Concept: Labor Cost Capitalization
Labor cost capitalization enables you to recognize labor costs on a project as long-term
assets rather than short-term liabilities.
The
Project Labor Cost Recovery
account posting rule enables you to identify the
different contra accounts (typically liability) in which to record the capitalization of
labor costs.Example: You can have different contra accounts for each cost center or company. These
labor costs come from transactions that you tie to capital projects, phases, or tasks.
Workday debits summarized labor costs from Work in Progress (WIP) accounts and credits
the labor costs to contra accounts.
A
Labor Cost Summarization
subprocess on the transaction combines journal lines
from labor costs. It then posts a:- Summarized debit line to the correct WIP account based on your WIP account posting rule.
- Credit to contra account to offset the WIP account debit, based on theProject Labor Cost Recoveryaccount posting rule.
For labor costs tagged to
capital projects, Workday doesn't create WIP accounting when the labor cost summary
meets a WIP exclusion rule.