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Difference between Ledger Approach and Account Approach

Hi experts!

Could you help me with this finanace certificate question?

"What is the difference between the ledger approach and the accounts approach to parallel valuation in Asset Accounting?

a) In the accounts approach, you assign a completely separate set of accounts for each accounting principle, unlike the ledger approach

b) In the ledger approach, you maintain additional depreciation areas to post the delta valuation of each accounting principle, unlike the accounts approach.

c) In the accounts approach, you define a technical clearing account for integrated asset acquisitions, unlike the ledger approach

d) In the ledger approach, you assign a ledger group to every depreciation area, unlike the accounts approach"

Thanks

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2 Answers

  • Best Answer
    Posted on Sep 08 at 02:20 PM

    Hi,

    Let me explain using an example. A Belgian company has to declare financial statements in BGAAP (legal requirement in Belgium) and IFRS (as the company is listed on Euronext). And valuations in the two different reporting standards, BGAAP and IFRS, are different. Examples of postings valuated differently in BGAAP and IFRS: fixed asset depreciation rules, stock valuation, foreign exchange valuation,...

    Thus two different sets of reporting is needed for this company, one for BGAAP and one for IFRS. This can be achieved using account-based or ledger-based approach.

    1. In the ledger-based approach, one set of general ledger accounts is defined. For the majority of the postings, where the valuation in BGAAP and IFRS are the same, postings are done without ledger group in both ledgers (BGAAP & IFRS). But for postings where there's a difference in BGAAP and IFRS two postings are done, one for BGAAP in ledger for local GAAP and one for IFRS in ledger for IFRS using common set of accounts (i.e. general ledger account is the same, but ledger determines for which valuation it is).
    2. In the account-based approach, you have three set of accounts: common accounts, BGAAP specific accounts and IFRS specific accounts. The reporting for BGAAP is done by taking common and BGAAP specific accounts and the reporting for IFRS is done by taking the common and IFRS specific accounts. For the majority of the postings, where the valuation in BGAAP and IFRS are the same, postings are done using common accounts. But for postings where there's a difference in BGAAP and IFRS two postings are done, one for BGAAP on BGAAP specific accounts and one for IFRS on IFRS specific accounts.

    Hopefully this explains the difference between account- and ledger-based general ledger.

    Best regards,

    Jonathan Eemans

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  • Posted on Sep 08 at 12:14 AM

    Hello Alvaro de Moutas Casanova

    The below SAP documentation should help you understand.

    https://help.sap.com/viewer/67e323b7117e4c91869c258933f47182/1909.001/en-US/defa455384877425e10000000a44176d.html

    Option a and d would be correct

    Regards

    Sanil

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