Mufid Solution

Today I'll post about the impact of IFRS 16 which is all about Lease Accounting and what we need to do in order to comply with new standard. IFRS 16 sets out the principles for recognition, measurement, presentation and disclosures of leases. It replaces the previous standard IAS 17 and will become mandatory from 2019 Financial year, 1st January 2019. Financial statement impact – Before and after IFRS 16 Balance sheet Impact: IAS 17 IFRS 16 Finance Lease Operating Lease All Leases Assets XX No record XX (finance+ Operating Leases ) Liability XX Income Statement Impact: IAS 17 IFRS 16 Finance Lease Operating Lease All Leases Revenue Operatingcosts (excluding depreciation and amortization ) XX ( Operating Lease Expense ) Depreciation and Amortization XX ( Deprecation ) Finance Cost XX ( Interest ) Profit before Tax Effect on the Lessee’s Balance sheet of: Increase           Lease Assets Increase           Financial Liability Decrease     

SAP supports the entire Asset Accounting Life cycle   processes through Project  Systems  (PS),  Asset  Accounting  (AA)  &  General  Ledger  (GL) Modules. Asset Management (AM) is designed for users to manage and supervise individual aspects of fixed assets. SAP Asset Life Cycle SAP Structure for Asset Accounting A sset Acquisition Acquisition from Invoice : PR > PO > Good receipt > Invoice Receipt > WBS > Asset Under  Construction > Complete Asset A sset Settlement A sset Depreciation Depreciation Overview - Depreciation is the reduction or diminution in value of fixed asset due to wear & tear, obsolescence, effects of time and change of technology. -Depreciation run is performed at period end just prior to FI closing. - Depreciation run can be Automatic or Manual as per business requirements. - Depreciation run expense is computed and posted with entry: Dr. Depreciation Expense                   Cr. Accumul

Budget Control • For controlling purpose, Budget Availability Control for AFE has been activated in SAP • The Availability Control will calculate Budget Availability (remaining value percentage) based on budget set on lowest WBS level (for posting) compared to the spending (commitment + actual) – Budget commitment : Budget reservation for consumption – Budget actual : Budget consuming posting data • B udget Availability Control : – Warning on 70% spending – Error on 100% spending • If any budget revision made to the respective AFE / Cost Center, budget control validations will refer to the revised budget (not the original) Budget Monitoring a. Original Budget   = Amount budget uploaded (tcode: CJ30) b. Supplement   = Additional budget amount for revision (tcode : CJ37) c. Return   = Less budget amount for revision (tcode : CJ38) d. Total Budget   = Total budget release (tcode : CJ32) e. Actual   = Total amount from actual posting, exclude settlem