Key Concept
The Investment Management module is closely linked to FI/CO modules and provides management of large scale capital investments. This module provides simultaneous cost accounting and asset accounting sides of capital investment. The investments are managed in the form of overhead cost (Work Breakdown Structure) and links to an AUC. These WBS are the primary CO Objects which can be settled on a periodic basis to AUCs. The WBS element with its AUC can be termed as Investment Measure.
In simple terms, AUC is created to accumulate all the cost that belongs to an asset during the construction phase. The cost is accumulated to a WBS and can then be transferred to an AUC.
Asset under Construction does not have any Depreciation as these are considered as partial assets and hence are not capitalized. After the desired cost or value is transferred from the WBS to AUC, the value residing in the AUC can be transferred to a Fixed Asset which can then be capitalized.
Setup Process
Create Investment Measure Asset Class
The stepping stone for the process is creating an Investment Measure Asset Class. When we say we are creating an Investment Measure Asset Class it means that Assets for this class cannot be created manually/directly using AS01, ABZON or with any other transaction, assets for this class can only be created automatically with WBS of type AUC.
Figure 1: Asset Class Configuration
Account determination of asset class
GL Accounts will be assigned to the investment measure asset class. Please note that only Balance Sheets accounts will be defined for an Investment Measure Class but there would be no Deprecation Accounts, as this class will not have any depreciation.
Figure 2: Balance Sheet Accounts
Figure 3: Depreciation Accounts
Define Depreciation for AUC Class
AUC Asset Class do not depreciate and to make this happen we need to create a Depreciation Key which will charge zero depreciation and assign this key to the various Depreciation Areas in the Asset Class. Also, the layout for this asset class should be different from the layout for a normal asset class. SAP has a predefined layout for AUC Classes.
The AUC Asset Class will have zero depreciation which allows the cost to be collected and posted to a GL account, recognized as capital expenditures and can be capitalized at the desired time.
Figure 4: Setting Depreciation Key
Create Investment Profile - OITA
Another major step is creation of an Investment Profile. This is the component which controls the creation of assets under construction for Investment Measure. The Investment Measure Asset Class created will be assigned to this Investment Profile.
Figure 5: Investment Profile Setting
Create Allocation structure - OKO6
Allocation structure decides which Settlement Cost Element would be the Receiver when the cost is settled to an AUC in other words to which cost element and the corresponding GL account the cost from the AUC WBS will be transferred (More details will be given later in the Settlement Process). Two major components in the allocation structure are defined to handle this process; Source and Settlement Cost Element.
- A Source can be a range of Cost elements or a Cost element group.
Figure 6: Defining Source
- A Settlement Cost element is defined for the Cost element group defined above in Figure 6. In case if the sender of the cost (Cost Element) lies in the Cost element group defined above then the receiver of that cost will be Settlement cost element 79330000 defined below.
Figure 7: Settlement Cost Element
Create Source Structure - OKEU
- A Source can have several source assignments like Capital, Expenses, etc and each of which can have a range of Cost elements or a Cost Center group which are settled using the distribution rules.
- For instance if there are more than one type of cost then we need to have a Source Structure defined.
- If there is a need to generate more than one AUC for a WBS then we have to check the box ‘AUC per source structure’ in (Figure 5).
Figure 8: Source Structure
Figure 9: Cost Element Group Defined for an Assignment
Create Settlement Profile and Assign the Allocation structure - OKO7
Settlement Profile is mainly used to define distribution rules (details will come later in the settlement process) which indeed can be used to determine the Receiver Asset (This would be a Fixed Asset to which Final settlement from AUC to Fixed Asset will take place) and the amount or percentage to be settled to that receiver.
Figure 10: Settlement Profile Configuration
Create Project Profile and Assign Investment Profile and Settlement Profile - OPSA
The linkage between the WBS and the Investment Measure Class is created here; Investment Profile created in Figure5 is assigned to the Project Profile. The Investment Measure Assets Class which is assigned to the investment Profile links to the WBS with this assignment.
Figure 11: Project Profile Configuration
Create Pojects and WBS elements of type AUC with the Project Profile
The WBS is created with the Project Profile created above. When checked in the WBS master table PRPS the Investment Profile will be updated as the one created and the type of the WBS would be AC.
When this WBS is released i.e. the status of the WBS changes to RELthen automatically an AUC is created (which belongs to the investment measure asset class as seen in Figure 14below) linked to this WBS. This linkage can be seen in the Asset Master of this AUC in the Origin Tab, the WBS element will be defined.
Figure 12: Creating Project
Figure 13: Creating Work Breakdown Structure
Figure 14: Asset Created After Releasing the AUC WBS
Postings on this WBS
Postings to this WBS will be done i.e. various costs will be booked to this CO Object. The document(s) will have one or more line items with this WBS of type AUC.
Figure 15: Posting to AUC WBS
Settlement Process
Maintain Settlement Rule - CJIC
The settlement rule is created for the WBS which will have fields like:
- Category: Would be FXA
- Fixed Asset Number
- Percentage of the value to be transferred to the Fixed Asset
Figure 16: Distribution Rule
Figure 17: Fixed Asset defined in the Distribution Rule
Automatic Settlement - CJ88
The automatic settlement through this transaction ensures that the value or cost sitting in the WBS will get transferred to the AUC and actual posting of the documents takes place.
Please note that the cost/value from WBS to AUC can be transferred till the WBS is closed.
Figure 18: CJ88 Screen for Automatic Settlement
4 Accounting documents/objects are created when the WBS is automatically settled. Please note that receiver would be the Settlement Cost Element defined in Figure 7.
Figure 19: Output Screen of the Settlement
Figure 20: Distribution Rules Applied
First document is an FI document which actually depicts how the cost is transferred from WBS to an AUC.
Figure 21: FI Posting Document After Settlement
- One of the line item would be a Debit to the recon account of AUC mentioned in the account determination of AUC asset class in Figure 1.
- The other line item will be a credit from the account which is derived based on the allocation structure of settlement cost elements for WBS with Investment Measure (Figure 6 and Figure 7).In the allocation structure different settlement cost elements are defined for a group/range of cost elements. Let me take an example to clarify this point. The GL account mentioned in the line item having AUC WBS when the initial postings are done (Figure 15)on the WBS will have a corresponding Cost element. Now this cost element will have a corresponding settlement cost element which is defined in the allocation structure (Figure 7). So now this settlement cost element will be picked and the GL account corresponding to this settlement cost element will form the account from which the credit of the value will take place.
- So, the document will have one debit line item to recon account of AUC and the other will be a credit line item from the GL account corresponding to the settlement cost element derived based on the allocation structure.
The second document is a Profit Centre document which will update the ledger balance corresponding to the profit centre for the AUC type WBS. The profit centre corresponding to the AUC type WBS can be seen from WBS master table PRPS.
Figure 22: Profit Center Document
The third object/document shows the asset transaction having the transaction type used by which the AUC’s value is updated. For instance TType 116 – Internal Settlement to AUC is used.
Figure 23: Asset Transaction Document
The last document is a controlling document which demonstrates the primary cost posting for the controlling object, which is AUC type WBS in this case.
Figure 24: Controlling Document
Full Settlement - CJIC
After the AUC has the desired value or completed we can transfer the value/cost to a Fixed Asset with what is called Full Settlement. After this is executed the value/cost sitting in AUC will be transferred to the Fixed asset based on the Settlement Rule created above (Figure 16)in CJIC.
Figure 25: CJ88 Screen for Full Settlement
3 Accounting Documents/Objects are created in Full Settlement.
Figure 26: Output Screen After Full Settlement
Figure 27: Distribution Rules Applied
First document is an FI document which depicts how the value is transferred from AUC to a Fixed Asset.
Figure 28: FI Posting for Full Settlement
- One of the line item would be a Debit to the recon account of Fixed Asset mentioned in the account determination of the Fixed Asset (Figure17).
- The other line item would be a credit from the recon account of AUC mentioned in the account determination of the AUC Asset Class.
The second document/object shows 2 asset transactions which will have the transaction type used by which the AUC’s value is transferred to Fixed Asset. For instance TType 336 – Amount is credited from the AUC and TType 339 - Amount is debited to the fixed asset.
Figure 29: Amount Credited From AUC
Figure 30: Amount Debited To Fixed Asset
The last document is a controlling document which demonstrates the primary cost posting for the controlling object, which is the Default Cost Center in the Asset Master of the Fixed Asset as shown in Figure 32.
Figure 31: Controlling Document
Figure 32: Default Cost Center of Fixed Asset
Conclusion
Now after all the cost is transferred to Fixed Asset then the depreciation can be charged according to the Depreciation Key defined for the Fixed Asset.
Below is the Flowchart for End to End process so as to recap what was explained in the paper.
Figure 33: Flowchart of End to End Process