Capitalization or settlement process understanding from PS module standpoint.

[sbhandepatil]

Hi,

I wanted to understand the capitalization or settlement process from PS module standpoint. I have read about it in bits & fragments & haven't understood the process as whole. Could anyone try to explain it in simple manner with correct sequence? also please share links for the blogs, documents, videos related to this which can help me.

Things I know,

WBS's are temporary cost collectors & they need to be settled to the final object/asset.

[Paulo_Vitoriano]

Hi Saurabh,

In my opinion it is better to segregate settlement (as an SAP system process) and capitalisation (as an accounting process). This is not always the same, mostly it is not.

Settlement is a technical process, similar to the cost allocation if you wish. Capitalisation is a pure accounting. But yes, the settlement is commonly used for capitalisation.

In accounting you have so called accounting principles that dictate what can be capitalised and what cannot be capitalised. Often you will be dealing with a parallel accounting, means trying to accommodate more then one accounting principle (two are very common, sometime Tax accounting would be the third one).

The settlement to the Asset Accounting will move the P&L balance to the Balance Sheet asset accounts (fully or partially, depending on customizing) and will update multiple depreciation areas (that is normally a combination of GAAP/Currency view).

The process can go via the AuC (Asset(s) under Construction) or directly to the Final Asset(s), depending on customizing.

Regards,

Paulo