BETTISWORTH_1805 - Asset Capitalization-Let Me Count the Ways!

8/19/2019 BETTISWORTH_1805 - Asset Capitalization-Let Me Count the Ways!

http://slidepdf.com/reader/full/bettisworth1805-asset-capitalization-let-me-count-the-ways 1/38

Co-Presenter:

Patty Downs,Proctor & Gamble

Co-Presenter:Kent Bettisworth,BETTISW !T"& #SS CI#TES

Session Code: 1805Tuesday, May 3, 2005 9:30am – 10:30am

Asset Capitalization: Let MeCount the Ways!



• A company’s i ed assets mi"ht #an"e $et%een alaptop compute# to an o sho#e oil plat o#m& And'%hethe# di#ect #om an in(oice o# settled #om

multiple W)S elements' the %ay it %as capitalized inSA* can $e +ust as (a#ied!

• ,his p#esentation p#o(ides a compa#isons o assetcapitalization methods&

• Audience: )usiness and - ecuti(e• ,echnical: .nte#mediate

Asset Capitalization: Let me

Count the Ways!



• $ Key %earnin s

1 .denti y di e#ent asset capitalization methods&

/ nde#stand the p#os and cons o each method&

Lea#n 2ey SA* con i"u#ation o# each method&

Asset Capitalization: Let me

Count the Ways!



• 3ene#al Led"e#

• Asset4cent#ic

• *#o+ect4cent#ic

Asset Capitalization Methods



• o su$4led"e#s o# • *#o+ects• Capital )ud"etin"• *u#chasin"• Assets

• se MS - cel and6o# othe# applications o# • 7etail i ed asset #eco#ds• 7ep#eciation calculation• Capital spendin" mana"ement

• )450 4 Capitalization %ith manual +ou#nal ent#y

3ene#al Led"e#



• Asset Mana"ement module implemented• .nte"#ated %ith

• 3ene#al Led"e# • *u#chasin"• Accounts *aya$le

• Capitalization method• 7i#ect to AuC 9unde# Const#uction o# inal Asset

• 450 o# A);< 4 3ene#al led"e# +ou#nal• M.3< 4 *u#chase o#de# "oods #eceipt• M.=< 4 .n(oice #eceipt• 4>0 4 Accounts *aya$le +ou#nal

• #om AuC to inal Asset• A.A) ? C#eate line item settlement #ules to inal asset• A.) ? Settle to inal asset

Asset4cent#ic



• Capital p#o+ect mana"ement is hi"h p#o ile

• ull inte"#ation ac#oss multiple su$4led"e#s• *#o+ects 9W)S elements o# o#de#s• Capital )ud"etin"• *u#chasin"• Assets• 3ene#al Led"e#

• Capitalization method #om p#o+ects• C@/0 o# <0B Automatic AuC asset• C@/0 o# <0B C#eate inal asset

Summa#y settlement #ules c#eated automatically• [email protected] o# <)5 Select speci ic line items o# settlement• C@886C@83 o# <886 <83 Multiple settlement choices

*#o+ect4cent#ic



• Summa#y ? settle investment measures (orders/WBSelement) in summary form to various receivers (assets). Youcannot settle individual line items. You can only display theproof of origin on the receiving assets either in summary

form or by cost element.• Line item ? settle by line item from investment measures

(order/WBS element) or AuCs not lin ed to investmentmeasures! and at the same time retain ability to display theline item origin.

• AuC pe# Sou#ce 4 settle costs! "hich are posted to theinvestment measure! separately by cost element to multipleassets under construction.

Settlement 7e initions



• *#os• -asy to implement

• Cons• Manual +ou#nal postin"s• Chan"es e plained $y 36L line item analysis• o inte"#ated capital $ud"et o# p#o+ect cont#ol

• Asset p#ocess att#i$utes• Minimal asset #eco#ds• Small (olume o asset acDuisitions• o capital p#o+ects

3ene#al Led"e# *#os E Cons



3ene#al Led"e# Con i"u#ation# SA$ %odules&' *+

• Balance sheet accountsallo" direct posting



• *#os• Simultaneous postin" to speci ic asset9s E 36L• Allocate to multiple assets (ia AuC• *ost (ia 36L' .n(oice' o# *u#chase <#de# t#ansaction

• Cons• o inte"#ated capital $ud"et cont#ol• o p#o+ect mana"ement suppo#t

• Asset p#ocess att#i$utes• Mode#ate to Fi"h num$e# o asset #eco#ds• Medium (olume o asset acDuisitions• Capital p#o+ects a#e simple and6o# e%

Asset4cent#ic *#os E Cons



Asset4cent#ic Con i"u#ation

• SA$%odules

' *+!' AA!%% $,-



• )alance sheetaccounts do notallo% di#ect

postin"• eep 3L and AM

su$4led"e#

synch#onized




• Allo%acDuisition oassets on *<

• Mate#ialsmana"ementG *u#chasin"

G Accountassi"nment




• Asset accountin" G ,#ansactions G 7ete#mineinte#nal t#ansaction types




• <A<A ? 7e ineasset class

• Allo%s sepa#ateo# collecti(esettlement oindi(idual line

items' #om anAuC asset




• < <H ?C#eate A.settlement

p#o ile

• <AA; ?Assi"nsettlement

p#o ile tocompany




• *#os 9All $ene its o asset4cent#ic method andI• Automatic c#eation o AuC E settlement #ules• Mana"e e pense and capital in sin"le p#o+ect• .nclude utu#e acDuisitions in dep#eciation o#ecast• .nte"#ated capital $ud"et E p#o+ect cont#ol

• Cons• Comple p#ocess E t#ainin" inte"#ation

• Asset p#ocess att#i$utes• Fi"h num$e# o asset #eco#ds• La#"e (olume o asset acDuisitions• ume#ous capital p#o+ects %ith (a#ied comple ity

*#o+ect4cent#ic *#os E Cons



*#o+ect4cent#ic Con i"u#ation• SA$ %odules& ' *+! ' AA! %% $,-! %! and $S• nvestment profile! "hen entered on

pro ect! triggers the automatic AuCand settlement rule

• $rovides choice of settlement

• Allo"s depreciation forecast offuture ac uisition



• <.)5 ? Assi"ncapitalization(e#sions

• Allo%s automatedsplittin" o costs

$et%een e penseand capital

*#o+ect4cent#ic Con i"u#ation



• =AS.M 0/ o# SJAL=J8H01/> K

*#o+ect4cent#ic Con i"u#ation



.nte"#ation6- iciency Scale

Process Efficiency

S y s t e m I n

t e gr a t i on

Low

High

High

General ledger

Asset-centric

Project-centric

Capitalization Process

A s s e t A

t t r i b u t e s

Few assets +Simple projects

Many assets +Variety of projectcomplexity



*#octe# E 3am$le ? Fo% %e use SA*to mana"e Capitalization o Assets

http://www.pg.com/



• &S& $ased Company doin" $usiness in mo#e than 1K0 count#ies%o#ld%ide %ith o(e# 00 consume# $#ands

• 80 count#ies %o#ld%ide %ith "ene#al o ices and6o# manu actu#in" plant sites

• Cu##ently ha(e 5H cha#ts o dep#eciation in "lo$al SA* B&5$ client• 1MM assets in "lo$al SA* B&5$ client• 1 5 asset4holdin" company codes in "lo$al SA* B&5$ client• .n iscal yea# /00B' *E3 had '(B in capital spendin" I 1&H) %as

mana"ed in ou# Capital6 i ed Assets sin"le SA* client• Cu##ently inte"#atin" Wella acDuisition into ou# "lo$al SA* clients

• pcomin" I& inte"#atin" 3illette acDuisition into ou# "lo$al SA*clients

*#octe# E 3am$le )ac2"#ound

http://www.pg.com/



.nte#nal =eDui#ements I

1& o su$seDuent settlements to a inal asset once the iscal yea# has $eenclosed

/& Must ha(e the a$ility to do pa#tial capitalizations& .nte"#ation must $e accu#ate %ith -C4*CA

B& -C4CS #eDui#ements must $e met5& Must $e a$le to settle to 3L accountsK& Must $e a$le to settle e pense costs to cost cente#s

H& Must $e a$le to settle to A C assets until #eady to settle to i ed assets8& Must $e a$le to #eti#e A C assets>& Must $e a$le to t#ans e# A C assets o# uniDue pu#poses

<u# App#oach to Capitalizations

http://www.pg.com/



1& o su$seDuent settlements to a inal asset once theiscal yea# has $een closed

44 su$seDuent settlements must $e settled to a su$4asset

44 a (alidation #ule %as c#eated that does not allo% acapitalized on date in a p#io# iscal yea# %hen usin"t#ansaction AS01

44 an e##o# messa"e %as c#eated that does not allo% inalsettlement to an asset %ith a p#io# iscal yea# capitalizationdate


http://www.pg.com/




/& Must ha(e the a$ility to do pa#tial capitalization

44 se o the Line .tem Appo#tionment option o#settlement [email protected] allo%s us to ul ill this #eDui#ement

44 Must ha(e line item settlement set in con i"u#ation touse Line .tem Appo#tionment

http://www.pg.com/



,#ansaction [email protected]

http://www.pg.com/



,#ansaction [email protected]

http://www.pg.com/



Conside# inte"#ation %ith

othe# modules• A C’s inte"#ate %ith -C4*CA (ia the cost cente# lin2on the W)S element

9#esponsi$le cost cente#ield

http://www.pg.com/



• ,#ansactions must $e p#ope#ly lin2ed on ta$le ,A)W tothe co##ect -C4CS t#ansactions used $y you# company

Conside# inte"#ation %ith

othe# modules

http://www.pg.com/



Conside# inte"#ation %ithothe# modules• Settlements must $e a$le to inte"#ate %ith A C assets

9 .4AA ' cost cente#s 9C< ' and 3L accounts 9 .43L

http://www.pg.com/



niDue Wo#2 *#ocesses 7e(eloped=eti#e A C assets• C#eate manual A C asset classes %ith the same account

dete#mination as the in(estment measu#e A C asset classes• When an asset is #eti#ed p#io# to puttin" it in use 9e&"&

p#o+ect is sc#apped6te#minated ' c#eate a manual A C asset%ith the manual A C asset class

• Settle 100N o the associated costs into the manual A Casset as i settlin" to any inal i ed asset

• A te# settlement' use a #eti#ement t#ansaction to #emo(e themanual A C asset #om the led"e#

http://www.pg.com/



niDue Wo#2 *#ocesses 7e(eloped

.nte#4company t#ans e# o A C assets 9(e#y uniDue•C#eate manual A C asset classes %ith the same accountdete#mination as the in(estment measu#e A C asset classes

•When an asset is t#ans e##ed $et%een company codes p#io# to puttin" it in use' c#eate a manual A C asset %ith the manualA C asset class

•Settle 100N o the associated costs into the manual A C asset

as i settlin" to any inal i ed asset•A te# settlement' use an inte#4company t#ans e# t#ansaction tomo(e the asset to the ne% company code

http://www.pg.com/



Summa#y

• 7ete#mine you# company’s uniDue inte#nal#eDui#ements as they pe#tain to asset capitalizations

• Map and match you# #eDui#ements to the di e#entmethods that ent desc#i$ed' 2eepin" in mind the

p#o’s and con’s o each• Set you# con i"u#ation in o#de# to meet you#

#eDui#ements

• - plo#e any simpli ication oppo#tunities that maye ist %ith the SA* so t%a#e

http://www.pg.com/



Ouestions E Ans%e#s

• What is yo)r ne*t action ste+

1 Ouestions

/ Ans%e#s



Summa#y

1 .denti y di e#ent asset capitalization methods&

/ nde#stand the p#os and cons o each method&

Lea#n 2ey SA* con i"u#ation o# each method&

7o%nload this p#esentation at:%%%&$ettis%o#thassociates&com



Than .o) /or #tten0in 1

*lease #emem$e# to completeand #etu#n you# e(aluation o#m

ollo%in" this session&

(223 #S4G #nn)al Con5erence

& 6en0or /air

Session Co0e: 7823

Documents

BETTISWORTH_1805 - Asset Capitalization-Let Me Count the Ways!