Asset Line Processing Rules for Automatically Created Project Assets
This topic explains how Project Costing allocates costs and generates asset lines for automatically created project assets. It covers scenarios involving item receipts, receipt corrections and returns for both serial and non-serial controlled items, supplier invoices, corrections, and cancellations.
This feature will be available starting with the 25D release.
Asset Line Processing for Item Receipts, Returns, and Corrections
The following rules apply to all items, including serial- and non-serial-controlled items when purchases accrue at receipt.
The application generates or adjusts asset lines for each asset as follows:
- It allocates item receipt costs to each automatically created asset.
- Asset associated costs are allocated to automatically created assets based on the destination type and the match option specified on the purchase order document.
- It adjusts asset unit quantities and re-allocates costs for returns or corrections.
Item Receipts to an Inventory Destination
- When you automatically create project assets based on item receipts made to an inventory destination, the application allocates asset associated costs (such as item receipt costs, non-recoverable taxes, and other inventory item costs, such as material overhead costs) to each asset based on the item receipt.
- The allocation applies regardless of whether you use the Receipt or Order invoice match option on the purchase order.
Item Receipts to an Expense Destination
When you automatically create project assets based on item receipts from purchase orders to an expense destination, the cost allocation is based on the match option specified on the purchase order.
- If the match option on the purchase order is Receipt, the application allocates across all assets received against a given item receipt.
- If the match option is Order, the application allocates costs across all receipts associated with the distribution of a purchase order schedule.
Receipt Returns and Corrections
The application allocates the returned or corrected costs against the corresponding assets that were returned or corrected when generating asset lines.
Automatic Asset Line Generation with Allocation of Only Associated Costs to Automatically Created Assets Disabled: Example
A purchase order for a serial-controlled item is created with two distributions to a destination type of expense, for capital project CP1, which is enabled for automatic project asset creation with the Allocate only associated costs to automatically created assets option disabled. Two receipts are made against the first distribution and one receipt against the second. The table below shows how asset lines will be generated and costs allocated in Project Costing.
Here's a table that lists out details associated with the purchase order:
PO Number | PO Line Number | PO Destination Type | PO Schedule/Distribution | PO Item Qty | PO Item Price | PO Match Option | Receipt Number | Receipt Qty | Serial Numbers | Project Asset Name | Asset Units | Asset Line Amount (From PO) | Reasoning for the amounts allocated to the project assets. |
101 | 1 | Expense | 1 | 8 | 10 | Order | 11 | 4 |
SN1, SN2, SN3, SN4 |
AA1001, AA1002, AA1003, AA1004 |
1 1 1 1 |
10 10 10 10 |
Item receipt costs that resulted in the automatic creation of the asset. |
12 | 4 |
SN5, SN6, SN7, SN8 |
AA1005, AA1006, AA1007, AA1008 |
1 1 1 1 |
10 10 10 10 |
||||||||
2 | 5 | 12 | Receipt | 13 | 5 |
SN9, SN10, SN11, SN12, SN13 |
AA1009, AA1010, AA1011, AA1012, AA1013 |
1 1 1 1 1 |
12 12 12 12 12 |
The table below displays the Order and Receipt matched invoices that were created for PO 101, with applicable variances.
Invoice | Invoice Line/ Distribution | Receipt | Item Qty | PO Item Price | Invoice Item Price | Invoice Price Variance |
INV_PO101 | 1 | 11 | 4 | 10 | 12 | 2*4 = 8 |
12 | 4 | 10 | 10 | - | ||
2 | 13 | 5 | 12 | 15 | 3*5 = 15 |
These variances will be allocated across the automatically created project assets based on the match option as follows.
Even though, in the above example, the variance is recorded only for receipt 11, since the match option for the PO schedule is at the order level, during the cost allocation process, the Invoice Price Variance of 8 will be applied across all receipts made for that distribution.
PO | PO Schedule/ Distribution | Receipt | Serial Numbers | Project Asset Name | Asset Units | Asset Line Amount (From PO) | Asset Line Amount (From Invoice) | Reasoning for the amounts allocated to the project assets. |
101 | 1 | 11 |
SN1, SN2, SN3, SN4 |
AA1001, AA1002, AA1003, AA1004 |
1 1 1 1 |
10 10 10 10 |
1 1 1 1 |
Item receipt costs that resulted in the automatic creation of the asset. Invoice match option of Order resulting in the IPV being allocated to all item receipts for the distributions of the purchase order schedule. |
12 |
SN5, SN6, SN7, SN8 |
AA1005, AA1006, AA1007, AA1008 |
1 1 1 1 |
10 10 10 10 |
1 1 1 1 |
|||
2 | 13 |
SN9, SN10, SN11, SN12, SN13 |
AA1009, AA1010, AA1011, AA1012, AA1013 |
1 1 1 1 1 |
12 12 12 12 12 |
3 3 3 3 3 |
Item receipt costs that resulted in the automatic creation of the asset Invoice match option of Receipt resulting in the IPV being allocated to all item receipts for the receipt only. |
Continuing with the above example, a receipt return is made for receipt 11 and serials SN3 and SN4. Here's a table listing the revised amounts for the assets.
PO | PO Schedule/ Distribution | Receipt | Serial Numbers | Project Asset Name | Asset Units | Asset Line Amount (From PO) | Asset Line Amount (From Invoice) | Reasoning for the amounts allocated to the project assets. |
101 | 1 | 11 |
SN1, SN2, SN3, SN4 |
AA1001, AA1002, AA1003, AA1004 |
1 1 0 0 |
10 10 0 0 |
1 1 1 1 |
Item receipt costs that resulted in the automatic creation of the asset Invoice match option of Order resulting in the IPV being allocated to all item receipts for the distributions of the purchase order schedule. Serials SN3 and SN4 were returned and debit memo created. Identified against automatically created assets AA1003 and AA1004. Returned receipt and debit memo costs applied only against identified assets. |
12 |
SN5, SN6, SN7, SN8 |
AA1005, AA1006, AA1007, AA1008 |
1 1 1 1 |
10 10 10 10 |
1 1 1 1 |
Item receipt costs that resulted in the automatic creation of the asset Invoice match option of Order resulting in the IPV being allocated to all item receipts for the distributions of the purchase order schedule. |
||
2 | 13 |
SN9, SN10, SN11, SN12, SN13 |
AA1009, AA1010, AA1011, AA1012, AA1013 |
1 1 1 1 1 |
12 12 12 12 12 |
3 3 3 3 3 |
Item receipt costs that resulted in the automatic creation of the asset Invoice match option of Receipt resulting in the IPV being allocated to all item receipts for the receipt only. |
Receipt Returns for Credit
- For non-accrual, expense destination purchases, the application does not update asset units for credit receipt returns. You must manually adjust asset units in these cases.
- The application treats unmatched debit memo costs as non-asset associated and allocates them across eligible assets.
- For credit-only returns made for accrued purchases, the application updates asset units and allocates return credits to automatically created project assets if the asset is not yet capitalized.
Asset Line Processing for Supplier Invoices
- When you automatically create a project asset from a supplier invoice, the application allocates both invoice distribution costs and prorated costs (such as freight or miscellaneous charges marked for proration) to the asset.
- Project assets that are created automatically from supplier invoice distribution costs that are tracked as assets will have the related invoice distribution cost and any prorated costs allocated directly.
The example below illustrates how asset lines will be generated and costs allocated in Project Costing for an automatically created project asset that was created based on a supplier invoice distribution tracked as an asset. Project CP2 has been enabled for automatic project asset creation, with the Allocate only associated costs to automatically created assets option disabled.
Invoice Number | Line | Line Type | Amount | Track as Asset (Invoice Distribution) | Prorate Across All Item Lines | Project | Task |
SINV_101 | 1 | Item | 150 | Y | - | CP2 | 1.1 |
2 | Freight | 25 | - | Y | CP2 | 1.1 | |
3 | Miscellaneous | 50 | - | N | CP2 | 1.1 |
Once this invoice is imported in Project Costing, an asset will be automatically created for Line 1. Also, for this example, assume a manually created asset exists at CP2 and Task 1.1, as illustrated below.
Project | Task | Project Asset Name | Source | Asset Units |
CP2 | 1.1 | AA_SINV_101 | Automatic | 1 |
1.1 | Manual_101 | Manual | 1 |
The following table illustrates how the asset lines will be generated and costs allocated to these assets assuming only the invoice cost exists for this project and task.
Invoice Number | Line | Line Type | Project Asset Name | Asset Units | Asset Line Amount | Reasoning for the amounts allocated to the project assets. |
SINV_101 | 1 | Item | AA_SINV_101 | 1 | 150 | Item costs that resulted in the automatic creation of the asset |
2 | Freight | 25 | Freight marked to be prorated across the item line results in the cost becoming an asset associated cost, which is then directly allocated to the related asset. | |||
3 | Miscellaneous | AA_SINV_101 | 1 | 25 |
|
|
Manual_101 | 1 | 25 |
Asset Line Processing for Common Cost Tasks
- When you incur item receipt or supplier invoice costs against a common cost task and the application creates an automatic asset, it creates the asset without a specific task assignment.
- Asset-associated costs from these transactions are allocated directly to the created asset.
- Non-asset associated costs incurred at a common cost task will be considered for
allocation to automatically created project assets only when the Allocate
only associated costs for automatically created assets option is
disabled. The non-asset associated costs will be:
- Unassigned if no peer tasks exist with eligible assets.
- Allocated using the cost allocation method defined for the project if peer tasks exist with eligible assets (manual and / or automatic).
Asset Line Processing with Separate Line Burdening and Burdened Costs Capitalization
- For capital projects with separate line burdening and capitalization, set the Burden Cost Grouping configurator to group by Transaction Number. This ensures the application correctly allocates burden costs to automatically created assets.
- If you do not select this grouping, the application treats summarized burden costs as non-asset associated and allocates them across all eligible assets.
- For more information, see the Project Burden Cost Grouping Configurator documentation.
Asset Line Processing for Project Cost Adjustments
- When adjusting project costs associated with an automatically created asset, as long as the resulting adjustment is within the same project, the cost allocation will continue to happen directly to the related automatically created asset.
- If adjustments move costs to a different project, the association between the asset and project is lost, and adjusted costs become non-asset costs, allocated to eligible assets in the new project.
Asset Line Processing with Construction-in-Progress Asset Cost Allocation Method Set to NONE
When you set the asset cost allocation method to NONE, the application generates unassigned asset lines and does not allocate costs to automatically created assets.
You must manually assign and allocate costs to the appropriate assets.