The goods and/or services produced, in-house, can be capitalized into asset(s). But, there are two distinct phases during this process:
- Construction phase (AuC)
- Utilization phase (useful or economic life phase)
It then becomes necessary to show the assets under these two phases in two different balance sheet items:
The ‘construction phase’ is one in which you start producing or assembling the asset but it is not yet ready for economic utilization. SAP categorizes these kinds of assets into a special asset class called ‘Assets under Construction’ (AuC).