project structures as temporary cost objects

[Former Member]

Hi,

"costs and revenues are collected in projects only temporarily." this is written in sap library under project settlement.

what does it mean exactly?

what will happen we do not settle costs and revenue of the project?

Thanks!

[virendra_pal · Accepted solution]

costs and revenues are always posted on cost elements and assigned to cost objects like projects (WBS and network activity), cost centre etc

so even if these are not settled they will appear in the P&L as expenses and revenues - settlement is done so that they appear correctly in reports

if you wish to settle then they can be moved to different cost objects using different cost elements

Hence these are temporary

[Former Member · Accepted solution]

Hi,

it means if i don't settle the cost and revenue then it will not have affect on balance sheet and p/l account .

am i right?

Edited by: Harsh Saxena on Apr 20, 2009 9:48 AM

[virendra_pal · Accepted solution]

correct

you do not have to settle

that is why in settlement config there is an option for no settlement required

only in case of AuC you need to settle to AuC if you want the cost to come to balance sheet dusing construction or asset acquisition

[Former Member · Accepted solution]

thanks,

one more query; do i have to settle costs and revenues of project to make the balance zero so that i can close that project?

[Former Member · Accepted solution]

yes, you have to settle all costs and revenues before you can close a project.

Otherwise the system will not allow you to close or archive the project.

Anuradha

[virendra_pal · Accepted solution]

if your settlement profile states that settlement is mandatory then you have to settle otherwise you cannot close project

if your settlement profile states that settlement is not mandatory then you shuld be able to close without settling

[Former Member]

thanks everybody!

[stheurkar]

Dear Harsh,

Yes, once you settled actual cost of project then it will reflect in Balance Sheet.

Regards,

Sandeep

[Former Member]

In addition to what Sandeep said the final settlement will help the management in reporting. By selecting type of settlement you decide whether, it should appear as a Balance sheet item or in P/L account when you settle to G/L. Cost center accounting when you settle to Cctr. Fixed Asset accounting if you settle to fixed asset by capitalizing.

The type of cost i.e. OPEX or CAPEX determine settlements and guided by reporting reqd by management and legal condns.

Hope this helps.

Sarang

[stheurkar]

"Costs and revenues are collected in projects only temporarily." this statement is true because you need to settle actual cost & revenue perodically on recevier like, Fixed Asset, Cost Center etc.

So what ever cost carrying by project, after settlement will transfer it to any receiver like Fixed Asset, Cost center

They are settled to one or more receivers as part of period-end processing.

You use settlement to:

1)Capitalize the balance from results analysis which is capable of capitalization in the balance sheet.

2)Obtain detailed data in results analysis for enterprise controlling.

3)In capital-investment measures, to settle the charge to assets under construction which can or must be capitalized.

4)Include actual costs from the project in actual price calculation in Cost Center Accounting.

Regards

Sandeep