Configure CIP Cost Accounts for Fixed Assets in Progress

When adding assets to the fixed asset register, which have the type “In progress”, e.g. when building or remodeling a new arena, two additional GL distribution lines are needed in the related GL distribution scheme of the fixed asset. The reason is that all incurred expenses still have to go to the balance sheet for assets in progress.

In the GL distribution scheme at the major / minor group, add two new GL distribution lines with:

• Debit the CIP Cost Account
• Credit the CIP Cost Clearing Account

It’s recommended to use a separate CIP Cost Account and a CIP Cost Clearing account as resulting journal entries would be:

Source                                                                                       Example

Debit (From Accounts Payable) CIP Cost Clearing           Office CIP Clearing

Debit (FX Add Transaction)                                                    Office CIP Cost

Credit (FX Add Transaction)                                                   Office CIP Clearing (Clears #1)

Debit (FX Transfer to Capitalized)                                         Office Equipment

Credit (FX Transfer to Capitalized)                                        Office CIP Cost

With this setting the CIP balance is maintained clearly in a CIP type GL account.

All costs on the Dr CIP Cost Account & CR CIP COST CLEARING are transferred to the GL account DR Assets Costs & CR Assets Cost clearing as soon as the fixed asset gets capitalized and ready for depreciation.