It is not always that fixed assets are acquired in their complete form, sometimes they are built progressively over a period of time. When Fixed Assets are being built over time, they are treated as assets under construction, and then they are capitalized or settled to a fixed asset (s) or other settlement objects, upon completion.
In this posts we will discuss the whole cycle of an AUC in SAP (including its settlement to an asset) end to end, except the capitalization of AUC Down Payment (this will be discussed in another post).
Characteristics of an AUC
- They are built over time and settled to a Fixed Asset (s) or other settlement objects (Internal others, WBS, etc.) upon completion.
- Mostly not depreciated during the AUC stage. This is true for most countries.
- You can have a collective master record for all AUCs. However, the best approach is to have a separate asset class for assets under construction and maintain an asset master record for each AUC.
Steps to follow
The following steps will be followed in the post:
1) Configuration of a separate asset class (with other related settings) for the Assets under Construction.
We follow the steps below for the settings of the asset class:
a) Specify Account Determination
To specify account determination, use the menu path:
IMG — Asset Accounting — Organizational Structures — Asset Classes – Specify Account Determination
“The account determination determines the reconciliation accounts in the general ledger, as well as their offsetting accounts, that are to be posted when certain business transactions are carried out”.
Whichever account determination you specify here will be entered in the asset class.
b) Define screen layout rules for your AUC
To define screen layout rules, use the menu path:
IMG — Asset Accounting — Organizational Structures — Asset Classes – Create Screen Layout Rules
c) Define Number Range Interval, if you plan to assign a new number range to AUC.
To define number range interval for your AUC, use the menu path:
IMG — Asset Accounting — Organizational Structures — Asset Classes – Define Number Range Interval
d) Define asset class
To define asset class, use the menu path:
IMG — Asset Accounting — Organizational Structures — Asset Classes – Define Asset Classes
Or use transaction OAOA
Copy or insert new entries.
Double click on your AUC asset class and do the necessary field definition.
Account Determination. Enter the account determination key you defined in 1 a) above.
Screen layout rule: Enter the Screen layout rule you defined in 1 b) above.
Number Range: Enter the number range defined in 1 c) above.
Line Item Settlement: For our example we will use line item settlement approach in settling our AUC to the target/receiver asset.
No AUC or Summary management of AUC: If you check this option, it means that assets under construction assigned to this asset class are managed without the option of line-item settlement.
Investment Measure: “Specifies that the assets under construction in this asset class can be created solely in relation to capital investment measures (internal orders or WBS elements)”.
As I mentioned, we will use the line item settlement option in our example
After selecting all necessary fields, save your settings and go back
2) Carry out the account determination settings
It is assumed the all necessary account determination for the FA integration with the General ledger has been carried out. If this is not sure use transaction AO90 to do so.
Or follow the menu path below:
IMG — Financial Accounting (New) — Asset Accounting — Integration with General Ledger Accounting — Assign G/L Accounts
Or use transaction AO90
3) Define and assign settlement profile for the AUC and other related settings
a) Define Transaction Types
Follow the menu path
IMG — Financial Accounting (New) — Asset Accounting – Transactions — Capitalization of Assets under Construction — Define Transaction Types
We will use the standard SAP Transaction types, they are more than sufficient for our purpose.
Note: From the side of the Source asset (AUC), the system is treating this as a retirement:
Transaction types “340” and “345” are normally used for the “line item settlement” scenario (for settlement of prior year and current year acquisitions respectively).
Transaction types “348” and “349” are normally used for the “summary settlement” scenario (for settlement of prior year and current year acquisitions respectively).
Note: From the side of the Receiver asset (AUC) the system is treating this as an acquisition:
Transaction type “341” is the offsetting transaction type for Transaction types “340” and “348” on the receiver assets (acquisition) side of the transaction, irrespective of whether it is line item settlement scenario or not.
Transaction type “346” is the offsetting transaction type for Transaction types “345” and “349” on the receiver assets (acquisition) side of the transaction, irrespective of whether it is line item settlement scenario or not.
b) Allow Transfer Transaction Types for Asset Classes
In this step, you specify the asset classes, in which posting is allowed using the transaction type groups for transfers from assets under construction to completed assets.
Make sure your AUC Asset Class is included here.
Follow the menu path:
IMG — Financial Accounting (New) — Asset Accounting – Transactions — Capitalization of Assets under Construction — Allow Transfer Transaction Types for Asset Classes
Select your transaction type group and double click on specification of asset classes.
Enter your asset class here.
c) Define/Assign Settlement Profiles
Use the following configuration menu path to define and assign settlement profiles for the AUC
IMG — Financial Accounting (New) — Asset Accounting – Transactions — Capitalization of Assets under Construction — Define/Assign Settlement Profiles
Double click on define settlement profile
Adopt/copy/define a new settlement profile.
Double click on your settlement profile and make the necessary settings.
By our settings, any AUC under a Company code assigned to this settlement rule, can be settled on a cost center, Internal Order, WBS element and Fixed Asset. In our example we will only settle to AUC to another Fixed Asset.
Next we assign the settlement profile define above to our company code.
Double click on assign settlement profile to company code.
4) Create an asset under construction master data
Assets under construction is created in the same way other assets are created. Use transaction AS01 to Create an AUC.
5) Acquire assets under construction
AUC is acquired in the same way other assets are acquired. We assume that we already have postings in our AUC account. If this is not the case use the menu path below to do your acquisition:
Accounting — Financial Accounting — Fixed Assets – Acquisition — External Acquisition — With Vendor
Or Use transaction F-90 to procure the AUC
6) Settle/capitalize asset under construction
Settlement of the asset under construction to completed fixed assets (receiver asset) can be handled in either of the following ways:
a) Summary settlement to the receiver assets (transaction types 348/349).
b) Line item settlement of an asset under construction (transaction types 340/345).
For the purpose of our example we will demonstrate the line item settlement.
Settlement of an AUC is mainly done in two stages:
i. By creating the distribution rules for the line items you want to settle (use transaction AIAB)
Enter your AUC
Highlight the line item you want to settle and click on Enter icon to enter the distribution rule. This should be repeated for all the line items you want to settle.
Enter your distribution rules as above.
Click on the check button to check your entry
Proceed by clicking on the back button, if there is no error
Repeat this process for all the line items you want to settle.
Now Save and continue to the second step
Note: You can execute the settlement within this same screen by clicking on Settlement, or proceed to the second step with transaction AIBU. They all take you to the same step.
ii. Process the settlement of the asset under construction (use transaction AIBU).
The system used transaction type “340” for the retirement transaction of the AUC, because it is a line item settlement of a prior year transaction.
Press Enter and continue.
Click on execute.
As you can see, the system used transaction type “341” for the acquisition transaction in the Target Asset.
Now go back and remove the test run and execute the actual run.
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