Enterprise Assets
Management
EGN 5622
Enterprise Systems Integration
Fall, 2015
Enterprise Assets
Management (EAM)
Concepts & Theories
Asset Accounting
Tracking the financial consequences
associated with the entire lifecycle of an
asset, from acquisition to disposal
(retirement).
 Assets can be categorized as tangible,
intangible, and financial

3
Asset Accounting Classification

Tangible assets
◦ Fixed assets
◦ Leased assets
◦ Assets under construction

Intangible assets
◦ Intellectual property
◦ Patents
◦ Trademarks

Financial assets
◦ Securities
◦ Long term notes (debts)
◦ Mortgages
4
Asset Accounting Components
Asset
accounting
Tangible
assets
Intangible
assets
- Fixed assets
- Leased assets
- Assets under
construction
- Intellectual
property
- Patents
-Trademarks
Financial
assets
- Securities
- Long term
notes (debts)
- Mortgages
Asset Accounting in corporate
financial structure
Chart of Accounts
 General Ledger Accounts

◦ Balance sheet accounts
◦ Income statement accounts
◦ Reconciliation accounts

Subsidiary ledgers (sub ledgers)
◦ Accounts Receivable (customers)
◦ Accounts Payable (vendors)
◦ Assets
6
Asset Accounting

Assets are assigned to
◦ company code
◦ Business area

Accounting data of assets are maintained in
asset sub-ledger accounts.
◦ E.g. Acquisition costs and depreciation



Asset sub-ledger accounts are created when
asset master record is created and associated with
a reconciliation account in the general ledger
Sub-ledger account and the master record
share the same account number
Companies maintain separate reconciliation
accounts for different types of assets
7
Asset Accounting
8
Example of Asset Reconciliation
Accounts in GL
9
Asset Accounts (AA) Structure
Example
10
Asset Management (Lifecycle)
Cost center
Asset master
creation (AA)
Vendor master
Asset
Report
(AA)
Vendor invoice
Asset
Acquisition
(AA)
Outgoing
payment
Asset
Addition
(AA)
Depreciation
Charge
Asset
Transfer (AA)
Asset
Retirement
(AA)
Within/outside
Company code
Business
Area
Plant/location
External
Customer
Master
Customer/Scraping
Customer
Invoice
Customer
Payment
Major Activities in Asset
Management (Lifecycle)
Asset Acquisition
 Asset Depreciation
 Asset Retirement

12
Asset Acquisition

Asset acquisition is concerned with acquiring assets
via internal or external processes
◦ Internal:
 production process or project systems
◦ External:
3 external options for purchasing assets,
 Purchase from an established vendor using the
purchasing process (different GL accounts)
 Purchase from an established vendor without using the
purchasing process (manual entry in GL and subledger; similar to AP accounting)
 Purchase from a one-time vendor or a vendor for
whom master data are not maintained (via clearing
account).
13
Asset Acquisition With a Clearing
Account
5,000
3
Goods receipt
Magal and Word | Integrated
Business Processes with ERP
Systems | © 2011
14
Asset Depreciation
Asset depreciation is concerned with the decrease
in the value of an asset over time
 Depreciation can be planned or unplanned
 Depreciation methods are used
◦ Straight line
◦ Double declining balance
 Usefulul life
 Residual value
 Book value
 Depreciation areas: parallel valuation for each fixed
asset for different purposes such as cost accounting
or tax purpose.

Magal and Word | Integrated
Business Processes with ERP
Systems | © 2011
15
Straight Line Depreciation
Magal and Word | Integrated
Business Processes with ERP
Systems | © 2011
16
Double Declining Balance
Depreciation
Magal and Word | Integrated
Business Processes with ERP
Systems | © 2011
17
Financial Statements Based on
Depreciation Areas (parallel
valuation)
Magal and Word | Integrated
Business Processes with ERP
Systems | © 2011
18
Asset Retirement

Concerned with the disposal or
retirement of an asset after its useful
life

Retirement may be:
◦ Revenue generating (sold)
◦ Non-revenue generating (scrapped)
Magal and Word | Integrated
Business Processes with ERP
Systems | © 2011
19
Asset Explorer

Asset explorer provides an overview of all
activities related to the asset, including:
◦ Acquisition data
◦ Planned and posted (actual) depreciation
◦ Drill-down details for:
 Master data
 Transactions
 Documents
◦ Depreciation posting run (for an assumed
useful life)
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Asset Explorer (continued)
Asset explorer can:
 display connections from the Asset
Explorer to the G/L accounts, vendor
accounts, the cost center, and the
Purchase Order of the Asset

display planned values, as well as values
already posted for analyzing asset values
Asset Explorer Interface
Magal and Word | Integrated
Business Processes with ERP
Systems | © 2011
22
Asset management linked to
financial accounting
Magal and Word | Integrated
Business Processes with ERP
Systems | © 2011
23
Enterprise Assets
Management (EAM)
SAP Implementation
SAP Module View
Sales &
Distribution
Financial
Accounting
Materials
Mgmt.
Controlling
Fixed Assets
Mgmt.
Production
Planning
Quality
Mgmt.
Plant
Maintenance
Human
Resources
Integrated Solution
Client / Server
Open Systems
Project
System
Workflow
Industry
Solutions
Create Asset Master
Create Asset Master
Asset Master
Purchasing an Asset
Purchasing an Asset
One way to skip the step of creating an Asset in the books is to directly go
to the Purchase Order, and click the button pointed to.
Asset Explorer
Lab 3 Exercises (Due date 10/3/2015)
1.Create asset
2.Purchase asset
3.View Asset Explorer