11/17/2017 Treatment of Assets under Construction in SAP - from creation to settlement - SapGurus
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Treatment of Assets under Construction in SAP –
from creation to settlement
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It is not always that xed 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 xed 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
1. They are built over time and settled to a Fixed Asset (s) or other settlement objects (Internal others, WBS, etc.) upon completion.
2. Mostly not depreciated during the AUC stage. This is true for most countries.
3. 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) Con guration 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 o setting 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) De ne screen layout rules for your AUC
To de ne screen layout rules, use the menu path:
IMG — Asset Accounting — Organizational Structures — Asset Classes – Create Screen Layout Rules
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c) De ne Number Range Interval, if you plan to assign a new number range to AUC.
To de ne number range interval for your AUC, use the menu path:
IMG — Asset Accounting — Organizational Structures — Asset Classes – De ne Number Range Interval
d) De ne asset class
To de ne asset class, use the menu path:
IMG — Asset Accounting — Organizational Structures — Asset Classes – De ne Asset Classes
Or use transaction OAOA
Copy or insert new entries.
Double click on your AUC asset class and do the necessary eld de nition.
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Account Determination. Enter the account determination key you de ned in 1 a) above.
Screen layout rule: Enter the Screen layout rule you de ned in 1 b) above.
Number Range: Enter the number range de ned 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.
Other options
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: “Speci es 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 elds, 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
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3) De ne and assign settlement pro le for the AUC and other related settings
a) De ne Transaction Types
Follow the menu path
IMG — Financial Accounting (New) — Asset Accounting – Transactions — Capitalization of Assets under Construction — De ne Transaction
Types
We will use the standard SAP Transaction types, they are more than su cient 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 o setting 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 o setting 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.
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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 speci cation of asset classes.
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Enter your asset class here.
c) De ne/Assign Settlement Pro les
Use the following con guration menu path to de ne and assign settlement pro les for the AUC
IMG — Financial Accounting (New) — Asset Accounting – Transactions — Capitalization of Assets under Construction — De ne/Assign
Settlement Pro les
Double click on de ne settlement pro le
Adopt/copy/de ne a new settlement pro le.
Double click on your settlement pro le and make the necessary settings.
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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 pro le de ne above to our company code.
Double click on assign settlement pro le 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
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Settlement of the asset under construction to completed xed 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
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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).
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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.
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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.
Register on “Jobs hub” page to access thousands of job openings of top companies around the globe,
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5 thoughts on “Treatment of Assets under Construction in SAP – from
creation to settlement”
1. Ebrima Sawaneh (http://businessingambia.com) says:
November 21, 2016 at 8:10 am (http://sapgurus.com/treatment-of-assets-under-construction-in-sap-from-creation-to-settlement/#comment-19)
Hi Mr. Fatty
I am really enjoying your blog on SAP. I have been a SAP user for about 7 years now and your blog is given me some insight into Con g.
I have used FICO, HCM,TRM,GRC.
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Keep it up.
Reply (http://sapgurus.com/treatment-of-assets-under-construction-in-sap-from-creation-to-settlement/?replytocom=19#respond)
1. admin_sg (http://www.sapgurus.com) says:
November 21, 2016 at 10:45 am (http://sapgurus.com/treatment-of-assets-under-construction-in-sap-from-creation-to-settlement/#comment-20)
Hi Mr. Sawaneh,
Many thanks for the comment and for your encouragement.
I am equally a keen follower of your writings on http://www.businessingambia.com/ (http://www.businessingambia.com/), and I
think you are doing a great job in helping young Gambians and Gambians in general in dealing with and managing their nances.
Best Regards,
Ebrima
Reply (http://sapgurus.com/treatment-of-assets-under-construction-in-sap-from-creation-to-settlement/?replytocom=20#respond)
2. Nica Chua says:
November 24, 2016 at 8:45 am (http://sapgurus.com/treatment-of-assets-under-construction-in-sap-from-creation-to-settlement/#comment-21)
Hello,
I really like your blog ’cause i learn a lot especially in con gurations since i am a sap co practitioner. i hope you will post more about
Controlling part of SAP.
Regarding “Treatment of Assets under Construction in SAP – from creation to settlement” i just want to ask if after Settlement AuC, will the
source asset be automatically deactivated?
Reply (http://sapgurus.com/treatment-of-assets-under-construction-in-sap-from-creation-to-settlement/?replytocom=21#respond)
1. admin_sg (http://www.sapgurus.com) says:
November 24, 2016 at 9:49 am (http://sapgurus.com/treatment-of-assets-under-construction-in-sap-from-creation-to-settlement/#comment-22)
Hello Nica,
First of all many thanks for your comment, really appreciated.
As for the deactivation of the AUC, standard SAP behavior is that the AUC is automatically deactivated after the settlement process is
completed. However, if for any reason you do not want the settled AUC to be deactivated, you can control this in con guration.
If you go back to the second screen shot of para 3 (a) of this particular post, you will see that the deactivate check box is by default
“checked”. All you have to do is to uncheck that to avoid the AUC from being deactivated. I produce the screen shot below:
Best Regards
Reply (http://sapgurus.com/treatment-of-assets-under-construction-in-sap-from-creation-to-settlement/?replytocom=22#respond)
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