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Asset Under Construction

Assets under construction (AUC) are tangible assets that are still in progress. They require separate accounting from completed assets. Costs incurred for capital projects are collected in internal orders and periodically settled to AUC. When complete, the AUC is settled to the final asset based on a defined settlement rule. Key steps include creating internal orders to collect costs, posting expenses to the orders, settling amounts from orders to the AUC, and finally settling the AUC to the completed main asset.

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Sandhya Abhishek
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580 views

Asset Under Construction

Assets under construction (AUC) are tangible assets that are still in progress. They require separate accounting from completed assets. Costs incurred for capital projects are collected in internal orders and periodically settled to AUC. When complete, the AUC is settled to the final asset based on a defined settlement rule. Key steps include creating internal orders to collect costs, posting expenses to the orders, settling amounts from orders to the AUC, and finally settling the AUC to the completed main asset.

Uploaded by

Sandhya Abhishek
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Asset Under construction

Purpose
Assets under construction are a special form of tangible assets. They are usually
displayed as a separate balance sheet item and need a separate account
determination. WIP Assets (AUC) are also managed in the system as individual
master records, just like completed assets.
On completion of the project, WIP Assets are settled to one or multiple assets based
on the distribution rule defined.
The costs incurred for the Capital Projects are collected in the Order type and are
settled to Asset under Construction (WIP Asset) through periodic process. On
completion of the Capital Project, the AUC is settled to Final Asset.

Prerequisite
1. Internal Order of type Z100 to collect the costs incurred for the respective
project is created.
2. The Order status should be set to Released , to allow postings to the
Internal Order.
3. Asset Masters are created for WIP Asset and Final asset settlement on
completion.
4. Settlement Rule defined in the order for settlement of Order to corresponding
AUC.
1) Maintain Settlement Structure

Menu path
T Code

SPRO >> Controlling >>Internal Orders>>Planning>>Maintain


Settlement >>Maintain Settlement Structure
OKOA

2) Define/Assign Settlement structure

Menu path
T Code

SPRO >> Financial Accounting>>Asset Accounting


>>Transactions>>Capitalization of Assets under
construction>>Define/Assign Settlement structure
OKO7 or OKOA

Process Steps

1. Accounting for costs incurred for the Capital Project. The cost is accounted
either by creating Vendor Invoice directly in FI or through Purchase Order
processing in MM.
(In this process document Capital expenses incurred for the projects are
accounted through FI T-code FB60 or FB50.)
2. Settlement of Order to AUC
3. Settlement of AUC to Final Asset

Asset under Construction Configuration Steps with Line


Item Settlement
1. Define the AuC Asset Class (with Line Item
Settlement)

Menu path
T Code

IMG >> Financial Accounting >> Asset Accounting


>>Organizational
Structures >> Asset Classes >> Define Asset class

OAOA

2. Define the Asset Class for Main Asset

Menu path
T Code

IMG >> Financial Accounting >> Asset Accounting


>>Organizational
Structures >> Asset Classes >> Define Asset class

OAOA

3. Define Order Type (Overhead)

Menu path
T Code

SPRO >> Controlling >>Internal Orders>>Order Master


Data>>Define Order types
KOT2

4. Create an AuC-Asset (using Step-1 Asset Class) (TCode AS01)

5. Create an Internal Order (T-Code KO01)

In the Change internal order: Master data screen, Click on

Click on

to release the order and allow posting.

6. Assign the AuC Asset in Settlement Rule in Internal


Order (T-Code KO02)

7. Post the amounts to Internal Order (T-Code FB01 Or


FB50 or FB60)
The expenses incurred for the Capital Project are posted through FI T-code FB60.
Assignment to CO object - Internal order, ensures flow of cost to Internal Orders.

8. Settle the amounts to AuC from IO (T-Code KO88)

9. Create Main Asset (using Step-2 Asset Class) (T-Code


AS01)

10. Settlement AuC Line Item List (T-Code AIAB)

11.

Settlement AuC - Receiver (T-Code AIBU)

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