Warranty Fund Valuation

This document explains how to manage warranty funds within financials.

Warranty fund valuation applies to both standard warranties and extended warranties, and is used to obtain a stable flow of warranty costs during the warranty period.

An amount is credited to the warranty fund when an equipment is sold. Then the warranty fund is consumed through claim maintenance orders. Extended warranties can be sold together with the equipment or at any time.

The warranty fund should be zero at the end of the warranty period according to the warranty fund rules.


This automated functionality will only work for the predefined accounting model with model type=1, including creating the model lines with function key F14='Gen standard' in (CAS391).

Only item/serial numbers which have been sold this period and where an amount has been offset to the warranty fund will be included. This means that no calculation will be performed for previous periods.

Before you start

The column headings of the dimensions should be set manually in (CAS390/E) as follows:

  1. Item

  2. Serial no

  3. Origin ID

  4. Customer

  5. Agreement

  6. Order no

  7. Budget ID

  8. Life or product group

  9. Structure level

  10. Highest level

  11. Accounting model lines must be created in 'Accounting Model. Open Line' (CAS391).

    When the accounting model lines are created, decide if 'life' or 'product group' should be used in dimension 8.

    To set up the warranty rules, the fields to use must be defined.

    Enter 'Available Object Ctrl Parameters. Open' (CMS016). Mark the line 'Warranty Fund Rules' and select related option 11='Object table detail line' (Ob tbl det lin).

  12. Define the start values in 'Generic Object Control Table. Open' (CMS017).

    Define the fields to use and their order of priority.

    Prompt with function key F4 to view the available fields.

    FAM function CA70 must be defined for this functionality in 'FAM Function. Open' (CRS405).

    This FAM function is used for both standard and extended warranty fund adjustments when updating the proposal and creating the account entries.

Follow these steps

You must follow these steps to complete the warranty fund valuation process and to create the account entries to adjust the warranty fund.

  1. Create a proposal

    The warranty fund valuation proposal is created in 'Warranty Fund Valuation. Open' (CAS150).

    Serialized items with updated account entries with accounting rule OI20='Invoicing CO' 150='item charges' in the predefined accounting model for the current accounting period, will be included. These account entries are included on line 80, 'Standard Warranty Fund', and line 81, 'Extended Warranty', in the accounting model.

    The records in the Balance Table CAABAL are the base for the warranty fund valuation.

    Create a new proposal in (CAS150) by entering a round number and name. Fill in which accounting model to use, accounting period, report layout (only 1 is available), and a report text. When the proposal is created, the status should be 00='Proposal created'. If a proposal with status 98='Created, but not transactions exist' is created, this means that a proposal was created but there were no items/serial numbers to include for this period.

    It is only possible to create one round for each accounting period, so this process should be performed at the end of the period during period closing.

    Only proposals in status 00='Proposal created' and status 98='Created but no transaction exist' can be deleted from (CAS150).

  2. Review and change the proposal

    Enter the proposal lines in 'Warranty Fund Valuation Lines. Open' (CAS155).

    All items and serial numbers included in the proposal will be displayed.

    • The starting period is the period when the equipment is sold. The current period is the period according to the warranty rules.
    • The equipment will be included in the warranty fund valuation until the closing balance is 0 for the previous period, but if an amount is displayed in 'Amount consumed this period' the equipment will be included although the warranty fund for this equipment is 0. This is because the warranty fund will be adjusted, so that it will never have a positive amount.
    • The 'Initial warranty fund' is the credit amount that is offset when the equipment is sold and when the customer order line has an internal line charge where the check box 'Fund creation' in 'Order Line Charge. Open' (CRS275) is selected. The release of the warranty fund is based on this amount and is released according to the warranty rules. The 'Release/accrual end of period' is updated with this figure.
    • 'Amount consumed this period' is an amount related to a claim maintenance customer order with account entries CO20='CO Invoicing WO', where warranty related work is done.
    • If the settled amount is less than the claimed amount for this claim MCO, then a debit amount will be displayed meaning that the warranty fund is consumed.

      If the settled amount is equal to the claimed amount, then the amount here will be 0 and there is no consumption of the warranty fund.

    • The 'Adjusted release/accrual' (Adj rel/acc) amount is the 'Release/accrual end of period' (Rel/accr EOP) amount adjusted by the 'Amount consumed this period' (Amt cons th per).

      The 'Manually adjusted release/accrual' (Man adj rel/acc) amount is an editable field where manual adjustments can be done. These adjustments will affect what will be updated to general ledger. Both debit and credit amounts can be updated in this field.

      To make manual adjustments, mark the line in (CAS155/B). Use option 'Change' to access (CAS155/E). The field 'Manual adjusted release/accrual' is now open for changes.

      The manual adjustment amount will affect the 'Updated release/accrual amount'.

    • The 'Updated release/accrual' amount is the 'Adjusted release/accrual' amount adjusted by the 'Manual adjusted release/accrual' amount.

      The 'Updated release/accrual' is the amount that will be updated in the general ledger when updating the proposal.

    • 'Total revenue' includes all revenue lines in the accounting model and also manually updated revenue from line 180 for this equipment.

      'Total cost' includes all cost lines in the accounting model and also manual updated costs from line 180.

    • Margin % is calculated as (total revenue-total cost)/total revenue expressed in percent.
  3. Print the proposal

    Printouts can be launched from (CAS150) using related option 6='Print'. Option 14='Print selection' can also be used. This functionality is useful for printing selected item numbers, serial numbers, item groups, product groups, item types, or accounting control objects.

  4. Update general ledger

    To update the proposal, use related option 9='Update GL' in (CAS150).

    The status of the proposal will change to 99='Trans to fin system' when the proposal is updated to general ledger and account entries will be created. The balance table (CAABAL) and the aggregated balance table (CAAAGG) will also be updated.

    If 'Updated release/accrual' is a positive amount, accounting rule CA70='Warranty fund adjustments' 995='Warranty Fund (Balance account)' will be debited, and CA70 996 ='Warranty fund release/accrual (P/L acc)' will be credited.

    If 'Updated release/accrual' is negative, CA70 995 will be credited and CA70 996 will be debited. The same is true for accounting rule CA71 995 and 996.

    • CA70 995 is added to line 80 of the predefined accounting model.

      Accounting rule CA70 995 represents the standard warranty fund which is a balance account.

    • CA70/CA71 996 represents the P/L account of the release/accrual of the warranty fund.

      Accounting rule CA71='Extended warranty fund adjustments' 995 is added to line 81 of the predefined accounting model. CA71 995 represents the extended warranty fund which is a balance account.

      Also CO20='CO invoicing WO' 120='Revenue' and CO20 151='Offset A/C int item charges' is added to line 81 from claim MCOs where warranty class=2, 'Extended Warranty'.

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