How to Set Up and Process Leased Assets

  • by Kees van Westerop, Senior SAP Consultant, Kwest Consulting
  • December 9, 2013
Learn how to configure leased assets to make sure that not only depreciation is posted but also the interest and the periodic payments.
Learning Objectives

After reading this article, you will know how to:

  • Configure leased assets to ensure that not only depreciation but also interest and periodic payments are posted in the SAP system.
  • Create a financial document containing all the open items to be paid.
Key Concept
In SAP Asset Accounting (FI–AA) you can maintain several kinds of assets. One particular kind is the leased asset. Besides the standard fixed-asset functionality for this kind of asset, the interest is calculated and posted.

For various reasons, such as cash flow or flexibility, companies often choose to lease assets rather than buy them. There are two types of leasing:

  • Financial leasing (aka capital leasing)
  • Operating leasing

Capital leases give the lessee (the person who is leasing) the benefits and drawbacks of ownership, so they are considered as assets, and they may be depreciated. At the end of the lease contract the lessee has the option to buy the asset. For operating leases, however, the lessee uses the property, but does not take on the benefits or drawbacks of ownership; the lessor retains them.

Because capital leases are registered as assets, they should be recorded in the fixed-asset module (FA) of the SAP system. However, leased assets are different from other assets: They are reported on the debit side of the balance sheet and also as liabilities (Accounts Payable) on the credit side of the balance sheet. The assets are valuated as the sum of all payments minus the included interest. For leased assets a payment has to be made periodically to the lessor (vendor). Part of the amount paid is interest, and this must be posted separately.

Kees van Westerop

Kees van Westerop has been working as an SAP consultant for more than 25 years. He has an MBA degree in mathematics and a degree in finance. Kees has been concentrating on the financial modules, especially in general ledger accounting, cost center accounting, and consolidation. He also has a great deal of experience with rollouts of kernel systems and integrating finance and logistics.

See more by this author


Comments

6/30/2015 9:40:04 AM
T. Mu.

Thank Kees,

Quick question about limiting the Capital Lease posting to a specific depreciation area. Under some Local GAAP I would need to treat those assets as expense.
Furthermore, How can we proceed if the supplier is sending a monthly invoice for the rent cost?

Thank you very much
1/8/2014 9:26:02 PM
Akhil Rastogi

Hi Kees,

Most of the companies use Operating Leases. Right now I am also exploring a robust solution for operating lease of equipments and vehicles from the Lessee aspect.
Do you have any insight?

Please log in to post a comment.

To learn more about subscription access to premium content, click here.