What is capitalization of an asset under construction in SAP FI-AA - Asset Accounting?

SAP Term: capitalization of an asset under construction

• Component: FI-AA

• Component Name: Asset Accounting

• Description: An accounting procedure that is required when an asset produced in-house is completed. The acquisition and production costs that were collected on the asset under construction are transferred to another asset. From the perspective of the balance sheet, this transfer corresponds to a transfer between the balance sheet item for assets under construction and another balance sheet item such as, machinery. In the SAP System, this transfer can either be a simple, summary transfer, or a line item settlement.

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• Key Concepts: 
  Capitalization of an asset under construction is a process in SAP FI-AA Asset Accounting that allows for the recognition of an asset before it is completed. This process allows for the recognition of the asset’s value and the associated costs incurred during its construction. The capitalization of an asset under construction is done by creating a capitalization document in SAP. 
  
  How to use it: 
  To capitalize an asset under construction, first create a capitalization document in SAP. This document will include the asset’s value and the associated costs incurred during its construction. Once the document is created, it can be posted to the general ledger. The capitalized amount will then be recognized as an asset in the balance sheet. 
  
  Tips & Tricks: 
  When creating a capitalization document, make sure to include all relevant information such as the asset’s value and associated costs. This will ensure that the capitalized amount is accurately reflected in the balance sheet. Additionally, make sure to post the document to the general ledger in order for it to be recognized as an asset. 
  
  Related Information: 
  Capitalization of an asset under construction is just one of many processes available in SAP FI-AA Asset Accounting. Other processes include depreciation, revaluation, and disposal of assets. Additionally, there are various reports available in SAP FI-AA Asset Accounting that can be used to track and analyze assets.