G/L Accounts and Cost Elements for Settlement 

Use

When carrying out settlement, the system uses cost elements and general ledger accounts. These are described in more detail below.

Features

You specify the cost element for the periodic settlement to an asset under construction or to CO receivers (cost centers) in the settlement structure of the given settlement profile (IM Customizing: Settlement). When making this specification, you can choose if you want:

In the settlement structure, you make specifications for the settlement of debits on the order or WBS element to the given receiver type. You can specify per settlement assignment and per receiver type whether you want to settle by cost elements, or whether you want to use a settlement cost element, and if so, which one. The settlement assignment is a grouping of cost elements or cost element groups that should be treated in the same way during the settlement.

Settlement by Cost Element

During settlement by cost element, the system settles each debit again with the original cost element. The cost element of a debit, therefore, does not change during the settlement transaction. As a result, the cost element is still available on the settlement receiver. Using this method also ensures that the costs that require capitalization are not entered twice in cost accounting after the periodic settlement to the asset under construction.

When you settle to the asset under construction, the system transfers the applicable debits from the WBS element or order to the accompanying asset under construction. The result is a transfer from primary costs (expense) to non-current assets (asset under construction). For settlement by cost element, the offsetting account to the asset under construction balance sheet account is the primary cost element of the original debit (refer to Acquisitions).

Settlement with Settlement Cost Element

There are some conditions under which it is not possible to settle by cost element to an asset under construction. One of these is when the original debit is a secondary cost, for example, for internal activity allocation. The reason is that there is no corresponding expense account for secondary costs. Therefore, you have to settle secondary cost elements using a settlement cost element.

The following graphic shows the specifications for a settlement structure, along with the assignment to the investment measure by means of the settlement profile and either the order type or the project profile.

Settlement Structure

The advantage of settlement with a settlement cost element, as compared to settlement by cost element, is the improved performance. The reason is that the system does not have to create as many documents. Instead of creating a document for each source primary cost element, it creates documents for the settlement cost elements, which are usually fewer. Other than for settlement by cost center to assets, therefore, you should only use settlement by cost element when it is important for the receiver to contain information about the primary cost element of a debit.

Account for Settlement to Nonoperating Expense

You have to enter the account for settlement of capitalization differences (for specific depreciation areas) to nonoperating expense in the account determination for the individual asset under construction (IM Customizing: Capitalization values per depreciation area).

Full Settlement

You do not need cost elements for the full settlement, since this is just a transfer posting from assets under construction to completed assets.

You may already have inadvertently capitalized certain debits to the asset under construction. If these debits are now to be settled to CO during the full settlement, you enter a cost element in Asset Accounting Customizing (under Transactions ® Capitalization of Assets under Construction).