Asset Lifecycle Processes

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Created on June 19, 2015

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Table of content

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Table of content
1 Asset Lifecycle Processes
1.1 Constructing an Asset
1.2 Removing an Asset
1.3 Replacing an Asset
1.4 Preliminary Work
1.5 Preliminary Engineering
1.6 Purchasing and Installing Pre-capitalized Assets
1.7 Purchasing General Plant Assets
1.8 Manual Asset Transactions

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1 Asset Lifecycle Processes

1.1 Constructing an Asset

Process
In constructing an asset, the following steps occur:
1. Design
An asset request is created that links to work management cost objects. Planned asset events represent planned installations. Cost allocation rules are
provided to assign costs that are recorded in the work order.
2. Construction
The planned asset events automate and track the flow of cost to assets under construction (AUCs). The solution generates the settlement rules and
generates the required AUCs (one per asset event). The installation cost tracked for the Construction Work in Progress (CWIP) assets are settled to these
AUCs using standard settlement functionality.
3. In Service
The planned asset events for installs (construction) automate and track the flow of cost to Construction Complete, Not Classified (CCNC) assets created by
the solution.
4. As-built
As-built asset events are created that represent actually installed assets with updated quantities and the corresponding as-built cost allocation rules
5. Unitization
The asset request is unitized based on asset transfer rules that are automatically created from planned and as-built data. Asset events automate and track
the net flow of cost from work management cost objects to Plant In Service (PIS) assets by cost category.

1.2 Removing an Asset

Process
In removing an asset, the following steps occur:
1. Design
An asset request is created that links to work management cost objects. Planned asset events represent planned removals. Cost allocation rules are
provided to assign costs that are recorded in the work order.
2. Removal
The planned asset events automate and track the flow of cost to assets under construction (AUCs). The solution generates the settlement rules and
generates the required AUCs (one per asset event). The removal cost tracked for the Removal Work in Progress (RWIP) assets are settled to these AUCs
using standard settlement functionality.
3. As-built
As-built asset events are created that represent actually removed assets with updated quantities and the corresponding as-built cost allocation rules
4. Unitization
The allocation of removal cost and salvage to the asset reserve is based on the as-built cost allocation rules. Asset events automate the asset retirements
and the posting of removal cost or salvage to the asset reserve.

1.3 Replacing an Asset

This process is very similar to the process for constructing an asset, but in this process the CCNC phase is skipped because the new asset must not go into
service before the asset being replaced is retired. Because this retirement occurs in the unitization step, only then can the new asset be placed in service
(classified). It is assumed that an asset removal event exists on the same asset request document for the asset being replaced.

Process
In replacing an asset, the following steps occur:
1. Design
An asset request is created that links to work management cost objects. Planned asset events represent the planned installation and removal. Cost
allocation rules are provided to assign costs that are recorded in the work order.
2. Construction
The planned asset events automate and track the flow of cost to assets under construction (AUCs). The solution generates the settlement rules and
generates the required AUCs (one per asset event). The installation cost tracked for the Construction Work in Progress (CWIP) and cost of removal tracked
for Retirement Work in Progress (RWIP) assets are settled to these AUCs using standard settlement functionality.
3. As-built
As-built asset events are created that represent the actually installed and removed assets with updated quantities and the corresponding as-built cost
allocation rules
4. Unitization
The asset request is unitized based on asset transfer rules that are automatically created from planned and as-built data. Asset events automate and track

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the net flow of cost from work management cost objects to Plant In Service (PIS) assets by cost category and automate the asset retirements and the
posting of removal cost or salvage to the asset reserve.

1.4 Preliminary Work

Cost that is charged to a work management cost object before a design has been completed is called preliminary work. An asset can be created with a
preliminary work asset event to capture such cost

Process
1. The cost of preliminary work is settled to an Asset Under Construction (AUC) under a special asset class.
2. Once a final design with planned asset events for construction or removal has been created for the asset request, the preliminary work AUC balance is
allocated and transferred to the AUCs of these events.
3. The preliminary work event is closed.
4. The asset request proceeds as described under the appropriate Constructing an Asset, Removing an Asset, or Replacing an Asset process document.

1.5 Preliminary Engineering

Cost that is incurred prior to approval of a project can be charged to a work order that is linked to an asset request with a preliminary engineering asset event.

Process
1.
2.
3.
4.
5.

Similar to preliminary work, such cost is settled to an AUC under a special asset class.
If the project is not approved, all cost has to be expensed by retiring the AUC manually.
If the project is approved, the cost captured in the preliminary engineering event is transferred to a separate asset request for the approved project.
The preliminary work event and asset request are closed.
The asset request proceeds as described under the appropriate Constructing an Asset, Removing an Asset, or Replacing an Asset process document.

1.6 Purchasing and Installing Pre-capitalized Assets

Certain assets, like meters, are purchased in bulk, placed in inventory, and capitalized prior to installation. Such a purchase can be processed with the help of
an order that is linked to an asset request with an asset event of the purchase of pre-capitalized asset type.

Process
There are two types of asset events that can be used to install a pre-capitalized asset: the regular install event and the installation of pre-capitalized assets
event. How each of these events is used depends on how the related installation cost is to be capitalized.
1. Separate assets for the cost of installation and the installed asset
For a scenario in which the cost of installing a pre-capitalized asset is capitalized separately from the capitalized costs of the asset itself, two separate
install planned asset events are created:
One for the installation cost the retirement unit is identified as the cost of installation (for example, installation cost of electric meter)
One for the cost of the installed asset the retirement unit is identified as the installed equipment (for example, electric meter)
2. One asset for both the installed asset and the cost to install the asset
For a scenario in which the cost of installing a pre-capitalized asset is capitalized along with the capitalized costs of the asset itself, only one install planned
asset event is created. The retirement unit is identified as the installed equipment (for example, electric meter).

1.7 Purchasing General Plant Assets

Use this process when purchasing general plant assets that are ready for service when purchased. Such assets are ready to be depreciated when purchased.
This process generally does not require the use of construction type work orders and may instead use internal orders.

Process
1. A purchase of general plant assets event is created.
2. A Construction Complete, Not Classified (CCNC) asset is created, and the costs are settled to this asset.
3. Unitization for this type of asset is generally done as a manual process performed on a periodic basis, although it is possible to perform partial unitization by
entering a specific cost amount or percentage.

1.8 Manual Asset Transactions

Certain standard FI-AA transactions are enhanced under ALC to auto-create asset requests and update the summary ledgers, ensuring that all asset activity is
tracked by ALC. The solution includes these transactions in the relevant reports

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Process
Acquisitions
Standard asset acquisition transaction ABZON Acquis. w/Autom. Offsetting Entry is used for value adjustments.
Quantity adjustments
FI-AA treats asset quantities as a statistical attribute of an asset master record, and quantity adjustments are a simple master record update without a
transactional record. ALC also creates asset requests or events for quantity adjustments in the asset master record.
Transfers
Intracompany asset transfers
Intracompany transfers move both the APC value and accumulated depreciation for the asset being transferred. If the transfer is between different
asset reserve groups, the amount of accumulated depreciation for transfer is determined from the allocated theoretical reserve.
Intercompany asset transfers
These work exactly the same as standard intercompany asset transfers. There is no theoretical reserve calculation, and gain/loss is posted to
intercompany receivables or payables G/L accounts.
Retirements and Sales
When assets are sold, the gain/loss of the retired asset is not booked to an income/expense account but back to the reserve. The amount of retired
accumulated depreciation is determined from the allocated theoretical reserve instead of the recorded accumulated depreciation.
For a straight asset retirement, APC and accumulated depreciation are removed from the balance sheet based on standard recorded accumulated
depreciation. The solution identifies asset salerelated retirements based on the asset transaction type being used.

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