Kevin is ready to start making down payments for the assets that are still under construction. However, he needs a bit more direction on how to go about it. He's counting on his colleague Steve, who has years of experience in the area of accounting to guide him through the process.
Executing a Down Payment for an Asset under Construction
Objective
After completing this lesson, you will be able to execute a down payment for an Asset under Construction
Prerequisites Asset under Construction Asset Class
Down payments in the AuC
Kevin launches the search portal, eager to delve into when the down payment gets reflected in the asset that's in the middle of construction.
Purchase Order
In the first step, a purchase order is created for Asset under Construction with account assignment category P. This account assignment category requires a project/WBS element. In our case, this is an investment project.
The down payment is stored in the purchase order, but it is not visible in the asset master record.
Down Payment
The down payment is posted by the financial accounting department - this has no effect on Asset under Construction.
Settlement
The value of the down payment is not visible in Asset under Construction until settlement has taken place. The down payment is posted with transaction type 180 Down Payment. It increases the net book value of the asset by the down payment amount.
Key Takeaways
- We always see the down payment after settlement. If we want to see the down payments in Asset Accounting in a timely manner, we will therefore have to settle more often and not only at the end of the month.
- The down payment increases the net book value of the Asset under Construction asset.