AUC with Investment Measure Using Work Breakdown Structure

  • by Darrick Arora, Consultant, SAP FI/CO, Infosys Ltd.
  • April 15, 2014
Financials
Learn how to implement assets under construction (AUC) with the Investment Management module using work breakdown structure (WBS). Follow a detailed discussion of the settlement process.
Learning Objectives

Reading this article you will learn how to:

  • Create an investment measure asset class and an investment profile
  • Configure the settlement process settings in work breakdown structure
Key Concept
A work breakdown structure (WBS) element with its assets under construction (AUCs) can be termed as an investment measure. In simple terms, an AUC is created to accumulate all the costs that belong to an asset during the construction phase. The cost is accumulated to a WBS and can then be transferred to an AUC. An AUC does not have any depreciation as these are considered partial assets and therefore 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 that can then be capitalized.

The Investment Management module is closely linked to the FI/CO and Project System modules. Investment Management provides management of large-scale capital investments. It also provides simultaneous cost accounting and asset accounting sides of a capital investment. The investments are managed in the form of overhead cost (work breakdown structure [WBS]) and links to an asset under construction (AUC). These WBS elements are the primary controlling objects that can be settled on a periodic basis to AUCs.

Managing large-scale capital investment projects such as construction of a huge project that involves many phases can be handled using AUCs. For instance, consider a company that needs to create unique identification cards for the residents of a country. For this project, there would be many phases such as creation of IDs for one state first and then subsequent states of that country. AUC with investment measure is able to handle the accounting perspective right from the beginning until all the residents of that country obtain the ID cards.

Here are two major advantages of using investment measure and settling to an AUC:

  • For reporting and analysis purposes you can capture the nature and type of original expenditure that went into creating the assets (for example, materials), whereas if you don't use the investment measure, the posting then happens directly to the balance sheet.
  • It also provides a clear picture of plan versus actual expenditure.

Create an Investment Measure Asset Class

Creating an investment measure asset class means that assets for this class cannot be created manually or directly using AS01, ABZON, or any other transaction code. Assets for this class can be created automatically only with a WBS of type AUC.

To create an investment measure asset class, execute transaction code OAOA or follow menu path SPRO > Financial Accounting > Asset Accounting > Organization Structures > Asset Classes > Define Asset Class. In the screen that appears (Figure 1), enter a number in the Asset Class field for the asset class that needs to be created and a description for it. Select an Account determination, enter a code for the screen layout in the Scr.layout rule field, and populate the Number range field. In the status of the AUC section select the Investment Measure radio button and click the save icon (not shown) to save the data.


Figure 1
Asset class configuration

Note
In account determination only balance sheet accounts are defined for this class, but no depreciation accounts are because depreciation is not charged to the AUC.

Darrick Arora

Darrick Arora is a consultant, SAP FI/CO, at Infosys Ltd. He has more than seven years of experience in SAP FI/CO and SAP Treasury and Risk Management. He also has worked in number of implementation and roll out projects for US as well as UK territories. He holds an MBA in finance as well as a bachelor’s degree in IT.

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