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1. You first have to create an asset master record. Create Asset : AS01 (by FI person). MM
person should know the asset number for creating capital PO or can be referred from the dropdown
menu.


Enter business area. Also update vendor number in asset master from which u are going to
buy material. Say M0001 is vendor code


Create material code in SAP.

Capital material shall be of asset, Tools and Consumables. In industry point of view all the above
material category is falling under capital items. So, in SAP we can maintain a capital material as a
tools or consumables or assets depends upon the material character and usage.Here, for our
convenient we are treating the material as an asset.
The Material master record, the material has to be declared for Assets in J1ID.With material, plant,
Chapter ID combination.

2. You can then post the purchase order or the purchase requisition with account assignment A
to the asset.It is also possible to create fixed assets from within the transaction for creating
the purchase order. This means that you can carry out both steps, "create asset" and "create
purchase order or purchase requisition," within one transaction.
Create PO (ME21N) with ref to the requisition. Ensure that you select the Account assignment category
as 'A'. Enter the asset number, in account assignment tab. The system automatically determines the
G/Laccount to be charged fromthe asset number (from asset class).You cannot enter it
manuallyThe PO can be created without material or if it with material to keep a track on the stock, you
can use Non-valuated material type.

3. Post GR. Do the GRN through MIGO_GR , capture and Post the excise invoice through J1IEX (here
only 50% OF Cenvat you avail initial and 50% in coming financial year) and Invoice verification through
MIRO.

Accounting documents for Capital goods
When you post a valuated goods receipt, the system posts a debit to the asset and a credit to the
Goods receipt/invoice receipt clearing account. You have to enter this clearing account in
Customizing. This account is cleared when the invoice receipt is posted.
When you post a non-valuated goods receipt, the system makes an integrated posting at invoice
receipt (debit to asset and credit to vendor). The system does not create any accounting document at
the time of the goods receipt in this case, only an MM document.
RG23C register shall be affected by doing capital procurement with respect to the following
material type indicator : Assets / Tools/ Consumables
4. Transfer credit in the second year J2I8. By using J1IEX T code first 50% cenvat credit shall be
claimed. For claiming balance 50% cenvat credit in the second year, J2I8 T code shall be used.


The following indicates, the particular balance cenvat credit has been availed. Please note that, once the
cenvat credit availed by using this transaction can not be reversed.


After availing the balance 50% cenvat credit, the system will generate accounting documents and post the cenvat credit to
the appropriate G/L accounts.We can take 50% credit immediately in the first year itself by using T code J2I8. But
according to Indian taxation law, we should take the balance 50% cenvat credit only in the second year.
5. Advise finance to update the Asset Master (AS02)
6. Check the asset value AW01N

It is not advisable to keep the capital material in stores stock with production material. We can keep
the capital material in stores stock also depends upon the companys inventory management system.

ACCOUNT ASSIGNED PROCUREMENT:


You can specify one or more account assignments for an item. If you specify amultiple
account assignment, you must also specify how the PO quantity is to bedistributed among
the individual account assignment objects. Distribution can be on aquantity or percentage
basis. If you enter a multiple account assignment for an item,the GR non-valuated indicator
is automatically set for this item.

In addition, you must specify in the item how the costs are to be distributed if onlypart of
the ordered quantity is initially delivered and invoiced.


The partial invoice amount can be distributed among the account assignmentitems of a PO
item proportionally (in accordance with the distribution ratio).


The partial invoice amount can be distributed among the account assignmentitems of a PO
item on a progressive fill-up basis (step-by-step, one after theother).
other).
In this procedure, account assignment item 1 first receives its complete allocation,then
account assignment item 2 and so on, until the invoice value is reached. Thepartial invoice
indicator can also be derived automatically from the accountassignment category if a partial
invoice indicator is specified in Customizing for theaccount assignment category.

You cannot usually tell from an invoice whether it relates to a purchase order withaccount
assignment. You can only tell this from the item list in Logistics InvoiceVerification (Account
Assignment column). You can display the account assignmentinformation and, under certain
circumstances, change it. Special display variants areavailable for the item list when you
enter an invoice for a purchase order with accountassignment.


Consumable Material - Overview
In SAP R/3 the term consumable material is understood to cover a material that issubject
to a procurement transaction and whose value is recorded in the cost elementor asset
accounts.
Consumable material is thus procured directly for an accountassignment object. Examples of
consumable materials are office supplies and computer systems or machines.

When procuring a consumable material without a material master record, you must
manually enter in the document a short description, a material group, and a purchase order
unit because this data cannot be pulled from a master record.

Since the material type determines whether or not a material is subject to value-based
inventory management, the standard SAP R/3 system supplied includes the following
material types for consumable materials:

Non-valuated material (material type UNBW):
This type of material is managed on a quantity basis, but not on a valuebasis. This makes
sense for materials of low value, stocks of whichnevertheless have to be monitored (for
example, operating manuals).


Non-stock material (material type NLAG):
Inventory management is not possible for these materials either on aquantity or value basis.
For frequently required consumables, the use of this material type nevertheless enables you
to store the informationrequired to create purchasing documents (such as texts and units
of measure).

SPARE MATERIAL PROCUREMENT:

Doc type is EP.
Spare materials are valuated and inventory is maintained.
No account assignment.GR stock account debit, liability account credit. THIS IS LUPIN
SCENARIO also
We can use MRP fucntionality for spares.
Gears/Bolts/Screws/Shafts

Consumable Procurement/CAPEX
Accnt Assmnt Cat is F (PM Order IW33) else K
- production materials (Against prod order - make to order scenario)
_ project materials (Accnt assmnt P)
_ replacement items in plant maintenance (PM order)
Eg : Operating supplies, machines.


Eg : Where Consignment Works Best.
A supplier has a product or group of products that he believes will sell if he can get them in front of
end-users. The trick is that getting them in front of end-users means getting them stocked in retail
establishments. Retailers do not have confidence in supplier, they do not want to invest the money
and risk getting stuck with something that may not sell. Supplier offers to stock his product in their
stores. shared risk shared benefit- supplier risks the capital investment, retailer risks retail space to
the product. For a more specific example, consider a bicycle manufacturer.
It works well for:
New and unproven products
The introduction of existing product lines into new sales channels (new market).
Very expensive products where sales are questionable.
Subcontracting Scenario I am aware

Stockable material








Ways of material rejection:

Do GRN with movement type 101, then during quality inspection , options are
Rejected : 350 (Quality stock to blocked stock)
Sampling : 331 (Goods issue from sampling stock)
Accepted : 321

We can return the rejected stock by movement type 122.
MIGO : Return Delivery , Purchase Order 122. We can remove from either QI or
Unrestricted.
1.Returns to vendor will be created against the purchase order with movement type 122 in MIGO
transaction. This will have an exactly reverse effect to that of original goods receipt

2.If the material is excisable, then Excise Department will create an outgoing Excise Invoice with
reference to this 122 material document. J1IS

3.If payment has been already been processed before the return of materials, FI Team will first need
to create a Credit Note through MIRO transaction and then the return to vendor process will be
executed. MIRO transaction is used for capturing/posting Invoices/Credit/Debit Notes etc.

5.Excise invoice will be printed and sent along with the delivery document.


103 - Goods receipt for purchase order into GR blocked stock (Qty update no value update)
If inferior, or damaged,(or reason can be than invoice not received else inventory count
pending)
105 - Release GR blocked stock for warehouse

124 Return delivery to vendor from GR blocked stock

107 - Goods receipt to valuated blocked stock (value update, stock is updated under blocked
stock)
109 - Goods receipt from valuated blocked stock

J1I5 To update missing Part 1 in rg23a or RG23c.

Quota Arrangement: