Valuation of Capitalized Costs

Use

If you have opted to manage the capitalized costs separately (exclusively), they are valued separately by the key date valuation function.

The capitalized costs are either written off fully or written down proportionately, depending on your Customizing settings.

Prerequisites

  • In the Customizing activity Set the Effects of the Update Types on the Position Components you define for each update type whether costs should be managed inclusively or exclusively.

    For each update type for costs to be capitalized you define the position components for managing the costs. The following position change categories are available:

    • 1014 Post Costs to Cost Component [=> the costs are managed separately (exclusive)]

    • 1015 Post Costs to Purchase Value Component [=> the costs are included]

  • You define for each security valuation procedure whether the capitalized costs for a position are written off in full or written down proportionately in Customizing under Start of the navigation path Transaction Manager Next navigation step General Settings Next navigation step Accounting Next navigation step Parallel Valuation Areas Next navigation step Settings for Position Management Next navigation step Valuation Next navigation step Define Security Valuation Procedure End of the navigation path .

Features

  • Proportionate write-up/write-down of capitalized costs

    If the costs are written up or down proportionately, the book value of the capitalized costs is adjusted in such a way that the ratio 'new book value to acquisition value' is the same for the costs and for the security.

    1. a. New book value of the costs in PC = (new book value of the security in PC / acquisition value of the security in PC) * acquisition value of the costs in PC

    2. b. Valuation amount of the costs in PC = new book value of the costs in PC - old book value of the costs in PC

    3. c. Security valuation amount for the costs in VC = valuation amount of the costs in PC * old book exchange rate.

    4. d. New book value of the costs in VC = (new book value of the security in VC / acquisition value of the security in VC) * costs in VC

    5. e. Total valuation amount of the costs in VC = new book value of the costs in VC - old book value of the costs in VC

    6. f. Forex valuation amount for the costs in VC = total valuation amount of the costs in VC - security valuation amount of the costs in VC

      Notation:

      PC = Position currency

      VC = Valuation currency (usually the local currency)

  • Full write-off of capitalized costs

    The new book value of the costs is set to 0 both in the position currency and in the valuation currency. The difference to the book value of the costs is the write-up/write-down amount.