Material Ledger x IFRS x Depreciation

[Former Member]

Hi All

In South America companies are used to run actual costing run (CKMLCP) to valuate the stock with actual price. This actual price uses local depreciation method in their depreciation activity.

Due consolidation purposes and IFRS requirements companies also must report the stock of materials using other depreciation methods.

In few words, we have to maintain the actual cost but change the "local" depreciation cost to "IFRS" depreciation. It´s an additional material ledger.

So far I know you can do it using the following scenarios:

1) Develop a custom report that recalculates your material ledger (CKM3 massive).

2) Use IFRS as local depreciation, calculates a difference from local depreciation, make a posting, run CKMLCP and reverse.

3) Use Alternative Valuation Run (CKMLCPAVR) besides regular CKMLCP to have an additional actual price for materials using different stock valuation method or parallel valuation ledgers.

I´m very interested in the third scenario but until now nobody has implemented it.

Pls let me know your opinion and thanks for your cooperation

Frederick Ramos

SAP CO Consultant

Brazil

[rogrio_demattosfaleiros · Accepted solution]

Hi Fred, How are you?

I'm the one who did the configuration at the company you mentioned before.

For the solution, I used these steps.

1) First to enable the ckmlcavr steps, use the 659447 sap note.

2) Create a second planning version.

3) Go to OBYC key BSD to setup the delta stock accounts, spliting by valuation class. Remember to not use the same accounts from BSX key, use delta account.

4) Key PRG set a new difference account like PRD account, delta one too.

5) Set the Key UMD, this key is the opposite account from BSX

6) Create delta accounts for Cogs, if you are using CO-PA, set those account as cost element category 12.

7) Create a substitution for the cogs accounts. That because, when you use alternative valuation run revaluation of cogs, the system uses the same origin account, so you should create substitution steps for each cogs account that you use, doing that you can know the delta posting for revaluation.

😎 Create an alternative Valuation area in the fixed asset IFRS depreciation.

9) I had to used planning version because, the company was on a old support package, and an upgrade was not possible, lower support packages in 4.7 does not work well with the ckmlcpavr. I could not used Real delta version, because that.

10) If you use CO-PA you have to set the u201CSet Up Transfer of Cost Component Split to CO-PAu201D Creating one with the u201CCUMu201D key.

11) In CO-PA u201CDefine Access to Actual Costing/Material Ledgeru201D creating one with u201CCUMu201D key as well.

12) Then assign to the material type, at u201CAssign Costing Keys to Material Typesu201D

To use the ckmlcpavr, copy the real activities and prices to the new planning version.

Calculate the new activity price for depreciation, and use lsmw in kp26, to put into the planning version.

Select this version in ckmlcpavr, posting, and revaluation, select the plants.

Start the process.

In ckm3 you can choose which Costing run use want to view, Normal or alternative.

Use the mlcd table to create a massive ckm3, to attend reports.

Best Regards,

Rogerio Faleiros

SAP CO Consultant

[former_member403689]

Hi Fred,

Could you help us?

How can we see the BRGAAP and the IFRS in the same time? You wrote the CKMLCP and CKMLCPAVR don´t work togheter. Is it true?

We would need to post into the stock and the cost of sales in seperated accounts, which means:

Cost of sales R$ Account

Cost of sales R$ IFRS Adjustment Account

Stock R$ Account

Stock R$ IFRS Adjustment Account

Thanks for your help.

Claudia

[Former Member]

Hi Claudia

Sorry for my delay in answering you. Well...CKMLCPAVR and CKMLCP run together.

But you have to define one of them in SPRO "Activate Actual Costing" as a default to revaluate cost centers.

The scenarios I have seen is to maintain CKMLCP as default for BRGAAP as run CKMLCPAVR as an alternative to stock for IFRS.

When you run CKM3 you can press button Set Costing Run to have the view change to CKMLCPAVR costing run.

About the variance of cogs and stock for BRGAAP/IFRS I think you have to configure the accounts in cost elements in OKTZ to have this view.

Well I hope this information has helped you.

Regards.

[rogrio_demattosfaleiros]

Hi All,

The alternative material ledger will use the CKMLCP as initial, to create the delta.

If nothing is different in the activity price, and you didnu2019t create a Account Principle for the variable cost (present in the BOM), the AVR calculation will be the same as the real cost in CKMLCP.

You donu2019t need to add the accounts in the OKTZ, because the difference will be send to the material using the account that belongs to the Activity Type, and this account is already in the OKTZ

For the revaluation of consumptions the SAP will use the same account from the CKMLCP, if it is customized in Define Movement Type Groups of Material Ledger and Assign Movement Type Groups of Material Ledger , to use the origin account, so it goes to the account from the posting that created the entry, if it is not customized, it will be send to OBYC-COC. The problem here is that you are sending values that belongs to on GAAP to the another GAAP. To solve this problem, you should create an substitution step, changing this account to a different one, or use a BAPI to do that. If you have CO-PA you need to create the transfer structure to send the IFRS to CO-PA as well.

After the first run of the CKMLCPAVR, create the next run using the button Create following run, inside the transaction, doing that the system will get the AVR values to create the delta instead just build the difference using the CKMLCP.

Regards,

Rogerio Faleiros.

[alexey_shvab]

Hi Rogerio,

Thank you for the complete explanation of using AVR for "parallel" IFRS and local accounting.

We have only one question about this scenario. How can we calculate "parallel" activity price in planning CO-version which include IFRS deprecation?

Should we calculate it outside the ERP? Or should we copy all activity allocation, all primary costs etc from actual version to planning version, then make there complete period closing to calculate activity prices with IFRS deprecation?

I will really appreciate if you share you experience.

[Former Member]

Hi,

We had a similar requirement. And we decided to use Delta version (with a bit of a twick ;-).

It's based on the principle that we want to calculate different activity prices in different versions (0 and delta) using different splitting structures. We want to use the same data posted only once in version 0 (primary, secondary and production confirmations). However in one version you include depraciation CE from main dep. area and in delta version you include depraciation CE from IFRS (I presume you can post both depreciations into CO with different cost elements).

Then we use AVR which references delta version for activity prices.

I only prototyped it and this solution was not fully tested yet. So let me know if you encounter any problems.

Step by step description of the solution below:

1. Transaction OKEQN

a) Create a delta version referencing version 0. Make it valid for actuals, plan and variance.

b) Under Controlling Area Settings -> Settings for Each Fiscal Year -> Price calculation Tab set revaluation to 0 u2013 u201CDo not

revalueu201D. Otherwise in CKMLCPAVR price cal we get error KP291.

Please see SAP note 420366. Note 420366 - Error in cumulation actual price in ML delta versions

c) Under Controlling Area Settings -> Delta Version: Transfer Business Trans. from Ref. Version thick all the boxes for actual.

This setting defines which transactions are REFERENCED from version 0. Transactions are grouped per check box. If a

box is checked a group of CO business transactions is treated as to be referenced from version 0.

If a box is not checked a group of CO business transactions is not referenced from version 0 but can be executed

explicitly for delta version.

The logic here is that table TKA09V contains CO business transactions which can be explicitly executed for delta version.

CO business transactions which are not in TKA09V are referenced from version 0 and must NOT be executed explicitly

for delta version.

Check box u201CActivity allocationu201D controls several CO business transactions which are related to activities, amongst them

RKL - Actual activity allocation.

So if we want to use in delta version the same activity quantities confirmed in version 0 we need to tick this box.

However ticking this box also controls CO business transaction KSII - Actual price calculation.

In other words if we tick for actuals box u201CActivity allocationu201D neither activity RKL nor KSII can be executed explicitly in

delta version. Both transactions are referenced form version 0.

So now if we try to execute Actual activity price calculation for delta version we get an error:

"Message no. KI506

Transaction KSII for version YYY is not permitted"

However what we want is to reference activity quantities from version 0 AND to execute activity price calculation explicitly for delta version (using dedicated splitting structure with IFRS depreciation cost elements included).

In order to achieve the above (and avoid KI506 in KSII) I had to u201Cmanuallyu201D maintain table TKA09V. I just manually entered entry KSII - Actual price calculation for delta version. This way I can calculate actual activity prices separately for delta version using quantities (and costs) already posted in version 0 and dedicated splitting structure.

d) Create additional splitting structure as per your alternative valuation needs (transaction OKES).

For delta version assign your cost centres to this new splitting structure (transaction OKEW).

So now we are ready to execute actual activity price calculation for delta version in transaction KSII.

In my testing everything went as expected. Actual activity prices for delta version were calculated according to new splitting structure and saved in table COST.

e) Create AVR and specify delta version as u201CVersion for Price for Cumulation in Legal Valuationu201D. Specify 7 u2013 Actual price for the period.

In my testing system used the correct price from delta version.

NOTE: Do not use "Determine Actual Prices" activity in CKMLCPAVR but calculated activity pricers for Delta verrsion in KSII.

Good luck,

Szymon

[Former Member]

Hi Szymon,

A very fantastic approach to meet the parallel valuation. I have couple of doubts and thought on it.

1. Whether can we use version 0 itself for calculating the actual price after the calculation of single price determination in CKMLCPAVR cockpit. See in my case during normal process order confirmation I do not use activity type/price or say that i use with zero price. But after doing the CKMLCP run, I will update the price and in CKMLCPAVR run i will use the same. May be I will use version "0" and plan price only. The purpose of my CKMLCPAVR is to valuate te inventory with additional fixed cost. if i can use version " 0", then no need for manual maintenance of TKVA09 i think.

2. in CKMLCP , WIP revalution is activated through t.code OMXW. whether through CKMLCPAVR that WIp will be revalueated automatically the way it does for inventories.

Please let me know your opinion on this.

Best Regards

PRabhat Kumar

[Janet_Salmon]

Hi Frederick,

You might be interested to know that we are in the process of developing a new business function for the parallel valuation of cost of goods manufactured in EhP5 that will support this logic. It will allow you to map depreciation according to a second valuation approach to a second version in CO that is used only for parallel valuation of inventories. At period close you then calculate actual activity rates according to both versions in CO (leading valuation and delta version) and pull one rate into the periodic costing run and one into the alternative valuation run.

[Former Member]

Hi Janet

Thanks for your response but it makes me concern that currently we don´t have a standard solution to recalculate the depreciation activity and recalculate the actual price of the materials in an alternative run.

Will this new feature be available only for 6.0 with NewGL activated ?

What about 4.7 and 5.0 without NewGL....this is the most of the companies....

That´s the issue I have been facing, I was about to configure and test the following scenario:

1) I can set an second version

2) I can copy the real data to this version

3) Recalculate the depreciation activity. Here we have an issue !!!

4) Run the CKMLCPAVR considering this second version and the new price of depreciation activity.

5) For reports purposes I could export the result of the two cockpits and check if the difference is equal to delta depreciation.

What do you think about these steps ?

I heard that a petro-chemical brazilian company has implemented a scenario similar to this but the consultant who has implemented there didn´t give more details, but he said that was a standard solution.

Last week I received a request from a german pharma-chemical laboratory that is starting a project to use the parallel valuation in order to solve this problem. Maybe you are working in the issue, but they are not in NewGL.

Well...many thanks for your information and as soon as you have some news please help us !!!! (laugh)

Regards.

[udo_werner]

Hi Frederick,

Your steps sound reasonable and will run also in a 4.7 environment. I know a big German chemical group running this scenario since quite a while. What they covered is a parallel material value calculation:

1. valuation using normal monthly acual costing

2. Using AVR with

- multi-period valuation

- different asset depreciation rules

- not considering beginning inventories

best regards,

Udo

[Janet_Salmon]

Hi Frederick,

The new function is only available with EhP5. However, it is not necessary to be on new GL (it can generate closing postings in the classic GL too) or to use parallel ledgers.

Regards,

Janet

[Janet_Salmon]

Hi Frederick,

Forgot to mention also that the new function is essentially an extension of the group/transfer price logic. The additional valuation approach is represented as a new valuation view in the currency and valuation profile and in the version. You then steer your depreciation into this second valuation approach and proceed as I described. Currently you can only take your depreciation to cost centers (which shouldn't be too much of a limitation) and charge it to production based on activity rates. Assessment to CO-PA will also work, but there is no parallel valuation on orders/projects etc. Instead it is the material ledger what stores the parallel approaches.

Hope this helps!

Janet

[elena_veleva]

Hi Janet!

We are also trying to implement alternative valuation run and use different overhead rates than the ones used in material ledger periodic costing run. We've New G/L and our leading ledger represents IFRS, local statutory accounting requirements are represented in local ledger. Currently the transfer price functionality is not implemented in our system. Is the new extention with EhP5 which you mention going to be available to use without transfer prices?

Best regards,

Elena

[Former Member]

Hi Janet

Thanks for your response about this matter. It was a long time ago.

I was checking the EHP5 details at https://websmp106.sap-ag.de/erp-ehp and I saw my concerns were answered by SAP.

My question is: Is this package already available for companies to implement or is still being developed ?

Thanks again.

Regards

[Former Member]

Hi Ramesh

Thanks for your comments. I do appreciate it. Simple and smart.

I will try to process and check the results.

Regards.

[Former Member]

Hi,

The CO will capture transactions posted from the leading ledger only.So maintaining a parallel ledger for valuation will not help,in sense,you cant use this in CO for valuating etc.

CKMLCPAVR may not be a bad idea.

You can also use Copy actual to plan,in a CO version and plan the material value with IFRS depreciation.You will get IFRS centric valuation.This way you can bye pass Material ledger for IFRS valuation.

Hope this helps.

Regards

Ramesh