Skip to Content
Product Information
Author's profile photo Anirban Dutta

Post-Capitalization in Asset Accounting

Post-Capitalization in Asset Accounting

Background:

It often happens that business has omitted to book APC values of Fixed Assets in past fiscal years. This can happen for an entire asset or for part of the cost of an existing asset. There may be a variety of business reasons for this like asset valuation not finalized etc. The challenge now is to incorporate the APC value that was missed into the current fiscal period along with the accumulated depreciation component for that asset so that the Net Book value is correctly reflected in the Fixed Asset register.

Solution:

In S4 HANA cloud the Fiori App “Post Post-capitalization” enables subsequent additions/corrections to Acquisition and Production Cost (APC) of fixed assets. For an entirely new asset that was omitted to be booked in earlier fiscal years a new asset master data has to be created with the “Post Capitalization” checkbox enabled and the capitalization date maintained. For cost additions required to be made to existing asset from an earlier fiscal year a sub asset master with identical parameters mentioned above may be created under the main asset master.

Through this process business can correct the fixed asset register in the current year, without having to make postings and rerun the balance carry forward for previous years.

Example:

Company A has gone live with Asset legacy Transfer date of 31.12.2017. However, in December 2018, it realizes that it omitted to enter one of their Assets having APC Value of 760000 USD as a legacy asset. The Asset has an initial capitalization date of 01.01.2016. It has an estimated useful life of 8 years and should be depreciated fully over the same i.e. at the rate of 95000 USD every year for 8 years (from 2016 to 2023).

The following perquisites need to be met before we can book the post capitalization amount:

  • Create new Asset master record with the Post Capitalization checkbox enabled.

  • The Capitalization date should be maintained in the General data tab:

  • Depreciation area parameters should be set as below:

Now the capitalization amount can be posted onto this newly created asset master through the Fiori app “Post Post-capitalization”.

For this example, the following parameters should be entered:

Posting date should be in the current month/period as we cannot post to previous months which are now closed due to financial statements having been finalized.

The below Accounting document gets posted:

The posting updates the below Accounts:

a) The APC Fixed Asset GL Account with the full APC cost of 760000 USD.

b) The Accumulated Depreciation GL Account with the accumulated depreciation amount for 2016 and 2017 i.e. 95000*2 = 190000 USD.

c) The Balance as income into a Profit and Loss GL Account called “Revenue from Post Capitalization”

In this way the Fixed Asset Register is updated with the correct present net book value of the Fixed Asset i.e. (760000-190000) = 570000 USD.

This amount is now expected to be depreciated fully in 6 years starting from 2018 till 2023. This is also reflected in the parameters for the Asset in the “Asset Values” app.

Conclusion :

The Post post-capitalization functionality is a very useful application that enables fixed asset accountants to update correct net book value of fixed assets and account for costs relating to earlier years which have been missed out due to some business reason. This ensures accurate and up-to-date maintenance of the Fixed Asset register.

Details of this functionality can be found in the Scope Item J62 – Asset Accounting.

Assigned Tags

      8 Comments
      You must be Logged on to comment or reply to a post.
      Author's profile photo Sandeep Kumar
      Sandeep Kumar

      Very well explained and documented!

      Author's profile photo Cassiano Lins
      Cassiano Lins

      As Sandeep Kumar said, really good blog!

      I would like to give you a hint of creating a thumbnail as a cover for your blog, it would be even more attractive!

      Author's profile photo Riwa Mouawad
      Riwa Mouawad

      Thank you for documenting this - very helpful! I ran into this issue and had not known about post post capitalization.

      Author's profile photo Satyanarayana Sighakolli
      Satyanarayana Sighakolli

      Thank You for the post

      Author's profile photo Sai Giridhar Kasturi
      Sai Giridhar Kasturi

      Thanks for posting...

      Author's profile photo Gabriel Mattos
      Gabriel Mattos

      Thanks for sharing!! 🙂

      Author's profile photo Former Member
      Former Member

      Thanks for sharing. Exactly what we needed and not aware of post capitalization option.

      Author's profile photo Adnan Maqbool
      Adnan Maqbool

      We have current fiscal year maintained as 2021 while we have to perform a JV in 2019 but system is giving following error.

      System is giving following error.

      000 Depreciation area 01: More than two open fiscal years

      Message no. FAA_POST018 Diagnosis In Buchungskreis The year of the posting (2019) differs from the fiscal year currently open by one or two years in company code 1000, depreciation area 01. This is not allowed for posting depreciation areas. With a difference of two or more fiscal years, the year-end carryforward of values in the current fiscal year are no longer correct, which can cause incorrect documents in subsequent postings (such as partial retirement).

      System Response To avoid data inconsistencies, the posting must be terminated. Procedure Postings with integration in Financial Accounting are only allowed in the current fiscal year or in the year directly before.

       

      Please help , how to perform Asset JV in old years.