Enterprise Assets Management EGN 5622 Enterprise Systems Integration Fall, 2015

Enterprise Assets Manage ment (EAM) Concepts & Theories Enterprise Assets Manage ment (EAM) Concepts & Theories

Asset Accounting Tracking the financial consequences associated with the entire lifecycle of an asset, from acquisition to disposal (retirement). Assets can be categorized as tangible, intangible, and financial 3

Asset Accounting Classification Tangible assets ◦Fixed assets ◦Leased assets ◦Assets under construction Intangible assets ◦Intellectual property ◦Patents ◦Trademarks Financial assets ◦Securities ◦Long term notes (debts) ◦Mortgages 4

Asset Accounting Components Asset accounting Intangible assets Tangible assets Financial assets - Fixed assets - Leased assets - Assets under construction - Intellectual property - Patents -Trademarks - Securities - Long term notes (debts) - Mortgages

Asset Accounting in corporate financial structure Chart of Accounts General Ledger Accounts ◦Balance sheet accounts ◦Income statement accounts ◦Reconciliation accounts Subsidiary ledgers (sub ledgers) ◦Accounts Receivable (customers) ◦Accounts Payable (vendors) ◦Assets 6

Asset Accounting Assets are assigned to ◦company code ◦Business area Accounting data of assets are maintained in asset sub-ledger accounts. ◦E.g. Acquisition costs and depreciation Asset sub-ledger accounts are created when asset master record is created and associated with a reconciliation account in the general ledger Sub-ledger account and the master record share the same account number Companies maintain separate reconciliation accounts for different types of assets 7

Asset Accounting 8

Example of Asset Reconciliation Accounts in GL 9

Asset Accounts (AA) Structure Example 10

Asset Management (Lifecycle) Asset master creation (AA) Vendor master Outgoing payment Asset Transfer (AA) Within/outside Company code Asset Addition (AA) Asset Acquisition (AA) Vendor invoice External Cost center AssetReport (AA) (AA) Customer/Scraping Depreciation Charge AssetRetirement(AA) Customer Payment Customer Invoice Customer Master Business Area Plant/location

Major Activities in Asset Management (Lifecycle) Asset Acquisition Asset Depreciation Asset Retirement 12

Asset Acquisition Asset acquisition is concerned with acquiring assets via internal or external processes ◦Internal:  production process or project systems ◦External: 3 external options for purchasing assets,  Purchase from an established vendor using the purchasing process (different GL accounts)  Purchase from an established vendor without using the purchasing process (manual entry in GL and sub- ledger; similar to AP accounting)  Purchase from a one-time vendor or a vendor for whom master data are not maintained (via clearing account). 13

Asset Acquisition With a Clearing Account Magal and Word | Integrated Business Processes with ERP Systems | © ,000 3 Goods receipt

Asset Depreciation Asset depreciation is concerned with the decrease in the value of an asset over time Depreciation can be planned or unplanned Depreciation methods are used ◦Straight line ◦Double declining balance Usefulul life Residual value Book value Depreciation areas: parallel valuation for each fixed asset for different purposes such as cost accounting or tax purpose. Magal and Word | Integrated Business Processes with ERP Systems | ©

Straight Line Depreciation Magal and Word | Integrated Business Processes with ERP Systems | ©

Double Declining Balance Depreciation Magal and Word | Integrated Business Processes with ERP Systems | ©

Financial Statements Based on Depreciation Areas (parallel valuation) Magal and Word | Integrated Business Processes with ERP Systems | ©

Asset Retirement Concerned with the disposal or retirement of an asset after its useful life Retirement may be: ◦Revenue generating (sold) ◦Non-revenue generating (scrapped) Magal and Word | Integrated Business Processes with ERP Systems | ©

Asset Explorer Asset explorer provides an overview of all activities related to the asset, including: ◦Acquisition data ◦Planned and posted (actual) depreciation ◦Drill-down details for:  Master data  Transactions  Documents ◦Depreciation posting run (for an assumed useful life) 20

Asset Explorer (continued) Asset explorer can: display connections from the Asset Explorer to the G/L accounts, vendor accounts, the cost center, and the Purchase Order of the Asset display planned values, as well as values already posted for analyzing asset values

Asset Explorer Interface Magal and Word | Integrated Business Processes with ERP Systems | ©

Asset management linked to financial accounting Magal and Word | Integrated Business Processes with ERP Systems | ©

Enterprise Assets Management (EAM) SAP Implementation Enterprise Assets Management (EAM) SAP Implementation

SAP Module View Integrated Solution Client / Server Open Systems Financial Accounting Controlling Fixed Assets Mgmt. Project System Workflow Industry Solutions Production Planning Sales & Distribution Materials Mgmt. Human Resources Plant Maintenance Quality Mgmt.

Create Asset Master

Purchasing an Asset Asset Master

One way to skip the step of creating an Asset in the books is to directly go to the Purchase Order, and click the button pointed to. Purchasing an Asset

Asset Explorer

Lab 3 Exercises (Due date 10/3/2015) 1.Create asset 2.Purchase asset 3.View Asset Explorer