Asset Capitalization Process in SAP is the way to record an asset in the fixed asset register in SAP S/4 HANA. We can capitalize on an asset externally and internally.
With the External method, we-purchase assets from the vendor. While, with the internal method, we capitalize expenditures as an asset.
We have several Asset capitalization processes in SAP. The method chosen will depend on some factors, not least the complexity of the organization.
You can use a simpler process for assets that the system brings in to use immediately. Such as computers or office equipment and While you can take a more complex process for long-term projects to construct buildings or factory plants that may continue over a while. It may be even years.
Most of the processes after capitalisation such as depreciation or retirement are not affected by the method of capitalisation used. Unless you have used the post-capitalisation process.
Let us see the types of Asset Capitalization Processes in SAP.
We start by going through some direct finance and purchasing acquisition transactions without using Investment Management.
You can post the Costs between an offsetting account and an asset without any integration to Accounts Payable (AP) or a vendor account at the time of the asset posting. We generally receive the vendor invoice at some point in time but post it independently of the asset posting.
Segregation of duties may require AP to post the invoice at an initial suspense account or an offsetting account. Further, the asset accounts may need to transfer the costs to the asset in a separate posting. Alternatively, there may be a requirement to capitalize the asset separately.
This is because it’s already in use. Even though we have not received the vendor invoice yet. Or the costs have been posted elsewhere and needed to be transferred back to the asset.
Transaction ABZON has fields allowing you to select accounting principles and depreciation areas independently if required.
The SAP Fiori equivalent is called Nonintegrated Asset Acquisition. In both transactions, you can either create the asset beforehand or during the transaction. After you have entered the dates and amount, the transaction will post automatically between the asset. Further, the normal offsetting account is set up in the configuration.
You can also override the offsetting account by entering an account of your choice on the “Additional Details” tab.
Before New Asset Accounting, only the leading ledger was updated in real-time. You needed to run Transaction ASKB (APC Value Posting) at the period-end to post to the other ledgers. However, with SAP S/4 HANA you no longer require this step as the system updates all the ledgers at the time of transaction.
If after you have capitalized the asset, the invoice arrives with a slightly different value. You may need to make a second adjustment posting.
This is when we receive and post an invoice directly to the asset (or the AUC) as well as the vendor at the same point in time.
This process may suites to companies that don’t have a formal PO process in place for Asset Accounting. And they want to record the costs against the asset at the time of posting the invoice.
When making a posting to a vendor, you must post to all ledgers at the same time. So in SAP S/4 HANA, a technical clearing account allows you to split out the postings and post independently to each ledger for the asset.
This allows you to post differently to each accounting principle. To maintain integrity, the system doesn’t allow you to post the technical clearing account manually.
Related: 3 Key Features of New Asset Accounting in S/4HANA
| Ledger Group | Vendor Invoice Posting | Asset Posting |
|---|---|---|
| All Ledgers | Debit Technical Clearing Account Credit Vendor | |
| IFRS | Debit Asset Credit Technical Clearing Account | |
| GAAP | Debit Asset Credit Technical Clearing Account |
Before posting the invoice, you need to create the asset or AUC master record. This is because you have to enter the asset or AUC number during the transaction. The transaction for this type of posting using the SAP GUI is Transaction F-90 (Acquisition from Purchase with Vendor). And SAP Fiori equivalent based on the same transaction is Acquisition without Order.
This is not the most user-friendly process. Because in both cases you have to manually enter posting keys and transaction types. Regardless of whether you are using SAP FIORI or not.
The normal vendor invoice Transaction FB60 is an FI only transaction. It does not allow you to enter an asset.
But technically you can still use any transaction you are more familiar with. These are the transactions that allow you to enter a vendor, posting keys and an asset transaction type.
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This process may start with a purchase requisition (pr) or with a PO. Here the system creates the asset master data at or near the start of the process. Then when we receive the asset, we can either capitalize it at the time of posting the G/R or at the time of invoice posting, depending on the settings.
The asset or AUC master is created first. Then while entering the PR or the PO using account assignment category A-Asset, You need to enter the asset number in the Asset Field in item details.
If you select a valuated GR in the vendor master data or PO settings, then the system posts the asset at the point of GR.
Sometimes, the invoice has a slightly different amount from the original PO. Therefore the GR amount is different from the invoice. In that case, the system will automatically make an adjustment posting of the difference to the asset when the invoice is posted.
In some countries, even if we receive the asset, we still cant capitalize the asset until we receive the invoice.
As per the following diagram, you choose a non-valuated GR setting in the PO. Here, no value is posted at the point of GR. This also means that the asset will only be capitalized at invoice receipt.
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You can create one or more AuC and the related settlement rules automatically at the time of releasing the order or WBS elements. Although you can choose to create them manually as well.
You can post directly to the order or WBS elements by journaling costs there from another account. This is a non-integrated posting as there is no vendor involved.
You can also post a vendor invoice directly to an investment measure such as a WBS element or investment. This is an integrated posting. So, you can use the technical clearing account to allow separate documents for the asset postings to the different ledgers.
In both cases, you can’t use the availability control to prevent costs from going over budget. This is because the system updates the investment order or WBS element only after incurring the costs.
Periodically, the system settles the costs first to the AUC and then to the asset when its brought into use. Technically you can also settle directly from an investment order or WBS element. But if you want to settle directly for the asset anyway.
As and when the cost is incurred, we need to record the cost with the cost object. For e.g. Internal Order/WBS element. We need to capitalize that expenditure on assets under construction.
In SAP S4 HANA, when you settle on the final asset, you can create a different settlement rule for each ledger group. Line item distribution rule (Transaction AIAB, Distribute ) is where you select the items that you want to settle. This is because you may have collected several different costs for many assets.
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Well, it depends on the circumstances. As mentioned above the types of Asset capitalization process in SAP. These are the scenarios based on which we decide the right process to capitalize the assets.
In SAP S/4HANA Finance implementation, we may need this activity. This is only possible when you have a good knowledge of Asset Accounting in SAP S/4HANA and its workflow. The SAP HANA Finance consultants are responsible to do the asset capitalization process in SAP S4 HANA. So getting its knowledge is of utmost importance. I hope you get my point here. So do learn well this concept for a good knowledge of S/4HANA Finance sub-topics.
Visist Course Page: SAP S4 HANA Finance Training
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