INDEX

Description S.No
1 2 3 4 5 Assets under Construction- Overview Create CWIP asset Create Internal Order Settlement of Cost in Internal Order Capitalization of Asset under Const.

Page No.
2 3 4 12 23

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Assets under construction

1. Assets under Construction

Assets under construction are displayed as a separate balance sheet item and therefore managed as a separate asset class. You can manage assets under construction in the system as individual master records, just as you do completed assets. Ordinary depreciation is not allowed for assets under construction. Hence while creating an asset under Asset under construction, we choose a depreciation key that does not allow ordinary depreciation in the book depreciation area (Dep Key: 0000) In HOPFL, the process for asset under construction would be as follows: The concerned person in FI dept will create an asset code under CWIP (asset class). The direct acquisition cost would be booked under this CWIP asset code. - An Internal order would be created in CO Module for the assets being constructed. All the cost incurred will be accumulated in the internal order. Separate internal orders should be created for different CWIP assets for better control and monitoring. Now on different intervals (as agreed may be weekly, monthly or quarterly) this accumulated cost in internal order will be settled to Capital Work in Progress (CWIP) created. - All the cost including material, transportation, consultancy charges, commissioning expenses, etc will be booked in the internal order. The internal order will thus contain the line item wise details of the costs incurred for the preparation or construction of asset. - A new asset code for the final asset will also be created under the respective asset class. In case CWIP is to be converted to a fixed asset, a settlement will be done by the concerned person in the accounts dept. when the asset is put to use. The depreciation on this asset will start from the date of capitalization of this asset.
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2. Create an asset code under CWIP asset class( T- Code AS01) The process for creation of asset is the same as explained in the Asset Master Data file. File Attached for ready reference.

FI- Asset Master Data.doc

Be careful to select the relevant asset class of CWIP.

Select the relevant asset class of CWIP using F4 help.

For example, we create asset code 31000003 under asset class CWIP machinery. Use Transaction Code F-90 (External acquisition- Vendor) to post direct acquisition cost of the asset to this asset code. (Doc No. 190000112 amt 6000 GBP posted)

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3. Creation of Internal Order for CWIP asset Access transaction by: Via Menu: AccountingControllingInternal OrdersMaster Data Special Functions OrderCreate Via Transaction Code: KO01

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First Screen In the first screen, select the order type from F4 drop down menu. For assets we should always select ZAST as order type.

Select ZAST as order type for assets

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Next Screen: Select the controlling area from Environment Set Co area

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Next Screen: Enter the Controlling Area. The Controlling area ID is the same as that of Co. Code Id. Press Enter.

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Next Screen: We are at the Assignments tab now:

Enter the fields as explained in the table below:

Input Mandatory Fields Order Description Company Code Business Area Object Class Field Value / Comments Nothing can be entered here. The order number would be generated internally by the system Enter the description of Order being created Enter the Co. Code. Enter the Business area of the internal order being created. Select Object class from the drop down. By default Overhead is being selected. This should not be changed in our case and we should always select Overhead.

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Next Screen: Control Data Tab In this tab click on the Release icon to release the order for postings

Click on this icon to release the order

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Next Screen The message appears at the bottom of the screen that the order has been released. Unless the order is released, no entries can be posted to this internal order.

Message that the order is released

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Now press the save icon

to save the order.

The message that the order is created with number (700061) is displayed at the bottom of the screen.

Message that the order is created.

Note: The costs related to this particular CWIP asset e.g. consultancy, freight, installation etc should be posted using this internal order as CO assignment object as and when the cost is incurred.

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4. Settlement of Cost in Internal Order to CWIP asset code We will settle the costs incurred in the Internal order (our e.g. Order no. 700061) to the CWIP asset code (our e.g. asset code 31000003) First, we will create the settlement rule in the Internal Order on the basis of which cost will be settled on the CWIP asset code. Step A: Creation of settlement rule in Internal Order Access transaction by: Via Menu: AccountingControllingInternal OrdersMaster Data Special Functions OrderChange Via Transaction Code: KO02

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Next Screen Enter the internal order no.

Enter the CWIP asset internal order number

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Next Screen Click on Settlement Rule tab here.

Click on this Settlement Rule tab

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Next Screen Enter Cat- FXA, Settlement Receiver 31000003-0 (CWIP asset code) and %-100. After entering the fields press enter and click on save icon.

Enter the CWIP asset code to which the cost needs to be settled

Enter the % of cost in internal order to be settled to the given CWIP asset code.

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Next Screen The settlement rule is entered in the order and the order is saved.

Message indicating changes have been saved

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Step B: Settlement of costs in Internal Order to CWIP asset code Access transaction by: Via Menu: AccountingControllingInternal OrdersPeriod End closing Single Functions SettlementIndividual Processing Via Transaction Code: KO88

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Next Screen Enter the Order no, settlement period, fiscal year and asset value date. First tick on test run and Execute.

Enter the order no. to be settled.

Execute in test run mode first

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Next Screen In case of no error the message appears Processing completed with no errors.

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Next Screen Now go back using the back arrow and execute the transaction in an update mode.

Press this icon to Execute.

Remove the tick in test run

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Next Screen The settlement is executed and the screen appears as shown below.

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Use transaction code aw01n and enter the CWIP asset code and see the asset value, the internal order cost is settled to CWIP asset.

Internal order cost settled to CWIP asset

Now, create a new asset code for the final asset under the final asset class. (In our e.g. we create asset code15000020 under Asset class Plant & Machinery)

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5. Capitalization of asset under construction First we need to enter the distribution rule for the CWIP asset. Access transaction by: Via Menu: AccountingFinancial Accounting Fixed AssetsPosting Capitalize asset u. Const. Distribute Via Transaction Code: AIAB

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Next Screen Enter the Co. Code & CWIP asset code for which the distribution rule needs to be entered and press Execute icon.

Press this Execute icon after entering the Co. Code and asset no.

Next Screen
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The cost lying in the CWIP asset is displayed. Select the line item and click on Enter icon at the top to enter the distribution rule

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Next Screen We select both the line item (since we want to settle the entire cost in CWIP asset to the final asset) and click on Enter icon at the top.

After selecting the line item click on this Enter icon

Next Screen

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Enter Cat- FXA, Settlement Receiver 15000020-0 (Final asset code) and %-100. After entering the fields press enter and use the back arrow to go back to the first screen.

After entering the fields as stated above use this arrow to go back

Next Screen

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We see that the status indicator turns green now indicating the distribution rule has been entered. Now click on save icon to save.

The message appears at the bottom of the screen distribution rules saved

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Message Distribution rules saved.

Final step: Settlement or Capitalization of CWIP asset Access transaction by:

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Via Menu: AccountingFinancial Accounting Fixed AssetsPosting Capitalize asset u. Const. Settle Via Transaction Code: AIBU

Next Screen Here, we enter the Company Code, CWIP asset number, document date, asset val. Date and posting date (all required fields). The Doc Type appears as AA by default. The same should not be changed.

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Any explanatory text and reference can also be entered. After entering the above fields press the Execute icon in Test run mode.

Enter the Co. Code, asset number, doc date, asset val date, posting date.

First we execute in Test run mode

Next Screen The results in Test run are displayed now. Now go back using the back arrow and Execute in update mode

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Next Screen Execute in an update mode.

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Press this icon to Execute.

Remove the tick in test run

Next Screen The asset is capitalized and a message appears at the bottom of the screen specifying the Doc. No.

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Message displaying the Doc. No.

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