Down Payments to Assets Under Construction 

Purpose

Down payments represent a type of acquisition to fixed assets which you generally need to capitalize and report in a separate balance sheet item. For this reason, down payment postings use separate, special transaction types in the System.

Process flow

The following transactions should be posted in connection with the down payment:

·        Creating a down payment request

·        Posting the down payment

·        Posting the corresponding closing invoice

·        Clearing the down payment with the closing invoice

Posting to Accounts Payable

The FI‑AP (Accounts Payable) component has specific transactions that allow for posting to the corresponding assets. You post the down payment made to the reconciliation account for Asset Accounting ("Capitalized down payments to assets") as well as to the reconciliation account for Accounts Payable ("Down payments made to assets"). The offsetting account for the reconciliation account in Asset Accounting is a clearing account. In order to prevent down payments from being shown twice in the balance sheet, this clearing account must be linked to the same balance sheet item as the reconciliation account in Asset Accounting.

When the closing invoice is received, it must be posted in full and capitalized to the asset. After this, you must clear the down payments with the closing invoice. When you clear the down payment, the system reverses the original acquisitions (the down payments) to the asset.

Graphic: Down Payments

Down Payment Requests

When you create a down payment request with account assignment to asset, the system carries out the same checks that take place when you post directly to an asset. You can use the down payment request as a posting reference when you post the down payment manually. The payment program can also convert it automatically into a down payment posting.

Down Payments Made

You post the down payment made to the reconciliation account for Asset Accounting ("Capitalized down payments to assets") as well as to the reconciliation account for Accounts Payable ("Down payments made to assets"). The offsetting account for the reconciliation account in Asset Accounting is a clearing account.

Posting in Asset Accounting

As an alternative to posting in Financial Accounting, you can post the assets side of the accounting transaction in Asset Accounting without integrated posting to Accounts Payable.

 

If you manage depreciation areas in foreign currency, it is mandatory that you post down payments and the clearing of down payments using special FI transactions. Otherwise differences due to currency conversion can arise when you capitalize the asset under construction.

Posting Down Payments Using the Payment Program

You can use the payment program in Financial Accounting to have the system automatically post down payments. This option is open to you in addition to the manual posting of down payments in Asset Accounting. The payment program processes all of the down payment requests in the system that have come due and have been properly flagged. For more information on down payment processing in Financial Accounting, see the SAP library.

Capitalizing Down Payments Without Closing Invoice

If you want to start up an asset under construction at the year-end closing, you have to settle (transfer) the asset under construction to a capitalized asset. If the invoice receipt for a down payment does not take place in the same fiscal year as the down payment, you have to clear the open down payments already made first. They must be cleared with a forecasted invoice (reserve). The asset under construction can only be settled after this clearing.

 

Capitalizing Down Payments Without a Closing Invoice

System Settings

In order to post down payments to assets in the FI-AA component, you have to make the following system settings:

·        Enter the reconciliation account for down payments made in the appropriate account allocations. Also enter the offsetting account for Asset Accounting (FI‑AA Customizing: Transactions →Acquisitions).The system posts to the G/L accounts entered under “acquisition down payment” and “offsetting account acquisition down payment.”

·        Allow posting with the transaction type group for down payments in the appropriate asset classes. This is found in the maintenance transaction for asset classes under Extras.

Procedures

Integrated Posting of Down Payments

Non-Integrated Posting of Down Payments