Showcasing Assets Depending on Different Accounting Standards

Objective

After completing this lesson, you will be able to Explain how assets may be represented based on different valuations with the help of valuation views and depreciation areas.

Valuation Views and Depreciation Areas

Business Scenario

Bike Company does its financial reporting based on local accounting standards and IFRS. Kevin knows that every asset loses its value during the life cycle, for example, because it gets depreciated. He also knows that the depreciation rules based on local accounting standards may differ from the IFRS ones. This is exactly the case with his excavator. Its useful life may differ depending on an accounting standard. Kevin learns how this difference may be represented using valuation views and depreciation areas.

The valuation of a fixed asset depends on the relevant country-specific regulations. The following figure shows the example of an excavator acquired in a U.S. company code.

With regards to the IFRS accounting principle, nothing has changed. Company code 1710 uses the same entries as company code 1010.

Regarding the country-specific accounting principle, the excavator is valuated differently.

Kevin now wants to find out how much depreciation is planned for his excavator.

View the Planned Depreciation

Retirement

Kevin learns that the excavator has left the company because it did not meet the company's requirements. The excavator was sold. Kevin has to perform the retirement of the excavator. Learn how to perform the departure of the excavator by watching the next video.

The Bike Company has decided to acquire a new and better excavator soon. Kevin is now prepared to manage assets in the system.

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