SAP has a lot of ‘group’ items in it’s offering. In finance we have cost center groups, cost element groups, SKF groups, etc. There’s even a Group Chart of Accounts. How is that different from the regular COA? Now in S/4HANA they even have something in called Group Reporting. What is that? Reporting on different group objects in Finance?
What to make all of this? And what does this have to do with fixed assets and group assets?
What Are We Talking About?
To no one’s surprise, a word like ‘group’ gets used a lot in an IT solution. Most of the time, a lot of the items I listed above are merely a grouping of master data objects. SAP does this mostly for usability reasons. For instance, if you have a situation where there are a lot of activity types or cost centers that you’re working with, it can be easier to do so when you can treat them as their own grouping. This is particularly true during reporting and master data maintenance.
Another reason that they’re useful is for other SAP functions such as allocations. If you have to send costs to a large group of cost centers, it’s easier to just create them as a group and then specify that group in the allocation rule.
A group chart of accounts is different. This is used for financial consolidations purposes and can also be referred to as the consolidation chart of accounts.
Lastly, Group Reporting is SAP’s new financial consolidation solution. First FI-LC, then EC-CS, SEM-BCS, BW-BCS and finally BPC. But now those are all replaced by Group Reporting.
So, it’s the same word but SAP uses it in a variety of ways.
What is a Group Asset?
Other than the Group Reporting and Group COA, all of the items mentioned above are just groupings of a specific master data object. If you’re new to this topic, you might think that a group asset follows the same approach… and you’d be wrong.
A group asset is a specific type of asset record. It looks nearly identical to a regular asset but it’s not a reporting or allocation construct the way that a profit center group is. It’s an actual master data record. It has a screen layout, description, capitalization date, and plenty of depreciation parameters just like a regular fixed asset record. Unless you double check the transaction code or the title, you won’t notice any difference between a group asset and a normal asset.
This is the key point… when other SAP Finance people start working in fixed assets, they might think the ‘group’ asset functionality is just a grouping of related asset records that can then be specified in reporting. Nope, that’s not how these work.
How Does it Work?
First, you should know that SAP delivered group assets a long (long long) time ago so that we can group together several regular fixed assets into a singular asset in order to handle some specific depreciation requirements. By doing so, the assigned assets no longer calculate depreciation on their own; the depreciation parameters defined in the group asset takes precedence. This provides uniformity amongst all of the assets.
Secondly, the values that are on the regular asset are viewable on the group. Technically, the transaction postings get recorded simultaneously against both the main asset and the group that it’s assigned to. So there are some reporting advantages to this approach in addition to the depreciation treatment mentioned earlier.
To conceptualize this, think of an Oil&Gas company that has a refinery. They may have a large ‘asset’ such as a catalytic cracker or a heat exchanger. Each one of those may be represented by 100s of individual fixed assets records and 1,000s of individual PM equipment records. But from a financial perspective, it’s one large ‘asset’. Hence the need to roll up all of the individual fixed asset records… we’re mostly concerned with their values… into a single mega-asset.
Moving into SAP… the group asset is created at its own transaction code (AS21). In the screenshot below, I’m at the AS22 change group asset screen but it looks identical to the regular AS02 Change Asset screen. Only the transaction code and title indicate that this is not a regular asset.
Then the main asset is assigned to the group asset. This is just a single record but you would normally have multiple (hundreds or thousands) of main assets all assigned to the same group asset.
Now that the assignment is made, the main asset no longer calculates depreciation on its own. It is handing over that responsibility and the calculation to the group asset. Notice how area 01 (where the assignment was made) has the [Group] flag active and all other fields are greyed out. The main asset can no longer define its own depreciation treatment.
There are some reporting and posting implications that I won’t get into for this blog. I’m just trying to briefly explain how the Group Asset is an asset record and not some reporting construct.
Why Implement Group Assets?
The only reason to implement group assets is for a specific depreciation requirement. In the US, this only is found in the Oil&Gas and Utilities industries and revolves around something called composite or complex assets. Some people might also refer to them as pooled assets… but unless you’re in the heavily capitalized industries of Oil&Gas or Utilities, it’s probably not the same thing.
Since group assets were introduced, they’ve also been used in India for the Income Tax Depreciation requirement. This requirement has a concept around ‘block assets’ which lines up nicely with SAP’s group asset functionality.
Other than those two situations, I’m not aware of any other valid scenario in SAP where implementing group assets is warranted or the correct approach.
That’s a quick overview of what group assets are and how they’re used in SAP ERP (ECC or S/4HANA). In the next blog, I’ll cover what’s going on with this functionality in S/4HANA.