index Based New Valuation. This tab is similar to the New Valuation option except it is not determined on an asset-by-asset basis. Instead, the new asset values are determined by an index.

What other SAP solutions are helpful for users during a fixed asset revaluation?

A fixed asset revaluation is purely an SAP ERP-based initiative. It could potentially trigger a substantial amount of data that may have to be extracted to SAP NetWeaver BW, but otherwise, other SAP solutions aren’t involved or affected.

What tips or warnings would you recommend to users who are starting the configuration process for a fixed asset revaluation with SAP’s RAAUFW02 program?

• Do not configure the revaluation transaction types in AO84. Instead use AO73.

• Run depreciation up to the period of revaluation prior to running the revaluation (for example, if the revaluation date is 12/31, the depreciation for pd [period] 12 must be posted).

• Only active assets will be revalued. Retired assets will not be revalued. AR29N will not issue an error; instead, it will skip the retired assets. 

• Ask the users if they need to keep the historical values. If so, create a new depreciation area as a copy of the revaluation area (usually 01) before beginning the revaluation process.

Nathan Genez is an SAP FI/CO- and SAP NetWeaver BW-certified consultant who has worked with SAP ERP since 1996, with an emphasis on the capital accounting modules: PS, IM, and FI-AA. A former platinum consultant with SAP America, Inc., he has worked with SAP NetWeaver BW since release 1.2B. He is currently a managing partner at Serio Consulting in Houston, Texas.

To contact Nathan click here: Nathan Genez.

Gary Byrne

Gary is the managing editor of Financials Expert and SCM Expert. Before joining WIS in March 2011, Gary was an editor at Elsevier. In this role he managed the development of manuscripts for Elsevier’s imprint responsible for books on computer security. Gary also has held positions as a copy editor at Aberdeen Group, a Boston-based IT market research company, and as an editor at Internet.com, a publisher of content for the IT community. He also gleaned experience working as a copy editor for International Data Corp., a Framingham, MA-based IT market research company. He earned a bachelor of science degree in journalism from Suffolk University in Boston. He enjoys traveling, sailing as a passenger onboard schooners, and helping his wife, Valerie, with gardening during summer weekends. He’s a fan of all the Boston sports teams and once stood behind Robert Parish in a line at BayBank. He felt small and didn’t ask for an autograph. You can follow him on Twitter at @FI_SCM_Expert. His online footsteps can also be found in the SAP Experts group on LinkedIn.

You may contact the author at gary.byrne@wispubs.com.

If you have comments about this article or publication, or would like to submit an article idea, please contact the editor.