Dealing with Ukraine Regulations? Understand How to Account for Fixed Asset Repairs

  • by Karthik Tharkabhushanam, SAP Consultant, Infosys Technologies
  • August 10, 2012
Leverage the country-specific functionality of your SAP system for efficient accounting and compliance with local Ukrainian laws and regulations.
Key Concept

Fixed asset repair costs are usually charged off when they are incurred. However, Ukraine law has a distinctive requirement to capitalize such costs if they exceed a certain limit. An SAP system provides a Ukraine-specific functionality (via program J_1UF_MAJOR_REPAIR) that helps support this legal requirement.

According to Ukrainian law on tax accounting, the repair costs of fixed assets are subject to the following regulations:

  1. The repair costs, which are less than or equal to 10 percent of the total book value of all assets, included into groups of assets, should be posted into expenses (FI posting to Tax Ledger only).
  2. The amount that exceeds this 10 percent limit should increase the net book value of each repaired asset in proportion to the repair cost for the corresponding repaired asset (Asset Accounting [AA] and FI posting to the Tax Ledger only).
Note

You need to install the SAP Country Versions in Central and Eastern European (SAP C-CEE) add-on for Ukraine on your SAP system to view the programs listed in this article. SAP Note 574080 (Overview note SAP Core CEE add-on) provides more information on the country versions and specific components in them. Illustration of the functionality in this article is on SAP ERP Central Component enhancement package 4 using CEE add-on 110_604.

For more information on Ukraine fixed asset repairs regulation, see SAP Note 938743 — Ukraine: Fixed Asset Repairs, New rule 20.12.2005.

The process for fixed asset repairs accounting in Ukraine includes four steps:

  • Step 1. Check the fiscal year start values of all fixed assets
  • Step 2. Maintain or update the repair cost
  • Step 3. Set the repair period
  • Step 4. Process the repair cost

Karthik Tharkabhushanam

Karthik Tharkabhushanam is an SAP consultant at Infosys Technologies Limited with more than 11 years of consulting experience. As a certified SAP Financials consultant, he specializes in SAP implementations for the manufacturing industry domain. He has a bachelor’s degree in accounting and is a chartered accountant.

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