Capitalizing Down Payments Without a Closing Invoice

 

Under certain conditions, you may need to capitalize an asset under construction before all suppliers have presented their closing invoices. This can cause a few difficulties, especially if the closing invoice cannot be posted until the fiscal year following the capitalization of the asset under construction, and down payments were already posted to the asset under construction.

Initially, you post the down payment normally. If you then need to capitalize the asset under construction at the end of the fiscal year, but before the closing invoice is received, you post reserves for the total amount of the expected invoice. You post these reserves directly to the capitalized asset (external acquisition with vendor, transaction type 100). In the case where you plan to distribute the values from the asset under construction to several final assets, it makes sense to post the reserve to the asset under construction first, and then capitalize it. Whichever method you use, you have to reverse the down payment on the asset under construction, since the down payment is not allowed to appear in the account for down payments to fixed assets. Instead it has to appear in the account for completed assets.

  1. Down payment 100

  2. Reserves for expected closing invoice 200

  3. Reversal of down payment 100

  4. Capitalization of reserve 200 (if not posted directly to capitalized asset)

    You can post the closing invoice to one of the following:

    • Directly to the reserve account

    • To the capitalized asset

    • To the asset under construction

    Afterward, transfer the down payment to the vendor. When you make this transfer, the system automatically reverses the down payment on the asset under construction. However, in this case, the down payment was already reversed after the reserve was posted (step 3). Depending on how you posted the closing invoice, you may also have to transfer the reserve or the difference between the reserve and the closing invoice.

  5. Final invoice 250.

  6. Transfer of down payment 100

  7. Reversal of down payment transfer 100

  8. Reversal of reserves 200

  9. Capitalization of difference amount 50