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Capital Investment Orders

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Purpose:

This document explains the process involved in using Internal Orders for Asset

capitalization, flow of values to internal orders, period end activities which includes AUC

settlement process and final settlement of AUC to a completed asset.

Overview:

In the current scenario, the Internal Order will be considered as an Investment Order that has

capability of capturing all costs related to AUC. These costs can be posted through any

expense account through several sources such as vendor invoices and any manual expense

postings. All these captured costs can be settled to AUC associated to the Investment Order

during month end activities. After the month end settlement to AUC, Investment Order will

still be able to capture the costs across multiple periods. Once the purpose of the Investment

Order is complete, it can be settled to one or multiple completed assets. In addition to that,

the costs in this Order can be settled to Cost Centers, G/L account etc as well; however it is

not in scope of the current document.

Steps Involved in Process:

1. Create Investment Order Transaction Code: KO01 or KO04

Menu Path: SAP Menu -> Accounting -> Controlling -> Internal Order -> Master Data ->

Order Manager/Special functions -> Order -> Create

This transaction is used to create the Investment Order and only order type “0650 –

Capital Investment Order” should be used to create the order. It is important to use Order

type “0650” as this has the maintained for Investment Orders and has capability to create

AUC automatically from releasing the Internal Order.

Reference order can be entered to transfer the master data from existing order.

In assignments tab, values has to be entered for company code, plant, functional area, object

class will be defaulted to “Investment” (do not change) and profit center. Under control tab,

system status will be defaulted to CRTD and currency will be defaulted to USD. Under

investments tab, it is important to maintain the investment profile as “000003”. If investment

profile is not maintained, AUC master data will be created upon releasing the investment

order. In addition maintain investment reason as well.

Once these master data parameter were maintained, under edit, select release to release the

order. Now you can see that status of order has changed to “REL AUC” under control tab

and save the order. Order can also be saved without releasing. This would be helpful if the

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order has been created for future purpose and can be released before posting costs to the

Investment Order. Once the Order is released and saved, AUC master data can be seen or

modified through I/O master data by selecting “Asset under Construction” under Extras.

2. Posting to Investment Order Once the Order is released it has the capability to capture costs through any expense account.

The investment order number has to be entered as cost object in the line item of

corresponding expense posting. Make sure that the Order is released before posting.

For example:

Vendor invoice posting to an expense account can be captured by the Investment Order.

TCode: FB60 – Post Vendor Invoice

Make sure to maintain the Investment Order in the line item to receive the cost.

Similarly, capital expense can be posted to Order through regular PO based purchasing

process.

3. Order Information System T-Code: KOB1

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Menu Path: SAP Menu -> Accounting -> Controlling -> Internal Orders -> Information

System -> Reports for Internal Orders -> Line items -> Orders: Actual Line Items

This report would give the actual line items that were posted to Internal Order and

would facilitate to drill down to the actual document. There are reports that would facilitate

Order plan and actual comparison and would be useful when planning and budgeting

functionality is brought in to these investment orders.

4. Settlement to Asset under Construction T-Code: KO8G – Collective Processing

Menu Path: SAP Menu -> Accounting -> Controlling -> Internal Orders -> Period end

closing -> Single functions -> Settlement -> Collective processing

Settlement run is a period end activity performed on all the open orders to allocate

costs from the Investment Orders to AUC. A variant should be maintained with order type

0650 and other required parameters.

On screen parameters include settlement and posting period, fiscal year and processing type.

Processing type “Automatic” can be used for performing period end settlement activities.

After executing the settlement run, balance costs in Internal Order will be allocated to AUC

using the source cost element (cost element responsible for the expense posting in the

Investment Order), unlike current projects are settled to AUC using unique cost element.

This provides a better reporting with Asset under Construction as the source costs are visible.

Execute the transaction in background and if necessary can run the transaction in test mode

to check for errors.

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After settlement you can run the actual order line item report and the balance would

net down to zero by posting to AUC. After settlement, the order status would change to

“REL AUC SETC”.

5. Create completed Asset

A fixed asset can be created from the Internal Order master data. Under extras –

“Create Completed Asset” will take to asset creation screen.

6. Settle AUC to completed Asset and complete Order

Before executing the final settlement, settlement rule has to be updated in the Order, though

there are couple of ways in doing that, assuming that we settle all the order costs to one fixed

asset, settlement rule can be updated directly in the order master data.

T-Code: KO02 – Change Order

Menu Path: SAP Menu -> Accounting -> Controlling -> Internal Orders-> Master data ->

Order manager/ Special functions -> Order -> Change

Click on the Settlement rule tab located on the top and select the category as “FXA”-

fixed asset and mention the settlement receiver (fixed asset created in the earlier section) that

would capitalize from AUC upon final settlement. Settlement can be made by percentage to

different receivers i.e. to two or multiple assets.

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Once the Order is updated with the settlement rule, select “technically complete” under the

“Edit” option on the top. This would restrict further processing of the order

T-Code: KO88 – Individual Order Settlement

Menu Path: SAP Menu -> Accounting -> Controlling -> Internal Order -> Period End

Closing -> Single Functions -> Settlement -> Individual Processing

Maintain the Order, settlement period, posting period and fiscal year. Select “full

settlement” as processing type and execute the transaction. This would credit the Asset under

Construction and capitalizes all the costs to a fixed asset specified in the settlement rule. If

necessary, you can always run this transaction in “test mode” and check if there are any

errors.