Executing a Settlement

You can specify the following settings in the investment profile:

• Automatic creation of an asset under construction when the order or WBS element is released.

• Asset class to be used when the asset under construction is created.

• Asset class that supplies the depreciation terms for the depreciation simulation.

• If the default asset class can be changed when you create the order or WBS element.

• Asset under construction per source structure and source assignment.

  This function is not relevant unless you want to have an asset under construction for each source assignment in the source structure, rather than just one asset under construction overall. If you choose this method, the system debits a separate asset under construction for each cost element that belongs to the source assignment.

Actual costs on investment measures (WBS elements and internal orders) arise from the following:

• Postings in FI.

• Goods movements in materials management.

• Internal activity allocation and overhead within Controlling (internal management accounting).

The account assignment object for acquisition postings is the order or the WBS element of the investment measure. You cannot post the asset under construction that belongs to the investment measure directly (exception: investment support).

The split of those costs requiring capitalization from costs not requiring capitalization takes place during the periodic settlement.

The periodic settlement credits the order or WBS element and moves the amounts that require capitalization from costs (expense) to the balance sheet (fixed assets or assets under construction). The amounts requiring capitalization are shown in management accounting only temporarily, as primary costs, until the period-end closing takes place. You can settle costs that do not require capitalization to CO receivers (such as cost centers).

During the settlement of investment measures, there are always two different processing types:

• Periodic settlement at the close of the period.

• Full settlement or partial capitalization of the investment measure at its completion.

During periodic settlement, the system automatically settles all debits to the asset under construction that belongs to the measure (unless you entered a settlement rule that settles differently). You do not have to create separate settlement rules for this process.

Often, the allocation price for internal activity and the price of stock from the warehouse also include overhead. Usually, tax regulations or other legal restrictions forbid capitalizing these overhead costs. From the point of view of management accounting and product cost planning, it is desirable to capitalize 100% of all debits on investment measures to level large cost blocks by means of depreciation. To meet this need, you can specify that amounts from certain cost elements or cost element groups are capitalized only in certain depreciation areas of the asset under construction. The system separates costs that are not capitalized (valuation differences between depreciation areas) and treats them as non-operating expenses.

Full settlement takes place when the investment measure is completed. During full settlement, the system automatically settles the amounts on the asset under construction to completed fixed assets.

When you open the proof of origin for a fixed asset that was maintained as a receiver for summary settlement in an investment measure, you see that the various settlements appear as acquisition postings. The document number is the number of the settlement document.

If the investment measure was managed for line item settlement, you also see the document numbers of the line items that were posted to the measure.

If the investment measure is completed in stages, you can perform settlement to fixed assets more than once. The capitalization posting does not automatically close the investment measure.

The settlement profile is the central control parameter for settlement. You enter it in the project profile or order type (network type). It then proposes the allocation structure, profitability analysis transfer structure, and source structure for orders with this order type.

The allocation structure controls the assignment of source cost elements to settlement cost elements for each receiver. You can also choose to settle by cost element.

The profitability analysis transfer structure controls the assignment of cost elements to values fields in profitability analysis. You only need this function to settle projects directly to the operating result.

If you want to settle to various receivers according to the source cost elements posted in the order, use the source structure technique.

The allocation structure controls the conversion of cost elements to settlement cost elements. Settlement by original cost element is also possible.

To use the allocation structure, you need to create cost element groups that aggregate the primary and secondary cost elements used for debit postings to orders. In Customizing, link the cost element group to the allocation structure with a settlement assignment. For each settlement assignment, specify by receiver type if the settlement needs to use the original posted cost elements or a designated settlement cost element.

Similarly, the profitability analysis transfer structure controls the conversion of cost elements to profitability analysis value fields. A profitability analysis transfer structure is required only if you want to settle to a costing-based profitability segment.

You define a profitability analysis transfer structure if you want to settle the costs and revenues for a project to a profitability segment.

The profitability analysis transfer structure specifies the costs and revenues that need to be settled to costing-based profitability analysis. It classifies debit cost elements by assignment line and assigns assignment lines to value fields in an operating unit.

The profitability analysis transfer structure comprises one or more items (called assignment lines).

Note the following when defining a profitability analysis transfer structure:

• Each debit cost element must be represented in the profitability analysis transfer structure.

• The category for debit cost elements is called cost elements.

If you do not perform results analysis, you settle the actual costs and revenues to the profitability segment for the project/WBS element. All cost elements under which costs and revenues are recorded in WBS elements must be represented in the profitability analysis transfer structure.

If you performed results analysis, you settle the results analysis data (valuated actual revenue, cost of sales, and reserves for imminent losses) to the profitability segment. All results analysis cost elements in which data that affects profitability analysis is recorded must be represented in the profitability analysis transfer structure.