Gu - Sap s4 Hana - Procurement of Assets Under Construction

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PROCUREMENT OF ASSETS UNDER CONSTRUCTION
Assets under Construction are a special form of tangible assets. They are usually displayed as
a separate balance sheet item, requiring separate account determination, and their own asset
classes. During the construction phase of an asset, all actual postings are assigned to the AuC.
Once the asset is complete, a transfer is made to the final fixed asset.
As per business requirement we must create Internal Order to trace all the capital
expenditure for the new Assets. The expenses should be booked and accumulate in assets
under construction till the completion of the building. Once the building completes all the
expenses should be transferred to Fixed Assets.
ASSET UNDER CONSTRUCTION LINKED WITH
INTERNAL ORDER PROCESS HIGH LEVEL STEPS –
 Step 1- Respective user will create the internal order in SAP System.
 Step 2- Assignment of Budget to the internal order and after assignment approval
from the respective approver. –
 Step 3- Creation of Asset under Construction Master Data by the specific user. –
 Step 4- After creation of Assets Master record in SAP system the concerned user will
create the Purchase Order in SAP system.
 Step 5- Release the Purchase order in SAP as per authorization matrix.
 Step 6- Goods receipt is also taken care the concerned department after the delivery
is made in SAP system.
 Step 7- After the MIGO, Invoice receipt is also taken care by the Finance
department. The depreciation will not run against the AUC.
 Step 8- Post the Payment to the Vendor.
 Step 9-Fixed Assets Creation as per actual asset class.
 Step 10-Settlement of Asset Under Construction into Fixed Assets.
 To check the balance against the budgeted amount and posting for actual assets
the reports also explained after the process details.
Step 1- Creation of Internal Order – KO01 / Manage Internal Orders
This app allows users to manage internal order master data quickly and accurately. Users can
define filter criteria and layout to search for and review detailed internal order master data.
Users can also navigate to other apps to create, copy, edit, or display internal order master
data.
Create Internal Order Master data with required order type & other specifications.
Enter the correspond order type & press the enter –
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Enter the Description, company code, plant select object class as “Investment”, Profit center
& responsible user, after confirm your entries press the control data.

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Set the system status Release”REL” & check the radio button of Statistical Order press save
button.

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Step 2- Budget Assignment to the Internal Order – KO22 / Edit Original Budget - Internal
Orders
The budget is the approved cost structure for an internal order or an order group.
In contrast to planning, budget management is binding. In the planning phase you need to
estimate costs, whereas during the approval phase , funds are prescribed by the budget.
Key Features
The following different budget types exist:
 Original Budget
This is the budget originally assigned, before any updates were made.
 Budget Updates
Unforeseen events, additional requirements, for example, price rises for external
activities, and so on. This may mean you need to update the original budget, in the
form of:
 Supplements

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 Returns
 Current Budget
This is derived from the budget types already mentioned:
Original
budget
+ Supplements
- Returns
= Current
budget
Assigned the Budget to internal order to make sure the expenses cannot cross the limit which
approves by the department head.
Enter the correspond order & press the enter –

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Select the views as “Object Currency” & enter the budgeted amount in Overall Budget as
well as current year to assign the budget amount to Internal Order.
After confirm your entries press the save button and note the Document number.
Step 3- Create the Asset under Construction by the Specific User – AS01 / Create Asset
Create the Asset under Construction to make sure all the postings of capital expenditure
booked under this AUC till the building completion. After completion of the building the
amount will be transferred to respective Fixed Assets.

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Enter the Asset Class “###”, company code “####” and number of similar assets “1”.

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Enter the specific description for Asset under Construction to post the entire capital
expenditure under this asset. Click on the “Time-Dependent” Tab to enter the cost center –

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Enter the Correspondence cost center and press the save button.
Step 4- Create the Purchase Order with respect to Asset under Construction by the user
– ME21N / Manage Purchase Orders
With this app you can manage purchase orders to ensure that you get the ordered items on
time, at the correct location, and in the required quantity. You can manually order materials
for direct consumption as well as services. The list of purchase orders that is displayed is

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based on the header level of the purchase order (PO), so the information shown relates to the
entire PO. On the overview, you can immediately see the number of overdue items for each
PO. Depending on the status of the PO, you can still make changes such as adding or deleting
items, or changing the purchase order quantity. Standard POs and the item
category standard are supported.
This app is available for the role Purchaser.

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Create the Purchase order with respect to Asset under Construction using the internal order
(Department Specific) to procure the CAPEX item.

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Choose “A” as account assignment category; enter the Vendor, Purchasing Group, Purchasing
Organization, Company Code, Assets number (AUC), Internal Order, Plant, Requirement
number & Net. Price
After confirm your entries press the save button.
Purchase order number should be displayed after save button.
Step 5- Release the Purchase Order from the respective approvers – ME29N / My Inbox

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With the transactional app My Inbox, you can make important decisions via mobile or
desktop devices anywhere and anytime. Using this app, you can process your standard and
custom workflow tasks based on the decision options defined in the back-end system.
Release the Purchase order from the respective approvers for AUC with the relevant internal
order (Department Specific) to procure the CAPEX item.
Press the release button from the authentic approvers.
After release Press the save button.

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Step 6- Post the Goods Receipts against the purchase order for AUC – MIGO / Post
Goods Receipt for Purchasing Document
With this app you can post the receipt of goods with reference to the purchase order with
which you ordered the goods. If a material is delivered for a purchase order, it is important for
all of the departments involved that the goods receipt entry in the system references this
purchase order.
Post the Goods Receipts in SAP system against the purchase order for AUC with the relevant
internal order (Department Specific) to receive the goods for CAPEX.
Go to THE TILE Post Goods Receipt for Purchasing Document, enter the relevant purchase
order for AUC, Delivery Note number & press enter.

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Click the item okay check button and post the goods receipts.
Please note the document number after save the Goods Receipts.
Step 7- Post the Invoice Receipts against the purchase order for AUC – MIRO / Create
Supplier Invoices
Post the Invoice Receipts in SAP system against the purchase order for AUC with the relevant
internal order (Department Specific) to verify & enter the vendor Invoice for CAPEX.
Go to the tile Create Supplier Invoices

enter the relevant entries and press enter.

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After confirm your entries press Post button.

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Step 8- Post the Payment against the Invoice sent by the vendor – F-53 / Post Outgoing
Payments
With this app you can post and clear a single outgoing payment in one step. You usually
perform outgoing payments automatically based on payment proposals. However, if you want
to perform a payment immediately, you need to enter the payment data manually and trigger a
search for the matching open items. You can also post an outgoing payment on account.
Post the Payment against the Invoice Receipts from the vendor.

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Go to the tile Post Outgoing Payments

enter the relevant entries and press enter.

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After enter the mandatory fields press “Clear”.

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Press the post button.

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Step 9- Create the Asset Master record As per actual Assets class with specific details
– AS01 / Create Asset
Create the Assets Master record as per actual Assets class for which capitalization has to be
done.
Go to the tile Create Asset enter the relevant entries and press enter.

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Enter the Description for the Asset after enter the description select “Time-Dependent” Tab.

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After Enter the cost-center press the Save button & note the Assets Master Number.

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Step 10- Settlement the Asset under Construction into Fixed Assets to capitalize &
activate the depreciation on the particular Assets. – AIAB / Define Distribution Rules -
For AuC
An asset that you produce yourself has two stages in its life that are relevant for accounting
from the point of view of your company:
 Under construction phase

 Useful life
Generally, an asset has to be shown in different balance sheet items, depending on the phase
that it is in. Therefore, it is necessary to manage the asset as a separate object or asset master
record during the construction phase. The transition between these two phases is called
"capitalization of the asset under construction" in the following.
Key Features
During the under construction phase, assets can be managed in a normal asset master record
or in an asset master record with line item management, depending on the scope of functions
you need. As a result, the transfer from the asset under construction to completed fixed assets
can be handled in one of two ways:

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 Summary transfer from a normal asset master record to the receiver assets (transaction
type 348/349)
 As an asset master record with line item management, which you settle by line item to
the receivers
Recommendation
For extensive investment measures, we recommend using the Investment Management

(IM) component. Using the IM component, you can manage a capital investment in parallel:
for financial accounting purposes as an asset under construction, and for controlling purposes
as an internal order or project.
For more information, see the documentation for the Investment Management component.
Assets under Construction Without Line Item Management
The procedure corresponds to the procedure for the transfer between two assets within the
same company code (see Posting an Intracompany Asset Transfer (Splitting an Asset)).
Before carrying out a full transfer of an asset under construction, you have to reverse any
down payments that were posted in the current fiscal year. Down payments are ignored for a
partial transfer.
For transfers to be displayed in the asset history sheet as acquisitions to fixed assets, you use
special transaction types for the transfer of assets under construction.
Example

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Transfer of Asset under Construction to Capitalized Asset
Assets under Construction with Line Item Management
In Asset Accounting, you can accumulate costs under purely technical aspects in an asset
under construction. You do not need to consider the later creation of fixed assets at this point.
During the construction phase, you can accumulate all acquisitions for an investment in a
single asset. These acquisitions include
 External activity (acquisition from vendor)

 Internal activity (internal order)
 Stock material (withdrawal from warehouse)
When using this "collective management" of assets under construction, it is possible to

manage the individual acquisitions as open items over the course of several fiscal years. At
completion, the line items must be cleared and then distributed to the various receivers. The
system activates open item management when an asset under construction is created, if you
set the corresponding indicator in the asset class. In addition, for open item settlement, you
have to assign a settlement profile to the company codes involved (in Customizing for Asset
Accounting under Transactions Capitalization of Assets under
Construction Define/Assign Settlement Profiles). The main function of the settlement
profile is to specify the allowed receivers (such as, assets or cost centers).
Example

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For an example, see Graphic: Line Item Settlement
Distribution Rules
Line item settlement is carried out by using distribution rules. Distribution rules are asset-
specific. Several distribution rules form a distribution rule group. You can assign these groups
to one or more line items of an asset. Distribution rules consist of a distribution key and a
receiver. The distribution key can be equivalence numbers or percentage rates. In this way,
you can distribute any number of combinations of line items to any number of combinations
of receivers.
Example
Distribution rule group with percentage distribution
Distribution Receiver
proportion (Asset)
10% 10531 -1000
20% 10531 -2000
40% 10533 -0000
30% 10533 -1000
Distribution rule group with equivalence numbers
1:2:4:3
Distribution by ledger group
You have to set up the distribution of line items as specific to ledger groups, since the system
writes one line item for each ledger group.
Note

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It is only possible to maintain distribution rules in the view without the depreciation areas,
because it is only possible to enter the distribution rule also for each ledger group.
If in transaction Settlement of Asset Under Construction (AIAB) you want to display

additional depreciation areas in the line item list, choose the Show/Hide Depreciation
Areas pushbutton.
Receiver
You must settle those parts of the asset under construction that require capitalization to
capitalized assets. Those parts that do not require capitalization (expense) can be settled as
adjustment postings to cost centers. You can specify a cost element in the account
determination in Asset Accounting for this settlement to cost centers. However, you should be
aware that you can only settle acquisitions from the current fiscal year to CO receivers. This
restriction applies since acquisitions from previous fiscal years should not have an effect on
expenses of later fiscal years.
In addition, it is possible to settle to general ledger accounts. However, these G/L

accounts cannot be defined with additional account assignment to a CO object. Therefore,
you should first settle to clearing accounts, if necessary, and then transfer the values to the
corresponding accounts in Financial Accounting.
Investment Support
Just as it does for completed assets, the system calculates depreciation and interest for the
asset under construction. This calculation is based on the depreciation terms specified in the
asset master record or in the asset class. It is also possible to manage investment support on
the asset under construction. However, it is not possible to transfer investment support that
was posted to the asset under construction in the year of capitalization. The investment
support cannot be transferred to a completed asset, because you cannot tell if the investment
support applies to acquisitions in the current fiscal year or earlier fiscal years. Therefore, you
have to reverse the investment support manually before the settlement. After the settlement,
you post it to the completed asset.
Carrying Out Settlement

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You can set up the settlement rules at a given point in time, and then carry out the
corresponding update of the line items at a later point in time, since a separate transaction
exists for the actual settlement (transaction AIBU). This transaction triggers the settlement
posting for the selected assets under construction, and creates the necessary posting
documents.
During this process, the system automatically separates the transfer of asset acquisitions from
prior fiscal years from acquisitions that took place in the year of capitalization. When the
prior-year acquisitions are transferred, (special) depreciation and investment support measures
are also transferred proportionally. The system automatically generates carryforward postings
for partial capitalization.
The standard report List of Origins of Asset Charges (RAHERK01) enables you to trace the
origin of the items in the capitalized asset back to the original asset under construction.
Transfer the amount to the Actual Fixed Asset to capitalize the Asset & start the depreciation
on the actual Asset.
Go to the TILE Define Distribution Rules - For AuC enter the company code, AUC, sub
number and press execute button.

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Select the Line item and press the Enter Push Button

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Press the enter push button to settle the amount.

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Enter the Category ”FXA” Relevant Asset Master Number which has to be capitalized and
press Back button.

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Press the Settlement Push Button.

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Enter the Asset Value date (The date from which the Asset being capitalized and depreciation
will start.)
Press Enter.

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Press the Simulate button.

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Now press SAve
Actual Assets is Capitalized from the Asset Value Date.

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Asset Value can check through Asset Explorer.
G O T O MANAGE FIXED ASSETS

Tile enter the correspondence Assets Master number and press Refresh Asset –
The Actual Asset is capitalized from the Asset value date.

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PROCUREMENT OF ASSETS UNDER CONSTRUCTION

Step 1- Creation of Internal Order – KO01 / Manage Internal Orders

Enter the correspond order type & press the enter –

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The following different budget types exist:

This is the budget originally assigned, before any updates were made.

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This is derived from the budget types already mentioned:

Enter the correspond order & press the enter –

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Enter the Asset Class “###”, company code “####” and number of similar assets “1”.

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This app is available for the role Purchaser.

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After confirm your entries press the save button.

Purchase order number should be displayed after save button.

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Press the release button from the authentic approvers.

After release Press the save button.

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Go to the tile Create Supplier Invoices

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After confirm your entries press Post button.

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Go to the tile Post Outgoing Payments

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After enter the mandatory fields press “Clear”.

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Press the post button.

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 Under construction phase

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For extensive investment measures, we recommend using the Investment Management

For more information, see the documentation for the Investment Management component.

Assets under Construction Without Line Item Management

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Transfer of Asset under Construction to Capitalized Asset

Assets under Construction with Line Item Management