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Automatic Settlement of Assets under Construction

September 11, 2015 | 256 Views |
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I’d like to cover with this document, Settings that are required for Asset Under Construction Creation and Settlement Rule for direct settlement of the expenses to fixed assets for projects that are linked to an asset under construction.

If you want to select asset under construction functionality in your system configuration.

Step 1 : Scoping

To find this option, go to Business Configuration work center, and choose Implementation Projects view. Select your implementation project, and click Edit Project Scope. In the  Scoping step of the guided activity, select Financial and Management Accounting, then Fixed Assets, and Fixed Assets Files.

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Step 2 : Assign AuC

You need to have a Asset Class which supports AuC and for this either you create a default class where all assets under construction are created. You can either mark the standard available fixed asset class 4000 as the default class to create asset under construction or create a custom fixed asset class.

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So, here marked 4000 Asset Class as AuC class and also the depreciation method should always be 0000 – No automatic depreciation

Note: Before you mark 4000 as AuC, make sure that you have not created any other Non-AuC assets / Fixed Asset

Step 3 : Create a AuC Asset

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Step 4 :  Assign an AuC to a project task

From Cost and Revenues work center > Projects view

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Create/Select a direct cost project and click on Assign AuC or Settlement Rule

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You can assign the AuC which you have created

Step 5 : Maintain the Settlement rule and for this you need to go to the fixed asset work center and select the asset under construction

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Note: This settlement rule button will be enabled only for AuC and not for other assets

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Settlement Factor, Enter the quote for each receiver as an absolute value. Taken as a whole, the settlement factor represents the settlement ratio (such as for instance 60:40) for which costs are allocated. The system automatically calculates the percentage for each unit.

Once the first project postings are done,  100% of the expenses are automatically settled to the linked AuC.

For instance, we have posted a supplier invoice to capitalize the AuC for the project cost

At, this stage you will see two postings

1 : Supplier Invoice

2 : Automatic Asset Settlement Postings

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Step 6: Execute the Settlement Run

You can execute the settlement runs to capitalize the cost accumulated on AuC

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As per the settlement rule that receiver assets that we selected in above rule were Asset 78-0 & 73-0, we can see above settlement is also done for the same assets.

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After the settlement run you can see that in AuC – 82, the settlement run transfer postings appear

Also, since the settlement is done completely, the AuC net book value shows 0,00 but with the capitalized status

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FAQ’s :

1 . Will the AuC will have the status Capitalized or In-process during initial expense postings ?

A : So, When posting the initial expenses/cost the AuC asset is changing its status to Capitalized – Yes this is right AuC is nothing but a fixed asset with a special fixed asset class (with the AuC Indicator set to true).So there is no difference in the status handling between AuCs and FXAs.


2.  Upon settlement run execution, if the settlement is for 100 % then having the status as Capitalized with zero value ?


A :  Yes this works similar to normal assets as well, supposing you do partial transfer of individual material with 100% amount and the status would still remain capitalized.


In case of questions, feel free to post them below.


Thanks

Lokesh Sharma




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5 Comments

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  1. Ashish Sharma

    Hi Lokesh ,

    I have made the required configuration.But still I am not able to assign AuC and settlement rule to

    COC project in Cost and Revenure WoC. Could you please guess any reason for this or Shall I

    raise SAP incident for this.

    Thanks

    Ashish Sharma

    (0) 
    1. Lokesh P Post author

       

      Hi Ashish,

       

      Was the project released ?  Please raise an incident and provide the required details that you have already set up in the system.

      Mention this conversation that we had here as reference.

      Thanks

      Lokesh Sharma

      (1) 
  2. Ashish Sharma

    Thanks for your reply Lokesh. I have successfully assigned and allocate the cost to the NEW ASSET. I have few query on the process.

    Could you please answer the below questions.

    1. When I will see the cost sitting under AuC.
    2. In this process we are using 2 assets , means 1 AuC and one Target Asset.
    3. What will happen to the asset which we have created as AuC after moving the cost to some other asset.

    Please let me know in case you required any further details for answering the query.

    Thanks

    Ashish Sharma

    9686843399

     

    (0) 
    1. Lokesh P Post author

      Hi Ashish,

      1 – > Please refer to the help document ‘Posting Asset Under Construction’  ( Process flow section )

      3 – > AUC still have the status as ‘capitalized’ even with zero book value, If it is partial transfer ( for complete amount ) , if complete transfer is applied then the AUC will be retired.

      Thanks

      Lokesh Sharma

      (1) 

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