Name: Advanced Valuations: Discounting for Long-Term Assets and Liabilities - SAP S/HANA Cloud Finance and Risk
Uploaded: 2022-12-20
Duration: 651 s
Description: Understand how to realize IFRS9, IFRS15 and IAS37 requirements in SAP S/4HANA Cloud, public edition, and how the system is connected with AP, AR and GL Accounting

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<div>Understand how to realize IFRS9, IFRS15 and IAS37 requirements in SAP S/4HANA Cloud, public edition, and how the system is connected with AP, AR and GL Accounting</div>

Advanced Valuations: Discounting for Long-Term Assets and Liabilities - SAP S/HANA Cloud Finance and Risk

Hello and welcome to this Microlearning for SAP S/4HANA Finance. My name is Mirella Vorsprach, and I’m a senior product specialist for Finance. In this video, you will learn how to setup and run a period-end closing to demonstrate the benefits of the new generation discounting for long-term assets and liabilities. First, I will introduce the status of discounting long-term assets and liabilities, then explain the posting schema and calculation effects and then process overview and configuration. Last but not least, will show you the demo in the system. Discounting for long-term assets and liabilities replaces the classical transaction perform further valuations which is based on the ECC and S/4HANA OP and CE in the form of job entry in Schedule General Journal App. Beside to this, it is also supported to be created as a task in Advanced Financial Closing. The legal requirements of discounting is about adjusting the promised amount for the effects of the time value of money. Where the contracts made has significant benefit of financing the transfer of goods or services to the customer. And not to forget the contract should contain a significant financing component and discount rate should be defined. In this part, the business case scenario will reflect the concept of the booking and revaluation in the system with consideration of due payment in the end of the contract. Company A in US made a contract for 36.000 $ with Company B, where good is transferred and revenue recognized. This contract has a significant financing component for 36 months. As a results of calculations of discounting for this contract of 36 months is the net present value is 30.083,22 $ and initial discount is 5.916,78 $ and interest income is 150,42 $. Process overview reflect what business roles are involved by using which Apps and  and which spots of customizing are needed in order to run discounting of long-term assets and liabilities. Where AR/AP accountant do posting relevant for long-term and short-term contracts, where each BP’s profile has its own particular risk class. Then one starts configuring the aging increments and respective setup in order to calculate the net present value, initial discounting and whether it is income or expense postings in period-end close by G/L Accountant. In this overview, you see where accounting principle is activated for the advanced valuation and assigned to the Chart of Account. Then define aging increments where are assigned to aging type for instance “SDISCOUNT”. And this type has been defined and assigned to the interest indicator which is reflecting the interesting rate. Last but not least is to make sure that G/L Accounts are maintain with semantic tag in the financial statement to be valuated. In this slide, you see the list of required spots or SSCUI in other to confirgue the discounting for proper period-close running. Now I would like to show you the demo in the system. For the configuration part of advanced valuation, here we go to the Manage Solution App. Then we type the advanced valuation in the search area. Then we start with maintaining relevant steps required for running discounting. Firstly, we activate the accounting principle, as you see the USAP is flagged. And if you wish to activate additional fields for valuations, you can go to this step number 5, but for the demo, I wont focus on this. Secondly, we need to define the aging increment so we can then later use while we are defining the discounting rules. So, we will use the standard one “SDISCOUNT” which is splitted to two classifications short-term and long-term the short-term is until 12 months and the long-term until 999 months. Thirdly,  we go to defining discounting rule, so here is the standard delivered “STVM” which reflect the time value of money by SAP, in that you see that aging increment “SDISCOUNT” has been assigned to long-term AR as for our example. Underneath, you will see that semantic tag = ACCREC or ACCREC_OTH are used for, then you can assign the interest indicator to those different risk classes and then you pick one of them, and then you can see the respective G/L accounts representing net present value, expense, or interest income and interest expense to be visible on the financial statement. Last but not least, is to assign the defined rule to the respective accounting principle. So, for our example you see USAP the valuation rule the standard one has been assigned to this accounting principle. Now we are ready to run discounting. Firstly, we check the setting of the business partner. So, this is our business partner and we want to see whether it is assigned to the reconciliation account “Trade Receivable Domestic” It is already assigned and then we want to check whether the risk class has been assigned or not. So, we go to SAP credit management then credit profile and then the risk class of medium has been assigned to this business partner. So according to our example, we wanted to make a contract with the customer for the long-term 36 months for amount 36.000$ and we wanted to reflect it in the system. Here you see the posted document in the T-Account view. And, in order to come to the outcomes of discounting valuation, we need to run it in the first period, so here we go to the Schedule General Ledger Job then we create the job template. Here we pick, Step 2, Step 3,  for period end of November, then we pick the company code 1710 then we update run then schedule. So, for the moment it has been posted, so as a result, we see that the document has been posted with this calculated net present value 30.083,22 $, and the initial discounting 5.916,78 $. Key learnings of this video is to understand how to realize IFRS 9, IFRS 15 and IAS37 requirements in the SAP S/4HANA cloud system, and how the system is connected with AR, AP and General Ledger Accounting. This Microlearning relates to the scope item J58 in the best practice explorer as well as further detailed explained in the SAP blogs of Finance for SAP S/4HANA Cloud 2202. Please check out the offering of openSAP courses at open.sap.com and search or filter for your MOOCs of interest as well as our SAP learning journeys on help.sap.com/learningjourneys. Thank you and goodbye.