Post Capitalisation& CWIP

If the Freight Charges / Clearing Charges / Customs duty or any other additional cost details are not available at the time of capitalization of an Asset and became available after the capitalization of the asset then these costs will be capitalized using Post Capitalization transaction.

In case of capitalization of asset through CWIP, an Asset will be created under the CWIP Asset Class. These Assets will have a line item level settlement. Costs of acquisition of these Assets will be booked under the particular Asset. The Asset will be capitalized as when the construction of CWIP is complete. The CWIP asset can be settled and capitalized under any asset class or a part of the cost can be transferred to a general ledger account as an expense if capitalization is not desired for that part of the costs.

Sale of an Asset

The sale of asset is addressed in the following scenarios:

  - Sale/Retirement of asset – with revenue with customer

- Sale/Retirement of asset – with revenue without customer

- Sale/Retirement of asset – Scrap without revenue

In case of sale / retirement, sale will be effective from the Transfer date or Sale date. Any profit or loss on sale will be taken to separate accounts (i.e. different G/L accounts for profit and loss). The accounts defined in the Account Determination will be used for the purpose.

Depreciation Processing

Ordinary depreciation is Straight Line method of depreciation. Depreciation is charged on the asset every year until 100% depreciation is achieved; thereafter the asset will be carried at value of SAR 1/- (in SAP this will be achieved by showing gross value and cumulative depreciation of the asset). The rates of depreciation have been defined for a combination of Asset Class and Company Code.

The depreciation will run periodically at month end at company level.

SAP gives a functionality of Depreciation Forecast Report wherein one can analyse the Depreciation of the Asset over a period of years till the Book Value becomes Zero. The planned depreciation is posted to the general ledger at the time of the monthly depreciation posting run. This posting run uses a batch input session to post the planned depreciation for each posting level for each individual asset as a lump sum amount.

The Depreciation process requires the customizing in following areas:

- Book Depreciation (for normal depreciation)

- Assignment of Company codes to Chart of depreciation AL-NUKALY

- Assignment of General Ledger account to Asset class

  - Determination of depreciation area for Asset class.

- Set-up the document type for depreciation posting and Document Numbering.