Managing Value Adjustments

Objectives

After completing this lesson, you will be able to:

Explain the different types of value adjustments
Post individual value adjustments
Manage flat-rate individual value adjustments

Value Adjustment Types

Diagram on adjustment of receivables showing IVA, flat-rate IVA, and FVA using F107 and FB01/FB50. P&L has a 1500 expense, and balance sheet adjusts receivables by FVA of 1500, totaling 1,000,000.

Creating Value Adjustments For Receivables

The following options are available for creating value adjustments for receivables:

Enter the individual value adjustments as special G/L transaction E.
To carry out a flat-rate individual value adjustment, use the SAPF107V additional valuations program.
Adjust the flat-rate value by making a manual G/L account posting after you have determined the amount of the value adjustment. The posting record is the expense from flat-rate value adjustment to value adjustment.

Individual Value Adjustment for Doubtful Receivables

General Ledger diagram with sections for D Receivables (100,000), IVA for receivables (1500), Customer Account linked to Doubtful Receivables (1100, 550), and Expense from IVA (1500).

Doubtful receivables are individual value adjustments during year-end closing. The special general ledger method is suitable for this procedure because the transaction is entered in the customer account and posted to a special G/L account, Individual Value Adjustments for Receivables.

Individual Value Adjustment

Perform the following steps after individual value adjustment:

After ascertaining that the debt is irrecoverable or that the receivable has been paid, reverse the individual value adjustment.
If the debt is irrecoverable, clear the receivable from the customer account and post the amount to the account for depreciation of receivables.
Adjust the sales tax in the posting.

How to Post an Individual Value Adjustment

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Flat-Rate Individual Value Adjustment

Diagram details value adjustment for Customer A, showing debt percentages overdue, receivable and doubtful receivable amounts, and accounting code TA00 usage for valuation adjustments.

SAPF107V enables you to perform automatic flat-rate individual value adjustments for overdue receivables.

Flat-Rate Individual Value Adjustment of Overdue Receivables

Perform the following steps during flat-rate individual value adjustment of overdue receivables:

In the Accounts Receivable configuration, define the debit rate percentage (bad debt expense percentage) for a valuation adjustment key and the overdue period (in days).
In the account determination table, set up the appropriate adjustment and bad debt expense accounts for doubtful receivables.
Assign the valuation adjustment key to the master record of any customer account that you want to include in the posting for the flat-rate individual value adjustment.
To calculate the bad debt expense posting for overdue items, carry out periodical valuation runs. The valuation run produces a valuation proposal that you can change manually, if desired. If you agree with the proposal, transfer the valuation to the general ledger to generate the posting. The system then makes the adjustment posting for the relevant key date and the reversal posting for one day after the key date.

How to Manage a Flat-Rate Individual Value Adjustment

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Execute a Flat-Rate Individual Value Adjustment

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