You create an “intermediate” asset master record for the asset under construction, with no depreciation.

During the construction of the asset, you post all costs to this master record. You can post the costs to the asset directly (for example, by posting an invoice to an asset) or indirectly, by posting the costs to WBS elements, networks, or CO orders first, and then transferring the costs to the asset.

Use CO orders and networks if you want to track the costs and taxes incurred by each vendor over a month or other period. Use WBS elements to track the costs for a specific asset under construction.

In Customizing, you set the asset type to Asset Under Construction (see Customizing for Automatic Tracking of Invoices for APC), and you create the asset master record in the asset class Asset Under Construction.

You create a second intermediate asset master record for the asset under construction, with tax depreciation (optional).

You may be able to start depreciating the asset for tax purposes even while it is still under construction. If so, you create a second intermediate asset master record, and assign it the appropriate depreciation key in the tax depreciation area. You then transfer the costs from the first asset (which has zero depreciation in all depreciation areas) to the second asset.

In Customizing, you set the asset type to Capital Investment (see Customizing for Automatic Tracking of Invoices for APC), and you create the asset master record in the asset class Asset Under Construction. By using a different asset type, this enables the asset accountants to distinguish between them (some accountants are responsible for assets under construction before tax depreciation, others are responsible for assets under construction after tax depreciation).

You create an asset master record for the asset after capitalization.

When you capitalize the asset, you transfer the costs from the intermediate assets to this, the “real” asset. Note that if you use two intermediate assets, you can only transfer the costs from the second intermediate asset to the final asset manually, using the asset transfer transaction (not settlement rules).

You may of course have more than one real asset master record. For example, assume that you construct several new buildings at the same time, and you record all of the costs using a single intermediate asset master record. However, when you capitalize the buildings, you may want a separate asset master record for each. In that case, you create the required number of real asset master records and transfer the appropriate costs to each.

For these assets, you do not set any asset type. You create the asset master record in the appropriate asset class.