Capitalization Key - A hidden gem in IM-AA integration to differentiate asset capitalization values

[achraf_doumar]

Have you ever wondered, how can I post different settlement values across multiple depreciation areas while using AuCs (Assets Under Construction) ? Well, in this short article I will show you a functionality in SAP that has not been broadly covered and that a lot of consultants don't know about.

Let's take the following example: under IAS38, certain eligible intangible assets should be recognized as costs in IFRS. In the other hand, some local GAAP (such as France GAAP) require that these assets stay in the balance sheet. In this case, the same costs are to be settled differently between IFRS (not capitalized) and FRGAAP (Capitalized) books. And this is where the Capitalization Key comes in.

What's a Capitalization Key ?

The Capitalization Key specifies that certain cost elements in certain depreciation areas of the asset under construction are not capitalized (either wholly or in part). While configuring the key, you can specify (among other criteria) :

• The capitalisation version, which corresponds to the depreciation area(s) (configured in transaction OKGL)
• The cost element
• The percentage of capitalization

Transaction OKGK

Portions of costs that are not capitalized are periodically cleared as non-operating expense. The system transfers the acquisition and production costs, which do require capitalization, to the asset under construction.

All Capitalization Key-related configuration steps are available in the following path:

SPRO > Investment Management > Projects as Investment Measures > Capitalization Values per Depreciation Area

How does it work in a business process ?

Once the AuC is automatically created via WBS (we're using here WBS as investment measures with Asset Accounting integration), it is mandatory to maintain the capitalization key in the AuC's master data. It is also possible to default the value capitalization key for a certain asset class if necessary.

1. The WBS collects the costs
2. At the time of settlement to the AuC, the program will detect if a capitalization key is used
3. The settlement is done following the configuration specified in Transaction OKGK

 

Disclaimer

• The costs that are not capitalized are cleared as non-operating expenses. It should be noted that only one account can be specified in configuration for clearing. Some business cases require to keep the original cost account instead of the non-operating clearing account, this can only achieved via an enhancement.
• The ability to distinguish which costs should be capitalized is only available when using Investment Management (IM) objects — such as an internal order or a WBS element. Capitalization performed purely through FI‑AA transactions is not supported.