Maintaining the Periodic Settlement of Investment WBS Elements

The first deliveries for the welding cell have arrived at the Bike Company. The invoices are posted against the relevant WBS elements. Periodic settlement of the WBS elements has not yet been carried out, so the incurred costs are not yet assigned to the assets under construction.

This settlement rule determines where and how the costs are to be settled.

Watch the video to learn more about maintaining settlement rules:

The rolling gates were created for the welding cell by Bike Company workers.

This took 8 working hours. However, because the intercompany billing rate contains sales costs, 10% of the costs cannot be allocated to the asset under construction. Instead, this is allocated to the cost center.

The costs for the AuC must be debited by the end of the month. This is done through periodic settlement. The settlement process has two options:

• By Period: All debts to the receivers in Controlling (CO) with a preliminary settlement rule are settled, and the costs are internally settled to the AuC.
• Automatic: Periodic settlement is performed as with the by period method. In addition, if the investment project (WBS element) is technically completed, the system automatically selects the Partial Capitalization processing type.

During the month, expenses are recorded to the project using various G/L accounts. No entries were made directly to the receivers (AuC and Cost Center).

At month-end closing, the project's costs are settled, with 90% going to the AuC and 10% to the cost center. To maintain a zero balance, a new credit line is added to the project. The settlement rule determines how much goes to each receiver.

After settlement, €9,000 appears in the balance sheet under assets under construction.

To learn more about the periodic settlement run, check the video out: