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Assessment Cycle Vs Profit Center

Updated Jul 03, 2018

Difference between Assessment Cycle and Profit Center in SAP FICO

While creating the cost center master record we give the profit center in that by which the data which is in the cost center will flow to profit center.

When we execute the assessment cycle the data will flow from cost center to profit center.

Now my issue is :

If we link the cost center with the profit center then what is the use of assessment cycle?

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Comments

  • 16 Aug 2008 7:24 am Shalesh Singh Visen Best Answer
    In the Assessment secion it talks about "allocating primary and secondary costs". When they refer to primary they are talking about the dollars charged to Primary Cost Elements. 
     
    But when you read further it states "For allocations using assessment, you can summarize all the cost elements into one assessment cost element. When you carry out the assessment, the system allocates all the costs to be allocated from the sender using this cost element. 
     
    However, this method does not store any information on the receiver, regarding the composition of the costs." In short this states that the acummulated dollars from the Primary Cost Elements is allocated via an "assessment cost element" which is a Secondary Cost Element. Whereas in the Distribution area on the attached document it states: "The original cost element (that is, the primary cost element) is retained". 
     
    This means that just like my example below if dollars are posted in Primary Cost Elelment 456789 in the sender cost center then dollars will be posted to the same primary cost element 456789 in the receiver cost center. I hope this helps clarify your questions. 
     
    Allocations are confusing when you first review them but once you grasp the concepts you will think to yourself that "I sure made that more difficult than it needed to be." Assessments move money via Secondary Cost Elements. Distributions move money via the original Primary Cost Elements.
  • 14 Aug 2008 1:47 pm saket Helpful Answer

    Allocations in SAP can be handled in two different ways. You have Assessments and Distributions.

    Cost Center Accounting:

    Assessment Cycles use a Secondary Cost Element to move dollars from one Cost Center to another. Since Cost Centers can be assigned to Profit Centers these assessments will also appear in Profit Center Accounting. If Cost Center A is assigned to Profit Center 10 and you are assessing dollars from CC A to CC B which is assigned to PC 20 then in Profit Center accounting you will see dollars flowing between PC 10 and PC20 on Secondary Cost Elements. Distribution Cycles use the Primary Cost Element/GL Account. So if you move dollars on acccount 456789 from CC-A to CC-B then the dollars wil appear in CC-B in the same Primary Cost Element 456789. You will also see the movement of dollars from PC-10 to PC-20 on the same GL Account 456789.

    Profit Center Allocation:

    You can also use Assessment Cycles and Distribution Cycles in just Profit Center Accounting. These allocations work in the same manner as the Cost Center Cycles except Cost Centers are not impacted only Profit Centers show the allocations.

    Profit Center Assessment Cycles also use Secondary Cost Elements to move dollars between Profit Center only.

    Profit Center Distribution Cycles allocate dollars using the same Primary Cost Element in both Profit Centers. So dollars in Primary Cost Element 456789 will show a opposite entries in the sending and receiving Profit Centers.
  • 15 Aug 2008 3:09 pm Manoj Helpful Answer

    Cost Center Assessment Cycles are different than Profit Center Assessment Cycles. 

    Yes cost center assessments can be seen in Profit Centers but separate assessments created specifically for assessing Profit Center dollars will not appear in CO and cost centers.
  • 16 Aug 2008 7:19 am Shalesh Singh Visen Helpful Answer
    the basic difference is that with distribution the manger of the receiver cost center can see the original cost element (account). The assessment does not show the original account (cost element), it will only show the assessed costs form cost center XXXXX.

    However, that is not the discussion. Venka'ts original question was , what is the purpose of assessment cycles if cost centers are assigned to profit centers.
    I must say I have a little bit of difficulty understanding the question.
    Cost center allocations (there are more than distribution and assessments) are done to relieve one cost center of original costs and assign it to one or many cost centers. The example was given below.

    The assignment of cost centers to a profit center is done in order to get expenses/costs from cost centers to profit centers to get P&L report by profit centers.
    The revenue part on profit centers comes from the assignement of profit centers to materials being sold (in the slaes orders).
    Generally, revenues are not posted to cost centers.
  • 19 Aug 2008 1:22 am Manoj Helpful Answer
    Hi,

    The assesment cycle are created with CC as Sender to allocate costs
    to other cost objects like cost center,orders to trace the costs to
    the final destination during periodic closing. When we have Profit
    centers assigned to these objects statistical entries are passed to
    them as well.Statistical entries are purely for information purposes.

    However, if the eliminate internal business activity is ticked on in
    PCA customising, then postings between same object type involving
    same profit center is not recorded.For eg,if coster center A with PC
    1000 is assesed to CC B with PC 1000; Profit center postings will
    not be recorded.

    I hope I could answer your question
  • 24 Aug 2010 10:07 pm Guest Helpful Answer
    I would like to do profit center assessments and would like to see cost center as my object to gather info and then post the assessment as it normally does only to the profit center. Any ideas on how I can achieve this goal? I am sure I am not the only one to make this request.
  • 25 Jun 2018 10:45 am Guest Helpful Answer

    Refer to S_ALR_87012143 Accounting > Financial accounting > Vendors > Withholding tax > USA> 1099 Listings and for general info S_P00_07000134 Accounting > Financial Accounting >Vendors > Withholding Tax > General... 

    i hope it solves ur problem..... ..
  • 13 Aug 2008 3:20 pm Manoj
    Ok let me make things clear here Cost Centres are linked with Profit Centres... 
     
    Now there is a difference as we have two types of costs one the primary(COA) Posts from FI to CO and the other is the secondary Only in Controlling. 
     
    When we talk about assessment it allocates costs in both primary and secondary cost centres like Telephone expenses which will be allocated amongst several cost centres. Then we have Distribution which will allocate cost only in secondary cost centres which is not linked to Chart of accounts i.e it is a Controlling Document. I guess i have made myself clear as to why we use the Assessment and distribution.
  • 09 Dec 2016 4:31 pm Mahammad Rafi

    By the accesment cycle we able to know the exact actual  and plan costs incurred.   Thats the reason Distrubtion cycle and assesment cycle will use.  KP06, KP26.

     
  • 22 Aug 2017 7:15 pm P Das

    There are many people who don't know PC ( Product Costing) & COPA. It is very important that one should know these two things to become a complete FICO consultant. Try to learn them. You can contact PDas over telephone for Product Costing and COPA - (M) 9163947650
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