Assets under construction process prepared by odaiah pelley
Assets under Construction Process Prepared by Odaiah Pelley
Assets under Construction Process Internal Order as Investment Measure:
1. Define the AuC Asset Class (with investment measure) – OAOA
2. Define the Asset Class – for Main Asset - OAOA
3. Define Investment Profile - OITA
a. Assign the AuC Asset Class (Step-1) in the investment profile
4. Assign Investment Profile to Model Order - OITA
5. Define Order Type (Investment) - KOT2
a. Settlement Profile - OKO7
b. Maintain Allocation Structures - OKO6
c. Planning Profile - OKOS d. Budget Profile - OKOB
6. Create an Internal Order - KO01
a. With the Investment Profile (Step-2)
b. AuC automatically created by the system using Asset Class given in the Investment Profile
7. Post the amounts to IO - FB01
8. Settle the amounts to AuC from IO (Prcg type: Automatic) - KO88
9. Create the Main Asset - AS01 10. Settle the amounts to Main Asset from AuC (Prcg type:
Full) - KO88
AuC using Line Item Settlement:
1. Define the AuC Asset Class (with Line Item Settlement) - OAOA
2. Define the Asset Class – for Main Asset - OAOA
3. Define Order Type (Overhead) - KOT2
4. Create an AuC-Asset (using Step-1 Asset Class) - AS01
5. Create an Internal Order - KO01 a. Assign the AuC – Asset in Settlement Rule in IO
6. Post the amounts to IO - FB01 7. Settle the amounts to AuC from IO - KO88
8. Create Main Asset (using Step-2 Asset Class) - AS01
9. Assign the Main Asset in IO (Step-5) - KO02
10. Settlement AuC – Line Item List - AIAB
11. Settlement AuC - Receiver - AIBU Notes:
Common Business Requirement When the AUC is ready to be used, asset master in non-
AUC asset classes should be created.
Thereafter, distribution rule should be maintained and settlement carried out where the
system will debit the asset in non-AUC asset class and credit AUC. Upon settlement, system
capitalizes the non-AUC class with asset value date of settlement. Upon final settlement of
the AUC, it must be manually deactivated.
Conceptually, AUC is an asset which is not ready to be utilized yet. Hence, since economic
benefits are not yet being derived from the AUC, depreciation should not be posted.
Basically, in SAP depreciation areas 01 legal depreciation (depreciation areas post to the GL
module), asset classes have the default depreciation key 000 No Depreciation. In addition,
validation rule has been set in the system to ensure only depreciation key 000 No
Depreciation is allowed for AUC asset classes. In this way, no depreciation is posted for the
AuCs during depreciation run.
Settlement of AUC
Settlement of AUC is controlled by settlement profile. One company code will only be
assigned to one settlement profile.
Settlement profile dictates that:
Distribution rule will be defined by absolute amount, percentage or by proportion
(e.g. 2/7, 1/8 etc.)
Settlement must always be in full on item level. At the point of saving the
distribution rule, if the total percentage entered is not equal to 100%, the system
will issue a warning message.
Although the system allows distribution rule to be saved if the percentage is not equal to
100%, settlement cannot be successfully carried out unless the distribution rule has been
amended (system issues error message during settlement execution).When distribution
rule amended to 100% the settlement can be run for items. If there exists any items not
distributed to any object, they remain on AUC.
Settlement will only be made to fixed asset (technically, it is possible to settle
AUC to G/L accounts or other cost objects e.g. internal order, cost center etc.).
There are 2 ways to configure AuC in Sap system, for more information can refer:
Assets under Construction
Assets under construction are a special form of tangible assets. They are usually displayed as a separate
balance sheet item and therefore need a separate account determination in their asset classes.
You can manage assets under construction in the system as individual master records, just as you do
You can also use collective management of several assets under construction on one master record. You
can distribute to the proper assets when the asset under construction is completed by using either
Line item settlement (see below) or
Simple transfer to other asset master records
However, if you use collective management, without line item management, there is one limitation. You
can only post asset retirements (transfers) with asset value dates that follow in sequential order.
Due to the above restriction, it is not recommended that you manage a large number (or
all) assets under construction on one master record. Instead, you should use a general
ledger clearing account to temporarily collect acquisitions for assets under construction.
Ordinary depreciation is not allowed for assets under construction in most countries. You reflect this
limitation by choosing a depreciation key that does not allow ordinary depreciation in the book
depreciation area. To ensure that this depreciation key is protected during master data maintenance,
select the asset class as the maintenance level for the book depreciation area (see
Screen Layout and Maintenance Level).For certain assets under construction, special tax depreciation is
allowed. In this case you also enter corresponding keys in the asset class, to be used as mandatory
For posting down payments, allow the posting of the transaction type group "Down payments"
(transaction type groups 15 and 16) in these asset classes. In addition, enter the necessary general
ledger account in the account allocation. Also set the indicator for negative APC in the depreciation areas
of the assets under construction. This allows subsequent credit memos on already capitalized assets.
Control Information for Assets under Construction
Line Item Management
If you make large capital investments in your own in-house produced assets, you can manage assets
under construction with open items, and settle the assets under construction per line item to different
receivers. The system activates this line item management when you create the asset, if the indicator for
it is set in the asset class to which the asset belongs. This indicator also determines that the transaction
type for down payments is automatically allowed in these classes.
You can define profiles for the line item settlement of assets in FI-AA Customizing. The profiles determine
the receivers to which you are allowed to settle. In order to settle an asset under construction, an
appropriate settlement profile must be entered in FI-AA Customizing per asset company code (Specify
The transaction for the line item settlement of assets under construction enables you to select line items
for allocation to a distribution rule group for each asset. You define display variants for these transactions
in FI-AA Customizing (List versions). Using these variants, you can control which information (document
number, posting text, and so on) is displayed when you call up line items. There are also interfaces to
additional functions of Asset Accounting (such as, master record display, asset values).