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Fixed Assets-Investment support-Government grants

Posted on Aug 04, 2016 at 07:52 PM 734 Views

Dear FI-AA Experts,

I would like to have some clarifications regarding the accounting entries for government grants that reduces the fixed assets book value. Below is the sequence of the process/accounting events government grants:

1. Book the cost of construction to WBS element. Debit Capital expense account and Credit liability account

2. Monthly settlement to AUC: Debit AUC Account and Credit capital expense account.

3. Receive Grant from government in the middle of construction.

How this should be accounted? Should we account in the WBS element? If so how would this be brought as grant in main asset?

4. When eventually the asset construction is finalized and settled from AUC to final asset, how does the total cost will go as APC and grant will show as Investment support? What would be the accounting?

5. After the asset is capitalized, when the final grant is received, how does this needs to be accounted?

6. Under any exceptions if the grant needs to be refunded, how does that needs to spiked in the APC value of the asset?

6. it would be great if you also could give me the transaction codes and types that needs to be used for each of the sequence of the business events.


Thanks much for your support.

Best Regards

Surya

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    author's profile photo George Lin
    George Lin
    Posted on Aug 05, 2016 at 06:46 AM
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    Hi Surya

    In steps 3, you can settle WBS to AUC and then use ABIF to post investment grant to AUC

    in steps 4,
    there are 2 methods to manage investment support, one is direct deduction, another one is liability.
    you can define invest measure via T-cd:ANVEST and assign the measure in AUC and final asset master data

    direct deduction = the sum of APC and investment grant is updated in area 01 of final asset
    liability = APC is updated into area 01 and investment grant is updated in area 51 as investment support in final asset

    in step 5, no additional process

    in step 6, it depends what happened to the asset. e.g. for partial retirement, system will refund investment support automatically based on the setting of investment measure.

    regards
    George

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    • George Lin Former Member
      Aug 18, 2016 at 12:24 AM

      Hi Surya

      For above scenarios, please follow below process:

      1, For the first 50% of grant, you can use ABIF to update the received grant to AUC as investment support

      2, Then you can settle the AUC for final asset. of cause the investment support in AUC will be settled to final asset together

      3, Later on you received the second 50% of grant, you can use ABIF to post the rest of grant to final asset directly as investment support

      Regards
      George

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