product assistance for sap s/4hana for asset retirement

PRODUCT ASSISTANCE | PUBLICSAP S/4HANA for Asset Retirement Obligation2019-11-08

Product Assistance for SAP S/4HANA for Asset Retirement ObligationRelease 1906, Support Package 1

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Content

1 SAP S/4HANA for Asset Retirement Obligation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2 Getting Started. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

3 Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83.1 General Data for Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83.2 Transactions and Cost Estimation Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.3 Calculation Details for Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.4 Asset Retirement Obligation Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

4 Working with Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144.1 Creating Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154.2 Changing Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164.3 Displaying Asset Retirement Obligation Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174.4 Locking and Unlocking Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174.5 Deleting Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184.6 Underlying Objects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Creating Underlying Objects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Changing Underlying Objects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Deleting Underlying Objects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

5 Transactions for Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .225.1 Status of ARO Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235.2 Creating an Initial Cost Estimation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235.3 Adjusting a Cost Estimation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255.4 Adjusting a Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .265.5 Adjusting Interest Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275.6 Adjusting Inflation Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285.7 Working with Inflation Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305.8 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

6 Valuation of Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356.1 Cost Estimation Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366.2 Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396.3 Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

7 Postings Using SAP S/4HANA for Accounting Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 427.1 Detailed Information About Postings for Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . .437.2 Transaction Overview for an Asset Retirement Obligation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

2 P U B L I CProduct Assistance for SAP S/4HANA for Asset Retirement Obligation

Content

7.3 Processed Values Tab. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

8 Mass Adjustment of ARO Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 478.1 Performing Mass Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

9 Periodic Processing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

10 Reports for Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

11 Monitoring Asset Retirement Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5511.1 Accounting Integration Monitor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Product Assistance for SAP S/4HANA for Asset Retirement ObligationContent P U B L I C 3

1 SAP S/4HANA for Asset Retirement Obligation

The need for the recognition and reporting of asset retirement obligations (AROs) arises from requirements issued by Financial Accounting Standards Board (FASB), International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Securities and Exchange Commission (SEC) guidelines, Sarbanes-Oxley legislation, German local GAAP (HGB), and other standard-setting entities.

FASB Statement No. 143 provides guidance for when and how to recognize a liability for AROs with the goal to establish accounting standards for recognition and measurement of a liability for an asset retirement obligation and an associated asset retirement cost.

SAP S/4HANA for asset retirement obligation helps you manage your asset retirement obligations (AROs) from an accounting point of view. The application automates the recognition and reporting of AROs and supports different accounting principles (for example, IFRS, U.S. GAAP, and German HGB) while leveraging integration with SAP S/4HANA. The application supports relevant business transactions, such as cost estimation adjustments, interest and inflation rate adjustments, and termination or retirement. It triggers the necessary postings in the general ledger, accruals, and Asset Accounting using SAP S/4HANA for accounting integration.

SAP S/4HANA for asset retirement obligation is integrated with SAP S/4HANA and provides functionality associated with two main areas:

Management of Asset Retirement Obligation DataWhen working with ARO data, you can do the following:

● Manage the parameters for an ARO● Use the transactions that are necessary to change an ARO● Manage and execute calculations● Trigger accounting for an ARO

Accounting for Asset Retirement ObligationsSAP S/4HANA for accounting integration triggers and controls the necessary postings in the following integrated applications:

● Asset Accounting (FI-AA)● Accrual Engine (ACE and accrual postings)● One-time posting (OTP)


SAP S/4HANA for Asset Retirement Obligation

Overview of SAP S/4HANA for Asset Retirement Obligation

Features

● You can enter and adjust the key parameters of an ARO, for example, cost estimations, term, interest rates, and inflation rates.

● You can trigger and calculate follow-up business processes to adjust and change the ARO. The defined business transactions, for example, an interest rate adjustment, can be processed throughout the life cycle of the ARO asset. You can create transactions, check the calculations and release transactions, thus triggering the postings using SAP S/4HANA for accounting integration.

● Based on the master data and transactions mentioned above, the system calculates accounting principle-related values such as settlement value, present value, provisions, and interest costs.

● You can analyze the history of changes, including business transactions, business transaction status, and calculations. This helps substantiate compliance by tracking the history of changes and providing adequate reports. You can also use periodic programs to handle mass changes and periodic accruals.

● The integration with accounting and postings is triggered using SAP S/4HANA for accounting integration. Release of a business transaction, such as an interest rate adjustment, creates postings in Asset Accounting (FI-AA), accruals postings (ACE), and in the General Ledger (one-time postings (FI-GL)).

● In Asset Accounting (FI-AA), separate asset master data is activated and asset values are adjusted in the case of ARO adjustments. When you maintain AROs, you can navigate directly to the Asset Explorer and the Display Accounting Integration Contracts app for detailed analysis of postings.

Product Assistance for SAP S/4HANA for Asset Retirement ObligationSAP S/4HANA for Asset Retirement Obligation P U B L I C 5

More Information

● For more information on Asset Accounting, see the product assistance for the relevant release of SAP S/4HANA available at http://help.sap.com/s4hana: Enterprise Business Applications FinanceAccounting and Financial Close Asset Accounting (FI-AA) .

● For more information about SAP S/4HANA for accounting integration, see the product page on SAP Help Portal at http://help.sap.com/sai.


SAP S/4HANA for Asset Retirement Obligation

http://help.sap.com/s4hana

http://help.sap.com/sai

2 Getting Started

Basic functions for SAP S/4HANA for asset retirement obligation are available on the SAP Easy Access menu.

Choose SAP Menu Accounting Financial Accounting Additional Functions Asset Retirement Obligation Management . Alternatively, you can use the transaction /FOM/MENU.

You can access Customizing as follows:

● In the SAP Customizing Implementation Guide (transaction code SPRO) under Financial Accounting (New) SAP S/4HANA for Asset Retirement Obligation

● Using the transaction /FOM/ARO_IMG

Prerequisites

● You must define the type of financial obligation for which provisions are to be made. For example, you might have asset retirement obligations or warranty provisions.Obligation types are defined in Customizing under Financial Obligations Define Obligation Types and Obligation Type Configuration . For the combination of obligation type and company code group, you make settings such as the customizing set ID, inflation and interest rate keys, ARO asset class, and the assignment scenario.

● You then define which accounting principles can be used per obligation type.You do this in Customizing under Financial Obligations Configure Accounting Principles Per Obligation Type .

Related Information

Asset Retirement Obligations [page 8]Working with Asset Retirement Obligations [page 14]Transactions for Asset Retirement Obligations [page 22]Valuation of Asset Retirement Obligations [page 35]

Product Assistance for SAP S/4HANA for Asset Retirement ObligationGetting Started P U B L I C 7

3 Asset Retirement Obligations

An asset retirement obligation (ARO) is an obligation to retire an asset or changes to assets according to contractual stipulation. For example, this might be a leasing contract that gives temporary rights to use and change the leased object and requires retirement of any changes when the lease end.

SAP S/4HANA for asset retirement obligation structures the data used for ARO processing into three main areas:

● General data● Transactions and cost estimation plans● Calculation details for transactions

This information is available whenever you're working with AROs, for example, when creating or changing ARO data.

Related Information

General Data for Asset Retirement Obligations [page 8]Transactions and Cost Estimation Plans [page 10]Calculation Details for Transactions [page 10]Asset Retirement Obligation Status [page 13]

3.1 General Data for Asset Retirement Obligations

General asset retirement obligation (ARO) data consists of information that is independent of accounting principles and information that is specific to a particular accounting principle. Each type of information is shown in the relevant tab or area when you are working with an ARO.

General Tab

You can use the General tab to enter ARO data that is independent of an accounting principle, for example, company code, ARO setup date, and ARO asset class. Additionally, you can create a reference to an underlying object.


Asset Retirement Obligations

The following table lists the most important general ARO data:

Field What It Means

ARO Setup Date Date on which an ARO was created.

ARO Current End Date Current expected end date of an ARO. This date is determined by the final settlement date of the currently valid cost estimation plan (CEP) for the ARO.

First ARO End Date The very first expected or planned end date that was entered for an ARO.

ARO Termination Date Termination date, if the ARO has been terminated

Underlying Object Number of the object for which an ARO has been created

ARO Asset Class Asset class in which the ARO asset is to be created

As part of general data, you also set valuation parameters such as currency, inflation rate key, and interest key. Default values are provided by Customizing settings.

Assignments Tab

The Assignments tab shows you accounting data such as cost center, internal order, or profit center. This enables you to handle important accounting data at ARO header level.

NoteThe application provides a predefined set of possible assignment data. During implementation, you can specify which fields you want to appear on the Assignments tab in the General Data area in the ARO assignment screen. You can make these settings in Customizing for SAP S/4HANA for asset retirement obligation under Financial Obligations Object Assignment Scenarios .

Accounting Principle-Specific Data

In the General Data area, a tab is shown for each defined accounting principle. The following table lists the most important accounting principle-specific header data:

Field What It Means

Inflation Rate Key Key that represents the inflation rates used for discounting

Interest Rate Key Key that represents the interest rates used for discounting

Calculation Method U.S. GAAP-specific calculation method

Product Assistance for SAP S/4HANA for Asset Retirement ObligationAsset Retirement Obligations P U B L I C 9

3.2 Transactions and Cost Estimation Plans

The transaction data for an asset retirement obligation (ARO) is displayed in tabular form in the transaction area. Each transaction refers to the current cost estimation plan (CEP) or to a new cost estimation plan.

The CEP is one of the most important parameters for an ARO. You use the CEP to enter the CEP items, each of which defines the cost estimation for a specific and unique settlement date for the ARO you are processing. To enter the CEP, you use the transaction Create or Adjust Cost Estimation.

The following table lists the most important fields for ARO transactions:

Field What It Means

Transaction Number Number used to track the sequence in which transactions have been entered for an ARO.

Transaction Status Shows whether a transaction has been created, released, reversed, or set as immaterial.

Transaction Date Date on which a transaction for an ARO actually takes place. The transaction date can differ from the processing key date for an ARO transaction.

Processing Key Date Date on which the transaction flows into the valuation of an ARO. This date can differ from the transaction date.

Release Date Date on which a transaction was released.

Status Shows the status of processing in SAP S/4HANA for accounting integration.

3.3 Calculation Details for Transactions

When you select a transaction, you can access additional calculation details. You can track the ARO valuation in the accounting principle-specific tabs in this section.

Because the valuation of an ARO and the corresponding calculations can differ depending upon accounting principles, calculation details are separated by accounting principle. The following is available for each defined accounting principle:

● Calculated cash flows showing the periodic (monthly) provisions, interest costs, and other costs, if relevant● Specific settlement items in the cost estimation plan, total amounts of the provisions, the interest costs,

and other costs that are valid at the transaction processing key date, before and after an adjustment● Additional calculation steps or layers, if relevant



General Calculation Details

When you select an ARO transaction, you can see the relevant calculations for each accounting principle. This provides an overview of the provisions and interest costs as calculated based on a certain accounting principle.

The following table lists the main fields shown for each accounting principle tab:

Field What It Means

Provision Old The value of an ARO provision that was valid before an adjustment was made using an ARO transaction. This value is calculated based on the processing key date for the transaction.

NoteFor an initial cost estimation, this value is always zero.

Provision New The value of an ARO provision after an adjustment made using an ARO transaction. This value is calculated based on the processing key date for the transaction.

Provision Difference Shows the difference between the old provision value and the new provision value.

Provision EOO Shows the total value of the provisions at the end of an obligation (EOO). This value is calculated based on data from the corresponding ARO transaction.

Provision Consumption The amount of provision consumed by the costs of retirement of the underlying object of the ARO.

Provision Dissolution The amount of provision that is not consumed by the costs of retirement of the underlying object of the ARO. This amount can be dissolved.

Interest Cost Old The value of interest costs for an ARO that was valid before an adjustment was made using an ARO transaction. This value is calculated based on the processing key date for the transaction.

NoteFor an initial cost estimation, this value is always zero.

Interest Cost New The interest costs for an ARO after an adjustment made using an ARO transaction. This value is calculated based on the processing key date for the transaction.


Field What It Means

Interest Cost Difference The difference between the old and new interest costs. The value is usually zero, except in the case of retrospective changes.

Interest Cost EOO Shows the total value of interest costs at the end of an obligation (EOO). This value is calculated based on data from the corresponding ARO transaction.

Accounting Principle-Specific Calculation Details

In addition to the generally relevant calculation details, some aspects are specific to accounting principles:

● U.S. GAAP: You can use additional functions to display layers that have been created on cost estimation item level.

● German HGB: Additional functions are available to display the calculation of the cash flow based on the logic defined by the German Accounting Law Modernization Act (BilMoG).

Calculation Steps

Calculation steps enable you to track some of the basic calculations. In most cases, calculation steps show compounding and discounting of a base amount for a given period (defined using the base date and the target date).

Not all fields are filled in a calculation step. For example, if the interest rate is not relevant, the Percentage Rate is set to zero.

The following table lists the main data for a calculation step:

Field What It Means

Number of Calculation Step Sequence number of a calculation step

Calculation Step Description Identifies what kind of calculation step is involved

Base Date Start date of calculation period

Target Date End date of calculation period

Base Amount Value at the start date

Target Amount Value at the end date

Difference Difference between target amount and base amount



Field What It Means

Percentage Rate Percentage rate that is used in the calculation step

Retrospective Calculations

If you allow retrospective transactions to process corrections to the valuation of an ARO related to the past, you can toggle between the calculation data and the simulated calculation data. The valuation is always adjusted based on the last used transaction processing key date. This means that for retrospective transactions, the system must simulate the calculation of the transactions in chronological order. Transactions are indicated as retrospective transactions by a simulation icon. You can switch to display the simulated data by clicking the corresponding button in the Transactions and Cost Estimation Plans area. When you activate the simulation mode display, the Transactions and Calculation Details area displays the simulated cash flow data and the simulated calculation steps per accounting principle.

3.4 Asset Retirement Obligation Status

SAP S/4HANA for asset retirement obligation provides status handling at the ARO level.

The status of an ARO transaction is used in the display and tracking the status of an ARO and in plausibility checks.

The following ARO statuses are used in the application:

● Created● Active● Terminated● Canceled


4 Working with Asset Retirement Obligations

If you have obligations to retire assets, you must set up provisions to cover the future costs and show these provisions or liabilities in the balance sheet of your company. This usually involves different accounting principles. SAP S/4HANA for asset retirement obligation provides functions to process the financial obligations associated with asset retirements and to manage their costs. It supports the recognition and the reporting of asset retirement obligations (AROs). It facilitates the management of accruals and is able to trigger the necessary postings in Asset Accounting (FI-AA) as well as in the General Ledger (FI-GL).

In SAP S/4HANA for asset retirement obligation, you can use the following functions:

● To manage your AROs, you can:○ Create, change, and display an ARO.○ Create a link between an ARO and an underlying object (with or without assets)○ Lock an ARO to prevent further processing and unlock it again when processing should continue.○ Delete an ARO

● For the valuation of your AROs, you can:○ Create cost estimations and a cost estimation plan for an ARO.○ Handle changes during the lifetime an ARO, such as changes in the cost estimations, term, or interest

and inflation rates.○ Use transactions to adjust AROs.

You can do this for individual AROs using the change function or for multiple AROs using mass adjustment functions.

○ Manage provisions and cash flows for an ARO and monitor provision amounts and changes to provision amounts per accounting principle in the calculation details for an ARO.

● To perform accounting activities for your AROs, you can:○ Release a transaction. This automatically results in postings created by in the relevant integrated

applications using SAP S/4HANA for accounting integration.

Related Information

Creating Asset Retirement Obligations [page 15]Changing Asset Retirement Obligations [page 16]Displaying Asset Retirement Obligation Data [page 17]Locking and Unlocking Asset Retirement Obligations [page 17]Deleting Asset Retirement Obligations [page 18]Underlying Objects [page 18]Valuation of Asset Retirement Obligations [page 35]Postings Using SAP S/4HANA for Accounting Integration [page 42]Reports for Asset Retirement Obligations [page 53]


Working with Asset Retirement Obligations

4.1 Creating Asset Retirement Obligations

Procedure

1. On the SAP Easy Access menu (/FOM/MENU), choose ARO Processing Create Asset Retirement Obligation (transaction code /FOM/AM01).

2. Enter an obligation type and company code and confirm your entries.3. In the header data, enter a description for the obligation.

A number is assigned automatically. The description helps you identify an asset retirement obligation more easily.

4. In the General tab in the General Data area, enter an ARO setup date, inflation rate key, interest rate key, and ARO asset class.

5. If you want to assign an existing underlying object to your ARO, choose Environment Underlying ObjectAssign UL Object .

6. In the tabs for accounting principles, you can enter accounting principle-specific inflation and interest rate keys. You can also enter the following accounting principle-specific data:

○ IFRS: IAS End Date of ARO Asset and IAS Useful Life ARO Years○ GAAP: USG Calculation Method

7. In the Assignments tab, enter accounting data, for example: cost center, order, location.8. In Transactions and Cost Estimation Plans, choose Create or Adjust Cost Estimation to enter the initial cost

estimation plan (CEP) and enter the following:○ A description for the initial cost estimation○ For each cost estimation plan (CEP) item, enter a settlement date, the price key date, and the cost

estimation amount.

Depending on the obligation type, you can also enter different cost types per settlement date. The ARO setup date is automatically set as the transaction date of the CEP.

NoteIf an error occurs (for example, regarding the interest rate key used for the ARO), you might want to adjust the ARO header data. You can change the ARO header data after you have deleted the transaction that caused the error.

9. To create postings using SAP S/4HANA for accounting integration, choose Release Transaction under Transactions and Cost Estimation Plans to trigger the postings.

10. Save your entries.

Product Assistance for SAP S/4HANA for Asset Retirement ObligationWorking with Asset Retirement Obligations P U B L I C 15

Related Information

Creating an Initial Cost Estimation [page 23]Underlying Objects [page 18]

4.2 Changing Asset Retirement Obligations

You can change an existing asset retirement obligation.

Procedure

1. On the SAP Easy Access menu (/FOM/MENU), choose ARO Processing Change Asset Retirement Obligation (transaction code /FOM/AM02).

2. Enter the Company Code and Obligation Number for the ARO that you want to change and confirm your entries.

3. If you want to delete a reference to an underlying object, choose the menu option EnvironmentUnderlying Object Delete UL Reference .

4. In Transactions and Cost Estimation Plans, you can change an existing CEP using the following transactions:○ Cost estimation and term adjustment○ Interest rate adjustment○ Inflation rate adjustment○ Partial and full termination

5. To create postings using SAP S/4HANA for accounting integration, choose Release Transaction in the Transactions and Cost Estimation Plans area to release the transaction and trigger the postings.


Related Information

Creating Underlying Objects [page 20]Transactions for Asset Retirement Obligations [page 22]



4.3 Displaying Asset Retirement Obligation Data

You can view data for an existing asset retirement obligation.

Procedure

1. On the SAP Easy Access menu (/FOM/MENU), choose ARO Processing Display Asset Retirement Obligation (transaction code /FOM/AM03).

2. In Details and Calculations for Transaction, select the General tab to view details about the cost estimation transaction and select the accounting principle-specific tabs for details about provisions, interest costs, and other costs (if relevant).

3. You can also choose the relevant command in the toolbar to view details about cash flows or calculation steps.

4. Choose Accounting to navigate directly to the Display Accounting Integration Contracts app.

4.4 Locking and Unlocking Asset Retirement Obligations

Context

If you want to prevent changes to an ARO, you can lock an asset retirement obligation (ARO). If an ARO is locked, its data can be viewed but not changed. The data cannot be changed until the ARO is unlocked.

Procedure

1. On the SAP Easy Access menu (/FOM/MENU), choose ARO Processing Lock/Unlock Asset Retirement Obligation (transaction code /FOM/AM05).

2. Enter a company code and an obligation number and confirm your entries.3. In the header data under Locking Information, select one of the following options to lock or unlock an ARO:

○ Unlock Asset Retirement Obligation○ Lock Asset Retirement Obligation

4.


4.5 Deleting Asset Retirement Obligations

If no transactions have been released to create postings for an ARO, you can delete it.

Procedure

1. On the SAP Easy Access menu (/FOM/MENU), choose ARO Processing Delete Asset Retirement Obligation (transaction code /FOM/AM06).

2. Enter a company code and an obligation number, and then confirm your entries.3. Under Object Deletion Information, select one of the following options:

○ Do Not Delete Asset Retirement Obligation○ Delete Asset Retirement Obligation

4. Save your entries and confirm the deletion.

4.6 Underlying Objects

An underlying object is an object for which an asset retirement obligation (ARO) can be set up. SAP S/4HANA for asset retirement obligation provides master data management for underlying objects to specify detailed information about the ARO. The underlying object can represent one or multiple underlying assets. If the underlying assets are represented in SAP Asset Accounting by assets, these assets can be referred to in the master data of the underlying objects. In SAP S/4HANA for asset retirement obligation, the ARO is always created at the level of the underlying object.

Types of Underlying Objects

As master data can differ depending on the type of underlying object, SAP S/4HANA for asset retirement obligation differentiates master data according to the type of underlying objects. The type of underlying object also determines whether references to fixed assets in Asset Accounting representing underlying assets can be created in the master data. For example, assume that you have antennae and air conditioners that are relevant for retirement. You can decide to create only one underlying object type that is used for both types of underlying objects. Alternatively, you can create two underlying object types with specific master data for each type:

● In the first case, a 1:1 relationship exists between the underlying object and the asset in SAP Asset Accounting.

● In the alternative case, the underlying object is linked to multiple assets in SAP Asset Accounting. Assets can be assets with a quantity greater than 1.



Types of Underlying Objects

Integrating Underlying Objects

When you create an ARO, you can create a link to the relevant underlying object. If you have allowed this kind of reference in Customizing for the underlying object type, you can create a reference to the relevant fixed asset in SAP Asset Accounting when you create an underlying object.

You can maintain the following in Customizing for SAP S/4HANA for asset retirement obligation:

● Underlying object types (under Financial Obligations Maintain Underlying Object Types )

● Number ranges for underlying objects (under Financial Obligations Maintain Underlying Object Number Ranges )

ExampleA location has three assets (for example, three antennae). You have an obligation to retire these assets. From an accounting point of view, you decide to treat the three assets as one object and to create the ARO for the location. In this case, the antennae are the underlying assets and the location is the underlying object. If each of the antennae has a separate corresponding fixed asset in SAP Asset Accounting, you can refer to these assets in the master data of the location.

Related Information

Creating Asset Retirement Obligations [page 15]Creating Underlying Objects [page 20]


Changing Underlying Objects [page 21]Deleting Underlying Objects [page 21]

4.6.1 Creating Underlying Objects

You can create an underlying object for an asset retirement obligation (ARO).

Context

You can do this before you create an ARO or as you are creating or changing an ARO.

Procedure

1. On the SAP Easy Access menu (/FOM/MENU), choose ARO Processing Underlying Object Create Underlying Object (transaction code /FOM/UL01).

You can also create and change an underlying object when you create and change an asset retirement obligation. To do this, choose Environment Underlying Object and then Create UL Object or Maintain UL Object.

2. Select an underlying object type, for example, Underlying Object with Asset, enter a company code, and confirm your entries.

3. In Header Information, enter a description for the underlying object.4. In Address Details, you can enter general information about the location, as necessary.5. If you chose to create a reference to a fixed asset for the underlying object, enter the main asset number in

the Fixed Assets Linked to Underlying Object area.6. Save your entries.

Related Information

Creating Asset Retirement Obligations [page 15]Changing Asset Retirement Obligations [page 16]



4.6.2 Changing Underlying Objects

You can change an existing underlying object.

Procedure

1. On the SAP Easy Access screen (/FOM/MENU), choose ARO Processing Underlying Object Change Underlying Object (transaction code /FOM/UL02).

2. Enter a company code and an underlying object and confirm your entries.3. Enter changes to Header Information and Detail Information as relevant.4. Save your entries.

You can also create and change an underlying object when you create and change an asset retirement obligation. To do this, choose and Environment Underlying Object: and then Create UL Object or Maintain UL Object.

Related Information

Creating Asset Retirement Obligations [page 15]Changing Asset Retirement Obligations [page 16]

4.6.3 Deleting Underlying Objects

Procedure

1. On the SAP Easy Access screen, choose ARO Processing Underlying Object Delete Underlying Object (transaction code /FOM/UL06).

2. Enter a company code and the number of an underlying object and confirm your entries.3. Under Object Deletion Information, select one of the following options:

○ Do Not Delete Underlying Object○ Delete Underlying Object



5 Transactions for Asset Retirement Obligations

You use business transactions for processing asset retirement obligations (AROs). ARO transaction types include cost estimation, term adjustment, and interest rate adjustment, for example. Depending on the type of transaction that you select for processing, the ARO is reevaluated.

The first transaction for each ARO is the initial cost estimation. The following transactions to process an ARO are adjustment and retirement transactions. The following ARO data can be adjusted: cost estimation, term, interest rate, and inflation rate. Retirement transactions are available for partial or full termination of an obligation.

Each transaction has a specific transaction date. The transaction date of the initial cost estimation is the same as the ARO setup date. In further processing, the transaction date of a new transaction must usually be later than or the same as the transaction date of the last released transaction.

To allow processing of a correction for the valuation of an ARO that relates to the past, you can use a retrospective transaction. A retrospective transaction has a transaction date that precedes the transaction date of at least one previous transaction.

NoteYou can enable or disable retrospective transactions using a setting in Customizing for SAP S/4HANA for asset retirement obligation under Financial Obligations Define Obligation Types and Obligation Type Configuration .

Related Information

Status of ARO Transactions [page 23]Creating an Initial Cost Estimation [page 23]Adjusting a Cost Estimation [page 25]Adjusting a Term [page 26]Adjusting Interest Rates [page 27]Adjusting Inflation Rates [page 28]Working with Inflation Rates [page 30]Termination [page 32]


Transactions for Asset Retirement Obligations

5.1 Status of ARO Transactions

Each transaction for an asset retirement obligation is documented and receives a status.

SAP S/4HANA for asset retirement obligation differentiates between the following transaction statuses:

● Created● Released● Reversed● Immaterial

A new ARO transaction has the status Created. You can release or delete a transaction with the status Created. Only transactions with the status Created can be released.

As soon as you successfully release a transaction, it has the status Released. You can reverse a transaction with the status Released. Only transactions with the status Released can be reversed.

You cannot delete transactions with the status Released, Reversed, or Immaterial.

You can set the status of a transaction to Immaterial if the effects of the transaction are insignificant. Nevertheless, you want to document that you had in mind to do the adjustment (for example, an interest rate adjustment) but decided not to post the changes.

Related Information

Creating an Initial Cost Estimation [page 23]Adjusting a Cost Estimation [page 25]Adjusting a Term [page 26]Adjusting Interest Rates [page 27]Adjusting Inflation Rates [page 28]Working with Inflation Rates [page 30]Termination [page 32]

5.2 Creating an Initial Cost Estimation

The cost estimation plan (CEP) is the most important element in the valuation of an asset retirement obligation (ARO). It is the starting point for calculations that are processed to valuate an ARO.

Prerequisites

Before entering the initial CEP, check the following:

Product Assistance for SAP S/4HANA for Asset Retirement ObligationTransactions for Asset Retirement Obligations P U B L I C 23

● Make sure that the ARO setup date is correct.● Check the relevant inflation rate and interest rate key.

If the ARO valuation must be done for different accounting principles, make sure that you enter the correct accounting principle-specific inflation rate, interest rate key, and calculation method.

NoteYou can set default inflation and interest rate keys per obligation type in Customizing for SAP S/4HANA for asset retirement obligation under Financial Obligations Define Obligation Types and Obligation Type Configuration .

Context

● When you create an ARO for an underlying asset, the first transaction you create is always an initial cost estimation to specify the CEP

● When you enter the initial cost estimation, the application triggers the accounting principle-specific calculations to obtain valuation-specific values such as provisions, interest costs, and other costs (if relevant) for the ARO. You can also analyze calculated ARO cash flows and most of the calculation steps in more detail.

● You can change the initial cost estimation until you release it. After releasing, you must create a new transaction to adjust the cost estimation.

Procedure

1. Create an ARO (transaction /FOM/AM01 or change an existing one (/FOM/AM02) that does not yet have a CEP.

2. Choose Create or Adjust Cost Estimation Plan in the Transactions and Cost Estimation Plans area.

The application automatically uses the setup date of the ARO as the transaction date for the initial cost estimation. The currency and inflation and interest rates are taken from the header data of the ARO.

3. Enter a description for the CEP.

A number is assigned automatically. The description helps you identify the CEP more easily.4. Add a cost estimation plan item and enter the expected settlement date.

This can be the settlement date for the entire ARO or for part of it if you are using separate CEP items for larger objects.

5. Enter a price key date for the cost estimation. In order to do the ARO valuation, the application must have cost estimations that are valid on the transaction date.

○ If you have cost estimation amounts that have been determined using a price index that is valid on the transaction date, use the transaction date as the pricing key date and enter the cost estimation amount.

○ If you have a cost estimation that is earlier or later than the transaction date, enter the respective date and amount.



The application then calculates the equivalent cost estimation amount that is valid on the transaction date. The calculation uses the general inflation rate key of the ARO to determine the inflation rates necessary for the calculation.

6. Before you release the transaction, you can check the respective calculation details for each relevant accounting principle in the Details and Calculations for Transaction area. This gives you an overview of the provisions and any relevant interest costs.

7. Release the transaction to create the necessary financial postings using SAP S/4HANA for accounting integration.

The application determines the transaction processing key date automatically.

NoteA timestamp and your user ID are stored for the transaction.

5.3 Adjusting a Cost Estimation

You can adjust an existing cost estimation for an asset retirement obligation (ARO).

Context

The cost estimation adjustment transaction allows you to:

● Create a completely new cost estimation plan (CEP)● Update an existing cost estimation plan

Procedure


2. In the toolbar for the Transactions and Cost Estimation Plans area, choose Create or Adjust Cost Estimation.

As at least one valid CEP exists, the cost estimation items for the current ARO CEP are displayed here as default values.

3. Enter a transaction date that is the same as the date from which the new CEP is valid.

The application automatically determines the processing key date. Both of these dates are the same for the entire CEP.

4. You can adjust the existing CEP by changing the cost estimation values or the settlement values. You can delete items and create new items.

Following an adjustment, you can see the resulting changes in the provisions, interest costs, and other costs (if relevant) in the Details and Calculations for Transaction area.



5.4 Adjusting a Term

Term adjustment is a special kind of cost estimation adjustment. You might do this if the scheduled retirement of an underlying asset changes to an earlier or later date. If you adjust the term of an asset retirement obligation (ARO), the settlement dates of the relevant cost estimation plan (CEP) are changed.

Context

You can shift all of the settlement dates in your CEP forward or back by a certain interval.

NoteYou can perform a term adjustment for multiple AROs using the mass adjustment function.

Procedure


2. In the toolbar for the Transactions and Cost Estimation Plans area, choose Create or Adjust Cost Estimation.3. Choose Term Adjustment.4. Choose the relevant interval and then decide whether you want to modify in years or periods and whether

you want to shift the interval forward or backward.5. Confirm your changes to change the settlement dates accordingly.6. Release the transaction to make your changes effective for the ARO.

NoteCEPs contain different settlement dates. A term adjustment might not affect all the settlement dates.

Related Information

Mass Adjustment of ARO Data [page 47]



5.5 Adjusting Interest Rates

You can adjust interest rates for asset retirement obligations (AROs).

Prerequisites

Before processing an interest rate adjustment, make sure that you have updated the interest rate tables. This is especially relevant if you decide to update all AROs using the mass adjustment function.

The following activities in Customizing for SAP S/4HANA for asset retirement obligation are relevant:

● You can define interest keys and enter interest rates under Information System and EnvironmentDefinition of Inflation and Interest Keys and Their Values Enter Interest Rates .

● You can set default interest rate keys per obligation type under Financial Obligations Define Obligation Types and Obligation Type Configuration .

Note

You can also enter interest rates in the SAP Easy Access menu under Environment Current Settings .

Context

Depending on the accounting principle, the asset retirement obligation provisions on a specified date are equal to the present value of the ARO settlement value. To be able to calculate the present value, the system uses interest rates that must be maintained in the corresponding interest rate tables.

Because the interest, or discount, rates stored in the interest rate tables can change, provisions must be recalculated from time to time. This is because interest rate changes also affect the provision levels.

Changes to the provisions can also lead to a change of the relevant periodic interest costs. You can use the Interest Rate Adjustment transaction to update the valuation of AROs.

Procedure


2. In the toolbar for the Transactions and Cost Estimation Plans area, choose Interest Rate Adjustment.3. Enter a short transaction description to make it easier to understand why the transaction was performed.4. Enter a transaction date for the interest rate adjustment.


The following usually applies for the transaction date of an interest rate adjustment:

○ It should be later than or the same as the transaction date of the last released transaction○ It should be a date in the current (open) fiscal year○ Can only be the first or last date of a calender month


The system determines the transaction processing key date automatically.

NoteA timestamp and your user ID are also stored for the transaction.

Related Information

Mass Adjustment of ARO Data [page 47]

5.6 Adjusting Inflation Rates

You can adjust inflation rates for asset retirement obligations (AROs).

Prerequisites

Before processing an inflation rate adjustment, make sure that you have updated the interest rate tables. This is especially relevant if you decide to update all AROs using the mass adjustment function.

The following activities in Customizing for SAP S/4HANA for asset retirement obligation are relevant:

● You can define inflation keys and enter inflation rates under Information System and EnvironmentDefinition of Inflation and Interest Keys and Their Values Enter Inflation Rates .

● You can set default inflation rate keys per obligation type under Financial Obligations Define Obligation Types and Obligation Type Configuration .

Note

You can also enter inflation rates in the SAP Easy Access menu under Environment Current Settings .



Context

Asset retirement obligations are usually long-term obligations. This can make it a challenge to estimate the future retirement costs and the corresponding settlement value on the expected retirement date. For this reason, the retirement costs are estimated based on the price index that is valid when the costs are estimated. SAP S/4HANA for asset retirement obligation takes this cost estimation and uses inflation rates to calculate the future settlement value. The inflation rates used in these calculations must be maintained in the corresponding inflation rate tables.

Because inflation rates can change over time, the settlement values must be recalculated from time to time. This is because:

● Rising inflation rates lead to an increase in settlement values● Falling inflation rates lead to a decrease in settlement values

Since changes to the settlement value can affect the provision levels, you can use transaction type Inflation Rate Adjustment to update the valuation of an ARO.

Procedure

1. On the SAP Easy Access menu /FOM/MENU, choose ARO Processing Change Asset Retirement Obligation (transaction code /FOM/AM02).

2. In the toolbar for the Transactions and Cost Estimation Plans area, choose Inflation Rate Adjustment.3. Enter a short description to make it easier to understand why the transaction was performed.4. Enter a transaction date for the interest rate adjustment.

The following usually applies for the transaction date of an interest rate adjustment:

○ It should be later than or the same as the transaction date of the last released transaction○ It should be a date in the current (open) fiscal year○ Can only be the first or last date of a calender month

5. Release the transaction to create the necessary financial postings in SAP S/4HANA for accounting integration.

The system determines the transaction processing key date automatically.

NoteA timestamp and your user ID are also stored for the transaction.

If enabled in Customizing, you can also process retrospective inflation rate adjustments.

Related Information

Working with Inflation Rates [page 30]Mass Adjustment of ARO Data [page 47]


5.7 Working with Inflation Rates

You use inflation rate keys to manage inflation rates. When you create an asset retirement obligation (ARO), you must only specify one inflation rate key.

Once you release the initial cost estimation, you cannot change the inflation rate key. The inflation rate key defined for an ARO determines the inflation rates that flow into the calculations when making an inflation adjustment.

Valid On and Valid From Dates for Inflation Rate Keys

Maintenance of inflation rates is very flexible. You define the inflation rates by entering different Valid On and Valid From dates. Using the Valid From date, you can also define estimated future inflation rates (where the Valid From date is later than the Valid On date) that can be used, for example, in the calculation of future settlement values.

The system calculates a settlement value as follows:

● It determines a key date used to select the right valid-on date.This key date is usually the same as the transaction date of the transaction that requires the calculation.

● It determines the inflation rate key of the relevant accounting principle from the ARO header data.● It determines the inflation rates that are defined for the inflation rate key.● If there is a valid-on date that matches the key date, it uses the corresponding inflation rates to calculate

the settlement value.● If there is no valid-on date that matches the key date, it determines the latest valid-on date that is earlier

the key date.

NoteThe valid-on date must be a date in the same year as the key date. This means that you should update the inflation rates at least once a year.

Because even historical inflation rates can change over time, you must enter historic inflation rates per valid-on date.

You can do this as follows:

1. Copy all the inflation rates for the latest valid-on date.2. Update the historic rates (if they have changed).3. Enter or update the inflation rates for the periods that are later than or the same as the valid-on date.



ExampleThe inflation rate Valid From date defines the start date of the period for which the specified inflation rate is valid. The following shows an example of an inflation curve defined to be valid on January 1, 2011:

Valid On Valid From Inflation Rate

2010/01/01 2000/01/01 1.0%

2010/01/01 2010/01/01 1.2%

2011/01/01 2000/01/01 1.2%

2011/01/01 2008/01/01 1.4%

2011/01/01 2009/01/01 1.5%

2011/01/01 2009/07/01 1.0%

2011/01/01 2010/01/01 1.2%

2011/01/01 2011/01/01 1.3%

2011/01/01 2012/01/01 1.5%

2011/01/01 2013/01/01 2.0%

Interpretation:

The Valid On date is used to track the history of the inflation rate curves. For example, in the retrospective valuation of financial obligations, the Valid On date enables the system to use the exact inflation rates that would have been used had the values been entered some years ago.

On January 1, 2010, there were two valid inflation rates:

● 1.0% is used in calculations for the period 2000/01/01 until the end of 2009.● 1.2% is used in calculations for the period 2010/01/01 and is used up to any end date.

On January 1, 2011, there were eight valid inflation rates:

● 1.2% is used in calculations for the period 2000/01/01 until the end of 2007.● 1.4% is used in calculations for the year 2008.● 1.5% is used in calculations for the period 2009/01/01 until the end of June, because in 2009 there was an

inflation rate change mid-year.● 1.0% is used in calculations for the period 2009/07/01 until the end of 2009.● 1.2% is used in calculations for the year 2010.● 1.3% is used in calculations for the year 2011.● 1.5% is used in calculations for the year 2012.● 2.0% is used in calculations for the year 2013 and is used up to any end date.

The entries that are valid from January 1, 2012 and January 1, 2013 represent estimated inflation rates. This means that you can use estimated inflation rates, for example, in the calculation of future settlement values.


Calculation Example:

An ARO has a setup date of January 1, 2011, a cost estimation of $100,000, a pricing key date of January 1, 2009, and a settlement date of December 31, 2020.

The calculation of the settlement value is done with inflation rates that were valid on the ARO setup date January 1, 2011 and looks as follows:

● $100,000 is inflated with 1.5% for the first half of 2009 leading to an inflated value of $100,747.21.● $100,747.21 is inflated with 1.0% for the second half of 2009 leading to an inflated value of $101,249.69.● $101,249.69 is inflated with 1.2% in 2010 leading to an inflated value of $102,464.69.● $102,464.69 is inflated with 1.3% in 2011 leading to an inflated value of $103,796.73.● $103,796.73 is inflated with 1.5% in 2012 leading to an inflated value of $105,353.68.● $105,353.68 is inflated with 2.0% in 2013 and all the years up until the settlement date of December 31,

2020 leading to an inflated value of $123,438.63.

5.8 Termination

An asset retirement obligation (ARO) is usually terminated as soon as the related underlying object is retired. Sometimes, underlying objects are partially retired during the lifetime of an ARO. The following transaction types are available for ARO termination:

● Partial terminationThis transaction allows you to adjust the ARO if you must consider partial terminations in the valuation of the ARO. A new cost estimation is carried out when the underlying assets are partially terminated. The application calculates the amount of the provision level at the time of the partial termination. This is necessary to provide Asset Accounting (FI-AA) with the correct amount for the Consumption posting. This is the amount of provision consumed by the (actual or estimated) retirement costs. The calculation steps for the new cost estimation are the same as for a cost estimation adjustment.

● Full terminationThis transaction allows you to trigger the deactivation of the ARO asset.

NoteThe transactions are named termination and not retirement. Sometimes underlying objects are not retired in the sense of the definition of the term retirement. This means that the actual reversal of changes to the assets does not take place at the time of the ARO termination. Instead, a third party might take over the underlying object (the lessor, for example). The term termination is therefore not necessarily equivalent to the term retirement.

Partial Termination

In the case of a partial termination, only parts of the underlying object of an ARO are retired. If partial termination is enabled, you must enter the following data when triggering the transaction:

● The date of the partial termination, which must be the first or the last day of a calendar month.



● The following data per cost estimation item:

Parameter Explanation

Percentage Partial Retirement

Size of the partial retirement (estimated) in reference to the part of the underlying object for which the item has been created and for which the cost has been estimated. This is specified as a percentage rate.

Retirement Cost The actual spending on the cost of the partial retirement.

Cost Estimation New cost estimation for the part that is not yet retired.

You specify the size of the retirements on each item level as a percentage of the overall size of the part of the underlying object to which the cost estimation item belongs.

● Specify the overall size of the retirement for the ARO as follows, depending on the number of items in your cost estimation plan:○ One cost estimation item:

The overall size of the partial retirement is equal to the size that you specified for the single cost estimation item of the cost estimation plan.

○ More than one cost estimation item:You must specify the overall size of the partial retirement manually.

Full Termination

You use the transaction Terminate Obligation to terminate an ARO as a whole. The handling of a full termination is similar to the handling of a partial termination. It's not necessary to enter the percentage values of the retirement because they are equal to 100% per cost estimation item. No new cost estimation values must be entered because the ARO is terminated in its entirety.

The following parameters are necessary for a termination:


Transaction Date Deactivation date to be used in FI-AA deactivation of ARO asset

Retirement Cost The actual spending on the cost of the partial retirement.

Fixed Asset Retirement Posting

Depending on the accounting principles used and on the postings to be processed, the application might trigger a retirement posting that is related to the ARO fixed asset. If this posting must be triggered, the application can use the overall size of the retirement to decide which size to use in the ARO fixed asset retirement posting. In a full termination, the retirement of the underlying object is always 100%, and the overall size of the retirement is always 100%. The item-related size of the retirement is used to determine the item-


related provisions. This can be used to calculate the consumption and (if relevant) the dissolution of the provisions.

The actual amounts spent are used to calculate:

● The consumption of provisions (if actual spending is equal to or greater than the provisions)● The dissolution of provisions (if actual spending is less than the provisions)

Depending on your settings in Customizing, the calculated consumption and dissolution amounts could lead to corresponding postings in SAP S/4HANA for accounting integration. The new cost estimation values are used to calculate the new provision level per relevant accounting principle. The valuation is similar to the valuation of a cost estimation adjustment.

Example

In 2005, you created an ARO for an underlying object. You specified the following CEP with two items:

CE Item Cost Estimation Settlement Date

1 $60,000 31.12.2035

2 $80,000 31.12.2040

You are using IFRS and according to your Customizing, you created one ARO asset representing the entire ARO in 2006.

In 2011, you decided to retire parts of the underlying object. You decided to retire about 10% of the underlying object that was covered by the first cost estimation item. You also decided to retire about 25% of the underlying object that was covered by the second cost estimation item.

CE Item Cost Estimation Settlement Date Size of Ret.(%) New Cost Est.

1 $60,000 31.12.2035 10% $54,000

2 $80,000 31.12.2040 25% $60,000

Using the New Cost Estimation field, you can specify the cost estimation that is relevant for the remaining parts of the underlying object.

Based on the sample data, the overall size of the retirement could be calculated using the item level cost estimation values and the corresponding percentage rates and compare it to the total of the cost estimation. This logic would lead to an overall size of retirement of about 18.57% [($6,000 + $20,000) / $140,000]. Nevertheless, other factors may also play a role. Therefore, the application allows you to enter the overall size of the retirement manually, and you can decide to set it to 20% in the given example.

For more information about Asset Accounting, see the product assistance for the relevant release of SAP S/4HANA available at http://help.sap.com/s4hana: Enterprise Business Applications Finance Accounting and Financial Close Asset Accounting (FI-AA) .




6 Valuation of Asset Retirement Obligations

Calculations are carried out for the valuation of financial obligations, for example, asset retirement obligations (AROs). These calculations generally consist of multiple calculation steps, for example, inflation calculations and discounting. The purpose of the calculations is to determine the ARO provisions that must be set up at a certain point in time. These provisions must be adjusted during the lifetime of an ARO. Typical adjustments include changes in the cost estimation or of the planned retirement date. Various business transactions are used for ARO valuation.

The relevant accounting principles determine the calculations and adjustment of provisions.

Some accounting principle-specific calculation parameters are relevant on ARO level and do not change during the ARO lifetime. These parameters are stored as ARO accounting principle-specific header data (for example, interest and inflation rate key or calculation method). The calculation details are stored on ARO transaction level, and they are separated per accounting principle. An accounting principle is a set of rules and principles for legal accounting and financial statements. Examples of accounting principles include International Financial Reporting Standards (IFRS), Generally Accepted Accounting Principles (GAAP), and the German Commercial Code (HGB).

Calculations and adjustment of provisions consist mainly of the following:

● Cost estimation● Calculation of the settlement value on the planned ARO settlement dates based on inflation rates● Discounting of the settlement value to determine the present value on the date of ARO creation or

adjustment● Periodic increase of provisions based on interest accretion● Change of settlement dates in the cost estimation plan for the ARO● Inflation and interest rate adjustments● Consumption and dissolution of provisions due to partial or full termination of the ARO

NoteThe calculations included in SAP S/4HANA for asset retirement obligation are based on how SAP interprets the accounting principle-specific rules. Other interpretations of these rules are possible. If your interpretation differs from that of SAP, you must decide whether this difference is material from a valuation point of view. If you decide that the difference is material, then you can develop customer-specific calculations. In this case, you must validate whether your calculation results fit the overall logic of valuations in SAP S/4HANA for asset retirement obligation.

ExampleCalculation of Provisions (Typical Calculation Steps)

Setup date of the obligation January 1, 2019

Cost estimation based on pricing index of 2010 100,000 USD

Product Assistance for SAP S/4HANA for Asset Retirement ObligationValuation of Asset Retirement Obligations P U B L I C 35

Planned retirement date December 31, 2050

Estimated inflation rate

January 1, 2011 – December 31, 2050

2%

Settlement value on December 31, 2050 (due to inflation) 220,803.97 USD

Market discounting interest rate 5%

Provisions on January 1, 2019 (due to discounting) 31,364.25 USD

If there are no further changes, the provisions increase by periodic interest costs of 5% and will be equal to the settlement value at the planned retirement date.

Prerequisites

Define the inflation rate keys and interest rate keys that you want to use in your AROs. You can enter interest or inflation rates on the SAP Easy Access screen (/FOM/MENU under Environment Current Settings .

Decide whether to use the same inflation rate and interest rate keys in all relevant accounting principles. You specify the keys in the header data when you create an ARO. Depending on the accounting principle, other calculation parameters may also be required on header level, such as the layer calculation method in U.S. GAAP. In Customizing for SAP S/4HANA for asset retirement obligation, you can define default values that are automatically used in the corresponding fields when you create an ARO.

In Customizing for obligation types, you also define the interest calculation method that you want to use in the calculations that are processed in the valuation of the AROs. You can also decide whether to enable retrospective calculations. These settings are available in Customizing for SAP S/4HANA for asset retirement obligation under Financial Obligations Define Obligation Types and Obligation Type Configuration .

Related Information

Cost Estimation Plans [page 36]Provisions [page 39]Cash Flows [page 41]Transactions for Asset Retirement Obligations [page 22]

6.1 Cost Estimation Plans

The cost estimation plan (CEP) is a central element for the valuation of an asset retirement obligation (ARO). A CEP can consist of one or multiple cost estimation items.


Valuation of Asset Retirement Obligations

The retirement of an underlying object is usually done at the end of a leasing contract. This means that in most cases, there is only one settlement date and the cost estimation plan consists of only one cost estimation item.

However, underlying objects can also be used to represent large physical objects (for example, nuclear plants) that cannot be retired on one specific date. Instead, the retirement can last for many years and is done step by step. In this case, the CEP consists of the relevant number of settlement dates and the corresponding multiple cost estimation items.

You work with CEPs in the following situations:

● Initial cost estimation: When you create an ARO for an underlying asset, the first transaction you use creates an initial cost estimation.

● Cost estimation adjustment: If you have new information about settlement costs, you can adjust the cost estimation. You can update a CEP as follows:○ Change the cost estimations for all or selected settlement dates○ Enter new settlement dates in new cost estimation items○ Delete existing cost estimation items○ Adjust all settlement dates by a certain time period (term adjustment for an ARO)

● Partial termination (if relevant for your business processes): If one of the settlement dates is reached and you decide to retire the corresponding part of the underlying object, you must process the true costs of the partial retirement. The partial termination function allows you to enter these costs. In addition, you must update the CEP and adjust at least the cost estimation item that is being partially retired.

NoteWhen you enter or adjust a CEP, you can check the accounting principle-related view of the CEP.

A cost estimation contains the following basic parameters:


Settlement Date The retirement date on which you expect to have to settle the retirement costs.

Cost Type Identifies the cost components that make up a cost estimation.

To use cost types, you must enable them in Customizing. You can then specify separate parts of the cost estimation using cost types.

Pricing Key Date Date on which the cost estimation is based. This might be the ARO transaction date. If you are reusing a previous cost estimation for a similar ARO, this date may not be the same as the transaction date.

Transaction Date The transaction date is automatically set to the ARO setup date.

Cost Estimation on Key Price Date

The amount of the cost estimation based on the pricing key date.


Sample Cost Estimation Plans

Note

You define cost types in Customizing for SAP S/4HANA for asset retirement obligation under Financial Obligations Cost Estimation Plans (CEP) Define Cost Types .

Even if cost types are enabled in Customizing, the ARO valuation is done on the total of the (inflated) costs per settlement date and not on the (inflated) costs per settlement date and cost type. In Customizing, you can specify whether the costs of a specific cost type must be considered for all accounting principles or if a cost type is only relevant for specific accounting principles.

Sample CEP Without Use of Cost Types:

Example

CE Item No. Settlement Date Pricing Key Date CE Amount at Pricing Key Date

1 31.12.2012 01.01.2010 $30,000

2 31.12.2013 01.01.2010 $37,000

Sample CEP with Use of Cost Types:

Example

CE Item No. Settlement Date Cost Type Pricing Key Date CE Amount at Pricing Key Date

1 31.12.2012 Machines 01.01.2010 $20,000

Salary 01.01.2010 $12,000

2 31.12.2013 Machines 01.01.2010 $25,000

Salary 01.01.2010 $12,000

For accounting principles for which cost types Machines and Salary are relevant, the CEP that is used for an ARO valuation is as follows:


1 31.12.2012 01.01.2010 $30,000

2 31.12.2013 01.01.2010 $37,000

If Customizing is set up in such a way that cost type Salary is not relevant for IFRS, then the IFRS CEP used for the ARO valuation is as follows:




1 31.12.2012 01.01.2010 $20,000

2 31.12.2013 01.01.2010 $25,000

Related Information

Creating an Initial Cost Estimation [page 23]

6.2 Provisions

A provision is an amount of an expense that must be recognized currently when the exact amount of the expense is uncertain.

Asset retirement obligations (AROs) lead to future retirement costs. Provisions must be set up according to different accounting principles, depending on the expected future asset retirement costs. The level of provisions depends on the point in time that the provisions are set up or must be set up. Provisions also require periodic adjustment.

The following information is displayed per accounting principle in the Details and Calculations for Transaction area for an asset retirement obligation:

Information Shown What It Means

Provision Old The value of an ARO provision that was valid before adjustment by an ARO transaction.

Provision New The value of an ARO provision that is valid after adjustment by an ARO transaction.

Provision Difference The difference between the old provision value and the new provision value.

Provision EOO The total value of the provisions at the end of an obligation. This is usually equal to the expected settlement value at the end of the obligation.


Information Shown What It Means

Provision Consumption Relevant for partial or full termination.

Based on the provisions that have accumulated up to the transaction date of the termination transaction and the actual costs of a partial or complete retirement (costs must be entered manually), the application calculates the amount of provision consumed by the (actual or estimated) costs.

The consumption value can be used to trigger a corresponding Consumption posting using SAP S/4HANA for accounting integration.

Example

Accumulated provisions on transaction date

$50,000

Actual costs (entered manually)

$40,000

Provision consumption $40,000

Provision Dissolution The application calculates the amount of provision that is not consumed by the (actual or estimated) costs and that can therefore be dissolved.

The dissolution value can be used to trigger a corresponding Dissolution posting using SAP S/4HANA for accounting integration.

Example

Accumulated provisions on transaction date

$50,000

Actual costs (entered manually)

$40,000

Provision dissolution $10,000

Cash Flow ARO calculations lead to a cash flow per accounting principle, showing you the periodic (monthly) provisions.

NoteFor information about handling actual spending for AROs, see the related link about termination.



Related Information

Transactions for Asset Retirement Obligations [page 22]Termination [page 32]Cash Flows [page 41]

6.3 Cash Flows

A cash flow is a collection of flows that displays the movements or changes to values in chronological order. In SAP S/4HANA for asset retirement obligation, the term cash flow is used in a broad sense and includes, in particular, the flow of future provisions. The provisions level at the start and end of any single period, the interest costs, and other costs incurred in the period are mainly displayed.

SAP S/4HANA for asset retirement obligation enables you to display and analyze the cash flow related to an asset retirement obligation (ARO). The ARO-related cash flow is a combination of the cash flow that was valid before an ARO transaction was processed and the cash flow that is valid due to the processing of the transaction, for example, an interest rate adjustment.

NoteIn the ARO-related cash flow, all the values from the periods that have a period end date that precedes the processing key date of the current ARO transaction are not changed. Only the values of the periods starting at or after the processing key date of the ARO transactions are updated.

Since accounting principle-specific calculations can differ, ARO calculations lead to one cash flow per accounting principle showing you, if applicable:

● Periodic (monthly) provisions● Periodic (monthly) interest costs● Periodic (monthly) other costs

For detailed analysis of provisions and interest costs, you can display the cash flow at the following levels:

● On settlement item● For the cost estimation plan (for all settlement items of the CEP) in total● Overall level, combining the periods up to the transaction date (usually containing the historic unchanged

values) and the values of the new periods

Related Information

Transactions for Asset Retirement Obligations [page 22]


7 Postings Using SAP S/4HANA for Accounting Integration

Financial accounting for asset retirement obligations is performed using SAP S/4HANA for accounting integration. When you release an asset retirement obligation (ARO) transaction, such as an interest rate adjustment, it creates the necessary postings in Asset Accounting (FI-AA), accruals postings (ACE), and as one-time postings in the General Ledger (FI-GL).

In Asset Accounting (FI-AA), separate asset master data is activated and asset values are adjusted in the case of ARO adjustments.

Integration

SAP S/4HANA for accounting integration is used for the financial accounting of various business application scenarios. The functions that are relevant for financial accounting for business processes belonging to a single business application are technically encapsulated in SAP S/4HANA for accounting integration.

The relevant application component is set in Customizing for SAP S/4HANA for asset retirement obligation under Basic Settings Set Application Component . The relevant application component for SAP S/4HANA for asset retirement obligation is FOM.

Activities

● SAP S/4HANA for accounting integration is triggered when you release or reverse an ARO transaction.

● When you're working with an ARO, you can choose Goto Accounting or the Accounting button to ope the Display Accounting Integration Contracts app. From there, you can also navigate to the Asset Explorer for a detailed analysis of postings by double-clicking the fixed asset number.

More Information

● For more information about Asset Accounting, see the product assistance for the relevant release of SAP S/4HANA available at http://help.sap.com/s4hana: Enterprise Business Applications FinanceAccounting and Financial Close Asset Accounting (FI-AA) .

● For more information about SAP S/4HANA for accounting integration, see SAP Help Portal at http://help.sap.com/sai


Postings Using SAP S/4HANA for Accounting Integration




Related Information

Detailed Information About Postings for Asset Retirement Obligations [page 43]

7.1 Detailed Information About Postings for Asset Retirement Obligations

You can use the Display Accounting Integration Contracts app to take a closer look at the postings created in accounting for an asset retirement obligation (ARO).

Key Features

You can use this app to:

● Display header data and accounting details for an asset retirement obligation (ARO).● View the processing status of the AROs.● Sort and filter the list of AROs to suit your needs.● Branch to Monitor Accounting Integration Messages to find out more about AROs with errors and make the

necessary corrections.

NoteBoth apps are available as part of SAP S/4HANA for accounting integration, which is used to trigger the necessary postings for AROs in integrated applications such as Asset Accounting (FI-AA) and accruals (ACE).

These apps can be used on desktop devices.

Implementation Information

For implementation information specific to the app, see the entry in the SAP Fiori apps reference library.

ARO Information

You can open the Display Accounting Integration Contracts app using the Accounting button available when you're working with an ARO. The app opens to detailed information about an ARO. The contract number is identical with the number of the ARO.

Product Assistance for SAP S/4HANA for Asset Retirement ObligationPostings Using SAP S/4HANA for Accounting Integration P U B L I C 43

https://fioriappslibrary.hana.ondemand.com/sap/fix/externalViewer/index.html?appId=F3369

The following information is available for each transaction processed for an ARO:

Tab Title What It Shows

Item Data This area shows master data for an ARO, including the following:

● Start Date: This is the ARO setup date.● Effective Date: This is the key processing date for an

ARO transaction.● End Date Usage and End Date Calculation both show the

settlement date.● Device Class: Shows the asset class for an ARO.● The corresponding transaction number.

Accounting principle (such as IFRS or GAAP) ● A tab is shown for each accounting principle assigned to your company code. You can obtain detailed information about amount types, one-time postings, and accruals, and cash flows.

● For details about accruals, click an entry in the list of accrual types. You can then check the posted and planned accrual postings.

● If a one-time posting has been created, the document number is shown as a link. You can use this link to open the Manage Journal Entries app.

Processed Values ● Shows you the actual values that have been determined with the value IDs used in each process that affects an ARO.

● Lists the cash flows calculated for an ARO on the basis of settings in Customizing.

Navigation to Other Apps and Information

You can use the detailed view to access the following additional information:

● Click the Messages link to open the Monitor Accounting Integration Contracts app. This app helps you find out more about AROs with errors and make necessary corrections.

● If an ARO item has been processed in SAP S/4HANA for accounting integration, a Log link is available.If no log is available, an error occurred in the SAP Application Interface Framework layer. In this case, you can check the item in the Monitor Accounting Integration Contracts app. This app provides a link to the AIF log.

● If an asset is associated with the ARO, the asset number is shown as a link. You can use this link to open the Asset Explorer.



Overview of AROs

From the detailed view, you can also navigate back to the overview of all AROs for which accounting processes have been triggered in SAP S/4HANA for accounting integration.

You can do the following here:

● Check the overall processing status of each ARO.● Sort and filter the list of AROs.● To access details about an ARO, choose an entry in the list.

RecommendationChoose Adapt Filters and/or Settings to change the table layout to suit your needs. If you use the same layout often, save it as your personalized view.

Related Information

Transaction Overview for an Asset Retirement Obligation [page 45]Processed Values Tab [page 46]

7.2 Transaction Overview for an Asset Retirement Obligation

When you access the details for an asset retirement obligation (ARO), the Display Accounting Integration Contracts app gives you an overview of each transaction that affects the ARO, in chronological order. This timeline reflects each process-related change in an ARO.

Note the following here:

● Each entry shows the type of process, the time and date of processing, and the effective date.● Each process has its own set of detailed data and processed values. The respective data for a process is

shown at the right in the app.● You can use the Include Reversed button to hide or display process reversals for an ARO.

Product Assistance for SAP S/4HANA for Asset Retirement ObligationPostings Using SAP S/4HANA for Accounting Integration P U B L I C 45

7.3 Processed Values Tab

The Processed Values tab in the Display Accounting Integration Contracts app shows you the actual values determined using the value IDs included in each process for an asset retirement obligation (ARO). An additional table lists the cash flows calculated for the ARO.

Value IDs

Value IDs are defined in Customizing for SAP S/4HANA for asset retirement obligation under Accounting Integration Value Determination Value ID Determination .

The Processed Values tab provides the following information about value IDs:

Column What It Means

Value ID Name Identifies the value ID as defined in Customizing.

You can use this identifier to find the value ID in the overview of all value IDs defined in the system.

Value ID Content Shows the value determined using the value ID.

The determination method used is specified in Customizing.

Copied from Referenced Process Version Indicates whether the value shown was copied from a preceding process.

For example, this allows you to use values that have been determined for a new lease in a subsequent continuation, if necessary.

Cash Flows

This table lists all cash flows generated for an ARO. Cash flows are defined in Customizing under Accounting Integration Value Determination Cash Flows .

The raw cash flow replicated from an external contract management system is shown in the Item Data tab.



8 Mass Adjustment of ARO Data

You can adjust multiple financial obligations such as asset retirement obligations (AROs) at the same time. You can use the available functions to process adjustments for a selection of AROs. Using the Test Run mode, you can simulate the effects (for example, changes to the provision level) of a mass adjustment before you actually execute the changes.

The following mass adjustment functions are available:

● Interest Rate AdjustmentARO provisions must be recalculated from time to time, since interest rate changes might affect the provision levels.

● Inflation Rate AdjustmentARO costs are estimated based on prices for pricing key dates and are then inflated by current inflation rates for the settlement date. Inflation rates can change over time. Therefore, the settlement values for AROs might need to be recalculated periodically. Since changes to the settlement values can affect the provision levels, you can use the inflation rate adjustment transaction to update the valuation of AROs.

● Term AdjustmentTo change settlement dates in cost estimation plans for AROs, you trigger the term adjustment transaction. You then enter the number of years or periods by which to extend or shorten the settlement dates.

Related Information

Performing Mass Adjustments [page 47]

8.1 Performing Mass Adjustments

You can adjust interest rates, inflation rates, and terms for large numbers of asset retirement obligations (AROs) at once.

Prerequisites

NoteBefore processing multiple AROs with an interest or inflation rate adjustment, make sure that you update the interest and inflation rate tables first.

Product Assistance for SAP S/4HANA for Asset Retirement ObligationMass Adjustment of ARO Data P U B L I C 47

NoteThe number of AROs that can be processed in one adjustment run in online processing is limited to about 1000. If you would like to run the program for more than 1000 AROs at a time, you can schedule the mass adjustment for background processing. For background processing, you can use the Schedule Manager Monitor to analyze the job log, the spool, and the error messages of the background job.

To use the Schedule Monitor on the SAP Easy Access menu (/FOM/MENU), choose Periodic ProcessingStart Schedule Monitor (transaction code /FOM/SCMO).

Procedure

1. On the SAP Easy Access screen (/FOM/MENU), choose ARO Processing ARO Mass AdjustmentsPerform Mass Adjustments on AROs (transaction code /FOM/ARO_MASS_ADJ).

2. Enter the selection parameters for the AROs to be processed. You must enter both common and process-specific parameters. The following table lists the Common Parameters:


Obligation Type Specifies the type of financial obligations for which provisions must be made, such as asset retirement obligations

Company Code Specifies the organizational unit in financial accounting

Number of Obligation Specifies the number of an obligation, for example, an asset retirement obligation. You can enter a selection of values.

Test Run If this setting is activated, the calculations are only carried out with the results displayed in the output list. The calculation results are not saved and the transaction is not triggered.

3. Select the adjustment process that you want to perform on multiple AROs:○ For adjustment processing, enter the following parameters:

Adjustment Date and Description

Explanation

Transaction Date The date on which a transaction for an ARO actually takes place. The transaction date must always be on the first or last day of a month.


Mass Adjustment of ARO Data

Adjustment Date and Description

Explanation

Transaction Description Description of the transaction. The description is stored in the transaction details of each ARO that is updated by the program.

You can enter a short explanation that enables you to identify the adjustment transaction more easily.

○ For term adjustment processing, you must also enter these additional parameters:

Term Adjustment Options Explanation

Settlement Date Indicates the due date of a payment that is needed to settle retirement costs for an ARO. Only AROs with settlement items that are due in the specified settlement date interval will be adjusted.

Years/Periods Enter the number of years periods by which the settlement date is to change.

Forward/Backwards Specify whether to move the settlement date forward or backward in time, resulting in a shortening or extension of the term.

4. Choose Program Execute .

For each of the selected AROs, the ARO transaction is triggered.

NoteIf you activated the Test Run setting, the calculation steps belonging to the adjustment transaction are only carried out with the results displayed in the output list of the program.

If the Test Run setting is not activated, the calculation steps belonging to the adjustment transaction are carried out and saved in the related ARO. The transaction is also released. When the transaction is released, processes for accounting integration are generated, resulting in the corresponding postings. The data specified by the output list is copied to the output list of the program.

5. At the end of the adjustment run, the program displays the output list in the dialog mode.

The output list consists of a list header, an output list, and a list footer. The list header shows the company code and the date created. The list footer shows how many AROs were successfully processed and how many were not.

NoteYou can specify a layout for the output list. This allows you to select the fields you want to display. To create a new layout, choose Settings Layout Change . If you do not specify a layout, the system generates an output list with a predefined field selection.

Product Assistance for SAP S/4HANA for Asset Retirement ObligationMass Adjustment of ARO Data P U B L I C 49

Next Steps

If errors occur in the transactions triggered, these AROs are shown in the program's error log. For each ARO, you can obtain additional information about what caused the error. To display the error log in the dialog mode, choose Goto Error Log .


Mass Adjustment of ARO Data

9 Periodic Processing

In SAP S/4HANA for asset retirement obligation, some functions can be carried out regularly. To access these functions on the SAP Easy Access menu (/FOM/MENU), choose Periodic Processing .

Start Schedule Monitor

The Schedule Monitor is part of the Schedule Manager. If scheduled for background processing, ARO programs and reports use the Schedule Manager to store the job logs, output lists (spool files), and error messages. You can use the Schedule Monitor (transaction code /FOM/SCMO) to check the saved data.

For more information, see the product assistance for SAP S/4HANA available at http://help.sap.com/s4hana. You can find information about the Schedule Manager under Enterprise Business Applications FinanceFinancial Planning and Analysis Controlling (CO) Controlling Methods Schedule Manager (CA) .

Periodic Accruals

When an ARO transaction is released, SAP S/4HANA for accounting integration is triggered, which in turn triggers the accrual engine (ACE). Depending on the Customizing settings for SAP S/4HANA for accounting integration and the ACE, there may be periodic data resulting from the ARO cash flow (such as interest costs) that cannot be posted at once. Instead, these periodic values must be posted periodically, for example, every month.

Report Purpose

Accrual Engine: Start Periodic Accrual Run (transaction code /FOM/ACE_PERI_RUN)

By performing an accrual run, you carry out the relevant accrual postings for all accrual objects that are valid for the key date specified.

Accrual Engine: Reverse Periodic Accrual Run (transaction code /FOM/ACE_REV_RUN)

You can reverse an accrual run that has already been carried out. However, you can only reverse accrual runs in their entirety. You cannot reverse individual postings.

Accrual Engine: Transfer of Postings to Accounting (transaction code /FOM/ACE_POST_TRANSF)

You use this function for manually transferring ACE documents to accounting if errors occurred during the automatic transfer (for example, if account determination was incorrectly defined). In such cases, ACE documents are created but corresponding accounting documents are not.

Product Assistance for SAP S/4HANA for Asset Retirement ObligationPeriodic Processing P U B L I C 51


Report Purpose

Balance Carry Forward (transaction code /FOM/ACE_CFWD) You must run this program at the beginning of a new fiscal year to trigger the balance carry forward of the accruals.

Sorted List of Provisions Regrouping (Transaction Code /FOM/ARO_REGROUP)

● Provisions that are related to asset retirement obligations (AROs) must be reported in the balance sheet supplement. This program sorts the provisions by the remaining term of the corresponding AROs and can be used to create the following:○ A batch input file that can be carried out to trigger the regrouping adjustment postings○ A batch input file that can be carried out to trigger the reversal of the regrouping postings

NoteFor more information on periodic processing, see the product assistance for the relevant release of SAP S/4HANA available at http://help.sap.com/s4hana: Enterprise Business Applications FinanceAccounting and Financial Close Asset Accounting (FI-AA) .

Related Information

Postings Using SAP S/4HANA for Accounting Integration [page 42]


Periodic Processing


10 Reports for Asset Retirement Obligations

SAP S/4HANA for asset retirement obligation provides reports for asset retirement obligations (AROs). You can access these functions on the SAP Easy Access menu under Accounting Additional Functions Asset Retirement Obligation Management Information System Reports for Asset Retirement Obligations or directly using the respective transaction code:

Report Purpose Additional Information

Asset Retirement Obligation List ● Provides an overview of AROs.● Selection criteria allow you to filter

according to the ARO status, setup date, end date, and inflation rate key, for example.

● Transaction code: /FOM/REP01

Evaluate Obligations List ● Provides an overview of AROs and can optionally show the provision or interest on a certain key date.

● Transaction data is based on the most recent released transaction compared to the report key date.


Obligations Due Settlement List ● Provides an overview of AROs that have a planned settlement within a certain time frame.

● Helps identify obligations that require follow-on processing (for example, retirement, partial retirement, and so on). Using the report output, you can update the AROs and change the cost estimation plans (CEP).


Product Assistance for SAP S/4HANA for Asset Retirement ObligationReports for Asset Retirement Obligations P U B L I C 53

Report Purpose Additional Information

Sorted List of Provisions ● Provides a sorted list of ARO provisions that have been posted to an ARO provision account in the general ledger. For a combination of obligation type and company code, you select the accounting principle and the report key date.

● Available in two versions, based on data from the accrual engine: Plan (based on planned posting amounts from the accrual engine) and Book (based on already posted amounts).

● Combines two functions:○ Provision changes within a fis-

cal year: displays the development in provisions over time, for example, the accumulated balance in the current year.

○ Classification of AROs regarding remaining lifetime: based on the report key date, the program sorts the provisions into short, medium, and long-term provisions according to the selected sort method.

● Transaction codes: /FOM/REP05 (Plan)

● Transaction codes: /FOM/REP06 (Book)

● You can specify the order of the columns displayed for the accrual types and one-time postings in your provisions report using the sorted list version. You can define a version for the sorted list of provisions per obligation type in Customizing for SAP S/4HANA for asset retirement obligations under

Information System and

Environment Define Sorted List

of Provisions Grid .

NoteTo use the configured columns when executing the report, you must first create your own layout for the Sorted List of Provisions report.

● You can define sort methods in

Customizing under Financial

Accounting General Ledger

Accounting Periodic Processing

Reclassify Transfer and Sort

Receivables and Payables Define Sort Method and Adjustment Accts for Regrouping Receivables/

Payables .


Reports for Asset Retirement Obligations

11 Monitoring Asset Retirement Obligations

To ensure optimal processing of asset retirement obligations, periodic monitoring is advisable.

You can use the following on the SAP Easy Access menu under Asset Retirement Obligation ManagementMonitoring for Asset Retirement Obligations or execute the transactions directly:

● Accounting Integration Monitor (transaction /FOM/ACCTINFMON01)● Accrual Engine Postings Overview (transaction /FOM/PSDOCITEMS)

Related Information

Accounting Integration Monitor [page 55]

11.1 Accounting Integration Monitor

You can use the Monitor Accounting Integration Messages app to monitor asset retirement obligation (ARO) data.

Key Features

You can use this app to:

● Check the processing status of ARO postings in accounting.● Branch to the Display Accounting Integration Contracts app to see ARO details.● Branch to the SAP Application Interface Framework error handling log.● If you have sufficient authorization, you can restart, cancel, or reverse the processing of ARO data.● Export the list of data to a spreadsheet.

NoteBoth apps are available as part of SAP S/4HANA for accounting integration, which is used to trigger the necessary postings for AROs in integrated applications such as Asset Accounting (FI-AA) and accruals (ACE).

These apps can be used on desktop devices.

Product Assistance for SAP S/4HANA for Asset Retirement ObligationMonitoring Asset Retirement Obligations P U B L I C 55

Implementation Information

For implementation information specific to the app, see the entry in the SAP Fiori apps reference library.

Monitoring AROs

The app displays a list of AROs for which postings in accounting have been processed using SAP S/4HANA for accounting integration.

You can focus on the following information when monitoring AROs:

Field What It Means

Process ● The process shown indicates what kind of action has been performed for an ARO: for example, creation of an ARO, a cost adjustment, or adjustment of interest or inflation rates.The process name provides a link to the Display Accounting Integration Contracts app. This app shows you detailed information about postings in accounting for the ARO.

Contract Number ● The contract number corresponds with the number identifying the ARO.

● The number provides a link to the Display Accounting Integration Contracts app. This app shows you detailed information about postings in accounting for the ARO.

Overall Status Shows the overall processing status for an ARO. ARO accounting data is only processed if its Overall Status is set to Successful.

AIF Status Shows the processing status in SAP Application Interface Framework.

SAI Status Shows the processing status in SAP S/4HANA for accounting integration..

RecommendationChoose Adapt Filters and/or Settings to adapt the table layout to suit your needs. If you use the same layout often, save it as your personalized view.


Monitoring Asset Retirement Obligations

https://fioriappslibrary.hana.ondemand.com/sap/fix/externalViewer/index.html?appId=F3369

Additional Information

For each ARO entry, the app provides a set of additional links:

● The Log link provides for detailed information about processing steps and events.● The AIF link opens the log for SAP Application Interface Framework.● The XML link shows the data sent to SAP S/4HANA for accounting integration.

Administrator Tasks

This app can be used to identify AROs for which processing errors have occurred. For the actual correction of such problems, additional authorizations are necessary. For more information about how to correct errors, see the section on monitoring in the administration guide for SAP S/4HANA for asset retirement obligation available at http://help.sap.com/aro_s4hana.

Product Assistance for SAP S/4HANA for Asset Retirement ObligationMonitoring Asset Retirement Obligations P U B L I C 57

http://help.sap.com/aro_s4hana

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