What must be assigned to each depreciation area during setup?

In the context of SAP Financial Accounting, each depreciation area must have a specific accounting principle assigned to it during setup. This is essential because the accounting principle defines the rules that govern how depreciation is calculated and reported for the assets under that depreciation area.

Different accounting principles may apply based on regulatory requirements, financial reporting standards, or management decisions. By assigning an accounting principle, the system ensures that the depreciation calculations adhere to the correct guidelines, which can vary significantly between different jurisdictions or reporting frameworks.

In contrast, while leading ledger and relevant asset classes play vital roles in the overall structure of financial accounting, they do not specifically dictate how depreciation is processed within a given area. Depreciation keys are important for defining the method and duration of asset depreciation but are not the primary focus for association with each depreciation area setup. Therefore, the assignment of accounting principles serves as a foundational requirement to ensure compliance and accurate reporting for asset depreciation in SAP FI.