Capital Investment Orders
Purpose: This document explains the process involved in using Internal Orders for Asset capitalization, flow of values to internal orders, period end activities which includes AUC settlement process and final settlement of AUC to a completed asset.
Overview: In the current scenario, the Internal Order will be considered as an Investment Order that has capability of capturing all costs related to AUC. These costs can be posted through any expense account through several sources such as vendor invoices and any manual expense postings. All these captured costs can be settled to AUC associated to the Investment Order during month end activities. After the month end settlement to AUC, Investment Order will still be able to capture the costs across multiple periods. Once the purpose of the Investment Order is complete, it can be settled to one or multiple completed assets. In addition to that, the costs in this Order can be settled to Cost Centers, G/L account etc as well; however it is not in scope of the current document. Steps Involved in Process:
1. Create Investment Order Transaction Code: KO01 or KO04 Menu Path: SAP Menu -> Accounting -> Controlling -> Internal Order -> Master Data -> Order Manager/Special functions -> Order -> Create This transaction is used to create the Investment Order and only order type “0650 – Capital Investment Order” should be used to create the order. It is important to use Order type “0650” as this has the maintained for Investment Orders and has capability to create AUC automatically from releasing the Internal Order.
Reference order can be entered to transfer the master data from existing order. In assignments tab, values has to be entered for company code, plant, functional area, object class will be defaulted to “Investment” (do not change) and profit center. Under control tab, system status will be defaulted to CRTD and currency will be defaulted to USD. Under investments tab, it is important to maintain the investment profile as “000003”. If investment profile is not maintained, AUC master data will be created upon releasing the investment order. In addition maintain investment reason as well. Once these master data parameter were maintained, under edit, select release to release the order. Now you can see that status of order has changed to “REL AUC” under control tab and save the order. Order can also be saved without releasing. This would be helpful if the sujity
order has been created for future purpose and can be released before posting costs to the Investment Order. Once the Order is released and saved, AUC master data can be seen or modified through I/O master data by selecting “Asset under Construction” under Extras.
2. Posting to Investment Order Once the Order is released it has the capability to capture costs through any expense account. The investment order number has to be entered as cost object in the line item of corresponding expense posting. Make sure that the Order is released before posting. For example: Vendor invoice posting to an expense account can be captured by the Investment Order. TCode: FB60 – Post Vendor Invoice Make sure to maintain the Investment Order in the line item to receive the cost.
Similarly, capital expense can be posted to Order through regular PO based purchasing process.
3. Order Information System T-Code: KOB1
Menu Path: SAP Menu -> Accounting -> Controlling -> Internal Orders -> Information System -> Reports for Internal Orders -> Line items -> Orders: Actual Line Items This report would give the actual line items that were posted to Internal Order and would facilitate to drill down to the actual document. There are reports that would facilitate Order plan and actual comparison and would be useful when planning and budgeting functionality is brought in to these investment orders.
4. Settlement to Asset under Construction T-Code: KO8G – Collective Processing Menu Path: SAP Menu -> Accounting -> Controlling -> Internal Orders -> Period end closing -> Single functions -> Settlement -> Collective processing Settlement run is a period end activity performed on all the open orders to allocate costs from the Investment Orders to AUC. A variant should be maintained with order type 0650 and other required parameters.
On screen parameters include settlement and posting period, fiscal year and processing type. Processing type “Automatic” can be used for performing period end settlement activities. After executing the settlement run, balance costs in Internal Order will be allocated to AUC using the source cost element (cost element responsible for the expense posting in the Investment Order), unlike current projects are settled to AUC using unique cost element. This provides a better reporting with Asset under Construction as the source costs are visible. Execute the transaction in background and if necessary can run the transaction in test mode to check for errors.
After settlement you can run the actual order line item report and the balance would net down to zero by posting to AUC. After settlement, the order status would change to “REL AUC SETC”.
5. Create completed Asset
A fixed asset can be created from the Internal Order master data. Under extras – “Create Completed Asset” will take to asset creation screen.
6. Settle AUC to completed Asset and complete Order Before executing the final settlement, settlement rule has to be updated in the Order, though there are couple of ways in doing that, assuming that we settle all the order costs to one fixed asset, settlement rule can be updated directly in the order master data. T-Code: KO02 – Change Order Menu Path: SAP Menu -> Accounting -> Controlling -> Internal Orders-> Master data -> Order manager/ Special functions -> Order -> Change
Click on the Settlement rule tab located on the top and select the category as “FXA”fixed asset and mention the settlement receiver (fixed asset created in the earlier section) that would capitalize from AUC upon final settlement. Settlement can be made by percentage to different receivers i.e. to two or multiple assets.
Once the Order is updated with the settlement rule, select “technically complete” under the “Edit” option on the top. This would restrict further processing of the order T-Code: KO88 – Individual Order Settlement Menu Path: SAP Menu -> Accounting -> Controlling -> Internal Order -> Period End Closing -> Single Functions -> Settlement -> Individual Processing Maintain the Order, settlement period, posting period and fiscal year. Select “full settlement” as processing type and execute the transaction. This would credit the Asset under Construction and capitalizes all the costs to a fixed asset specified in the settlement rule. If necessary, you can always run this transaction in “test mode” and check if there are any errors.