Hi,
AuC (Asset Under Construction) are those assets which are not fully completed and in progress. Usually by nature they should take more than one fiscal year to get completed else one can easily create fixed asset when they are done in that fiscal year. There are many logics for the working of them but for understanding the complete cycle I will take approach on internal order with investment types.
Cycle:
Create internal order of investment type --> AuC will be created for it --> execute periodic settlement indicating transferring of values from order to AuC --> Once AuC is completed make the order as technically completed (TECO) --> Create fixed asset as a result of completion of AuC --> Provide the fixed asset under settlement rule --> execute full settlement transferring values to fixed asset --> Your AuC is completed as fixed asset which will now subjected to normal asset cycle. Below are details:
1) When you create internal order of investment type (KO01) that means you have an order to fulfill for investment. (you can additionally create budget for it - KO22 & KO24). During its creation AuC is created indicating where the investment is done. However the AuC asset number is still not reflected.
2) Do periodic settlement KO88 post which you will be able to see the AuC under the Settlement Rule button in KO02.
3) Till the time asset is not completed the allocation of budget in the internal order is done against the AuC. Once the asset is completed you need to transfer the balance against fixed asset(s) and capitalize them. You can transfer the balance against more than one asset. For example you have created internal order for creation of a building. When building is completed you can distribute the value to building and its furnishing on percentage basis. This can be achieved by making the order as technically completed (TECO) and then in the Settlement Rule button enter the details of the fixed asset(s) (and percentage allocation against them) against the AuC created. Category entered will be FXA. NOTE: create the fixed asset against which you wish to transfer the allocation.
4) Do the full settlement by executing KO88 and the fixed asset will be capitalized with Internal order value.
Hope this helps
Regards
Pankaj Pareek