SAP Financial Accounting (SAP FI) Practice Exam

Which of the following is a feature of Asset Under Construction (AUC)?

1. It must settle to a "real" asset upon completion

2. AUC can only be transferred within the same company code

3. AUC automatically calculates depreciation

4. It is not subject to any restrictions during the construction phase

The correct answer is: It must settle to a "real" asset upon completion

The feature of Asset Under Construction (AUC) that aligns with the correct answer is that it must settle to a "real" asset upon completion. AUC represents costs incurred for assets that are still being constructed and are not yet completed. Once the construction is finished, these costs need to be transferred or settled to a tangible asset such as machinery, building, or equipment, thereby enabling the organization to begin depreciation and recognize the asset in financial reporting. It’s important to note that while AUC can be managed within a specific company code, it is also capable of being transferred between company codes as necessary, indicating that the option mentioning restrictions to the same company code is not accurate. Regarding depreciation, AUC does not automatically calculate it until the asset is completed and reclassified; thus, the option about automatic depreciation is not applicable during the construction phase. Lastly, there are restrictions during the construction phase, such as limitations on capitalizing costs that are not directly attributable to the construction, which contradicts the idea that there are no restrictions during this period.