Programme SAP F107_PROVISIONS - Simulation of Provision Content

Purpose
This function enables you to determine the net present value forprovisions and long-term payables and receivables in a simulation run.

Integration
Provisions and payables/receivables in foreign currency are firstvaluated using foreign currency valuation.
Once the provisions run has been transferred, the valuation differencesare shown for each document and are visible in reporting (SAPF101, lineitem list).

Prerequisites
Provisions are posted as G/L account open items with the appropriatetransaction type. The customer-specific transaction types aretransferred to globally valid actions, and these actions are used in theprogram logic. This results in actions with postings that aretransferred to customer-specific transaction types.
Table for Entering Calculation Methods
Use view cluster F107_VC_TPROVMET to enter the relevant interestindicator that is to be applied for the entire maturity of theprovisions.
Customizing Settings for Transaction Types
Create the transaction types with which you want to post provisions;view V_T856. Enter values for the following transaction types:

  • Allocation

  • Utilization/Consumption

  • Recognition

  • Reversal of Allocation / Reversal of Utilization / Consumption /
    • Reversal of Recognition
    • Long-Term Receivables/Payables

      • Assignment of Transaction Types to Actions F107_MT2A
      The function works internally with actions: Assign your transactiontypes to the actions:
      Customizing Settings: Transaction Types for Discount Postings
      Create the transaction types that the program uses in the postingsgenerated: The function distinguishes between five transaction typesduring posting:
      • Initial Discount

      • Follow-On Interest Accumulation

      • Discount with Interest Change

      • Discount Correction from Allocation Reversal

      • Discount Reversal

        • Assignment of Actions to Transaction Types F107_A2MT
        The function works internally with actions: Assign the actions to thetransaction types with which the content is to be posted.
        Customizing calculation method F107_PROVMETH
        In this view, you define the interest indicators that are used duringthe maturity of the provisions or receivables/payables.
        Customizing Settings for Account Determination (OBB0)
        The automatically generated postings are posted to three different typesof account:
        Provisions/Receivables/Payables: Adjustment Account,,RKK
        Provisions/Receivables/Payables: Expense: Discounting,,ZKB
        Provisions/Receivables/Payables: Allocation: Discounting,,ZKK
        Specify the accounts and the posting keys of these accounts.
        Customer Enhancements
        The Business Add-In (BAdI) BADII_F107 enables changes to be madeto the standard process flow. You may make the following changes:
        • Influence the determination of the key for the provision content: With
          • the standard settings, the assignment field (BSEG-ZUONR) is usedto differentiate between the different types of provision content.
          • Influence the calculation: With the standard settings, the amounts are
            • not calculated using the posting date for an exact date, but at periodend. The calculation of a reversal (action 11) is performed for theprevious period end.
            • Influence account determination

            • Influence the postings

            • Influence how postings are summarized: With the standard settings,
              • postings are created for each provision content.
              • Influence how data is saved in table BSBW. (transfer F107)

                • Features
                Calculation of Present Value
                The present value is calculated by period (standard setting) or for aspecific day (using a BAdI). The effects of interest changes are shownif the interest change occurs in the considered period.
                Present Value Calculation for Provisions and the Related Postings
                Allocation/Recognition/Consumption/ is posted manually as G/L accountopen items.
                The required postings resulting from this on the Adjustment AccountDiscounting (operating profit IFRS ZKK), Expense: Interest Accumulation(financial result, ZKB), and Provision Adjustment Account (RKK) are madeautomatically.
                The business transactions on which the manually posted provisions arebased are identified on the basis of transaction types:
                If the business transaction can be determined, the required postings canbe created automatically.
                The following accounts are used to post provisions:
                RSK,,Provision account,,If postings are made manually, these accountsare selected in the valuation run.
                RKV,,Consumption account,,(provision consumption = utilization):Postings are made manually
                RKA,,Recognition account,,(provision recognition): Postings are mademanually
                ZKR,,Allocation Account (provision allocation):,,Postings are mademanually
                ZKB,,Allocation Account from Present Value (financial result):,,Postingsare made automatically
                ZKK,,Allocation Adjustment Account (operating profit):,,Postings aremade automatically
                RKK,,Provision Adjustment Account:,,Postings are made automatically
                All open items are calculated individually. The results are thentotaled.
                Example: An allocation with 1000 and the posting of 10 risk mitigations,each at 100. Each of the 11 items are calculated individually. If thebalance is zero, any rounding difference is added to the last item.
                New Allocations and Follow-On Discount
                If a new item is created in the reporting period,
                ",, ZKR / RSK
                it is valuated as a new allocation and the following automatic postingsare created:
                ",,Initial discount RKK / ZKK
                ",,Inverse posting ZKB / RKK in the subsequent period
                The calculation is made from the date of the allocation.
                If an item is posted in a prior period, this leads to a periodicfollow-on discount with the following automatic postings:
                ",,Follow-on discount RKK / ZKB
                ",,Inverse posting ZKB / RKK in the subsequent period
                The calculation is made from the key date
                Risk increase (same as risk mitigation)
                Based on manual posting (reversal of allocation)
                ",,RSK / ZKR
                the following inverse posting is made in the same period
                ",, -ZKK / ZKB (due to zero balance and reversal, the initial discountaccount ZKK has to be adjusted)
                Based on the manual posting New Allocation
                ",, ZKR / RSK
                the following postings are made:
                ",,RKK / ZKK (corresponds to initial discount (2))
                ",,Inverse posting (7a) ZKB/RKK in follow-on period (same as (2A))
                Consumption
                If a new item is created in the reporting period with the transactiontype Provision Consumption
                ",,RSK / RKV
                the following postings are made (same as follow-on discount):
                ",,RKK / ZKB
                ",,Inverse posting (9a) ZKB/RKK in the subsequent period
                Risk mitigation with interest change effect
                Based on the manual posting
                ",,RSK / ZKR
                the following inverse posting is made in the same period
                ",, ZKK / ZKB
                Based on the posting New Allocation
                ",, ZKR / RSK
                the following postings are made:
                ",,RKK / ZKK (with the old interest rate) corresponds to initialdiscount (2)
                and
                ",,interest change effect ZKK / RKK or RKK / ZKK in the same period(depending on whether there is an interest decrease or increase)
                An interest change effect occurs when the interest curve on the last keydate differs from the interest curve on the current key date. That is,when the interest rate has changed in the current period.
                Reversal of a new allocation
                If a new item is created in the reporting period,
                ",, RSK/ ZKR with transaction type (Allocation Reversal = Action 11 )
                it is valuated as the reversal of a new allocation and the followingautomatic postings are created:
                ",,Discount Reversal ZKK / RKK
                ",,Inverse posting RKK / ZKB in the subsequent period
                The calculation is made from the date of the previous period so that thebalance on the ZKK is zero.
                Recognition
                If part of the provision or the entire provision is recognized, thefollowing postings are made:
                Based on the manual posting
                ",, RSK / RKA
                the nominal risk is determined by grouping together provisions on thebasis of their content. The corresponding
                ",,follow-on discount RKK / ZKB is also determined.
                Calculation of the present value for long-term receivables andpayables and their respective postings
                Long-term customer/vendor items are considered in terms of their totalmaturity and discounted with a valuation method.
                In the standard system, the total maturity is calculated using theposting date and the due date. In the valuation run, parameters are usedto check whether the total maturity fulfills the long-termcondition.
                Since receivables/payables generally do not have a transaction type, thestandard setting applies the transaction type to which you assignedaction 8 in Customizing.
                Either initial discounting or follow-on discounting is performed.

                Selection
                Description of the parameters:

                • Currency for interest rates: This currency key is used to read data in
                  • the interest table.
                  • Maturity start/end: used to determine the total maturity

                  • All ends of the month as the key date: The history of interest
                    • accumulation over the total maturity period is shown.
                    • Compress: Suppresses calculation steps that occur for zero balances

                    • Last key date: Last time that discounting was performed

                    • Current key date: key date for current calculation

                    • Effective date: Posting date

                    • Calculate from date: Date for the amount calculation: In the standard
                      • system, the calculation using the last key date is performed whenallocations have been reversed. This reverses the original amount of theallocation.

                      Activity
                      Enter master data for provisions:
                      The Assignment Number field in Customizing is used as the field for theprovision content (provision ID). However, it can contain differentvalues as the result of a BAdI.
                      Enter the provisions as G/L account open items, whereby the G/L accountand the assignment number are used to differentiate the provisioncontent
                      Use transaction F107_PROV to specify the desired valuation methodfor the provision content. You can differentiate the content byvaluation area.
                      Valuation run
                      Run transaction F107 or perform report F107_START.
                      Choose valuation method 10 Discounting After Total Maturity(IFRS). Make the desired settings and selections.
                      Save your entries and schedule the valuation run. When the run hasfinished, you can display the result. Various evaluation reports can beused
                      You can use the Test Posting function to simulate postings.
                      You use the Transfer function to create postings and save thevaluation differences for each document.
                      Long-Term Receivables/Payables
                      For receivables and payables, you have to assign a valuation method foreach chart of accounts, valuation area, and reconciliation account.
                      Long-term receivables and payables are classified with the specificationof a threshold value in the valuation run. The specification is made inmonths.

                      Example
                      Examples of posting logic:
                      Example: Provision: Posting of an allocation as G/L accounts openitems
                      Assignment,,4711
                      Posting Date,,01/31/2005
                      Document Date,,01/31/2005
                      Baseline Payment Date,,01/31/2008
                      Due Date for Net Payment,,01/31/2008
                      Debit/Credit Amount,,2000.00-
                      Start of the valuation run on 01/31/2005. The provision method appliesan interest rate of 3.4%.
                      Result: Valuation difference 190.88
                      Posting on 01/31/2005: ,,Initial discount 190.88
                      ,,,,,,,,,,,,RKK to ZKK, transaction type 275
                      Posting on 02/01/2005 Discount Reversal 190.88
                      ,,,,,,,,,,,,ZKB to RKK Transaction Type 270
                      Start of the valuation run on 02/28/2005.
                      Result: Valuation difference 185.83
                      Posting on 02/28/2005: ,,Follow-on discount 185.83
                      ,,,,,,,,,,,,RKK to ZKB, transaction type 125
                      Posting on 03/01/2005 Discount Reversal 185.83
                      ,,,,,,,,,,,,ZKB to RKK Transaction Type 270
                      Start of the valuation run on 06/30/2005. From 06/01/2005, the interestrate is decreased from 3.4% to 3.0%.
                      Result: Valuation difference 165.50
                      Posting on 06/30/2005: ,,Follow-on discount 165.50
                      ,,,,,,,,,,,,RKK to ZKB, transaction type 125
                      Posting on 06/30/2005: ,,Discount with interest rate 18.47
                      ,,,,,,,,,,,,ZKK to RKK Transaction Type 130
                      Posting on 07/01/2005 Discount Reversal 147.03
                      ,,,,,,,,,,,,ZKB to RKK Transaction Type 270
                      Example: Reversal of an allocation
                      Allocation of 2000 is valuated on 03/31/2005, follow-on discount of180.77
                      ,,RKK to ZKB, transaction type 125
                      In April, the reversal is posted manually. The valuation run calculates
                      Effective date 04/30/2005 180.77
                      ,,,,ZKB and ZKK: Transaction Type: Adjustment Discount, AllocationReversal
                      Example: Discounting long-term receivables/payables
                      Document: 1000 USD valuated at 842.19, posted on 01/01/2006, maturityuntil 01/01/2009, interest rate 3%
                      Start of the valuation run on 06/30/2006.
                      Result: Valuation difference 40.72
                      Posting on 06/30/2006: ,,Follow-on discount 40.72
                      ,,,,,,,,,,,,ZKB to RKK Transaction Type 280
                      Posting on 07/01/2006 Discount Reversal 40.72
                      ,,,,,,,,,,,,RKK to ZKB, transaction type 270