Balance sheet valuation in Inventory Accounting enables you to valuate your inventories at the end of reporting periods in accordance with international accounting principles (IAS, U.S. GAAP) and your own purposes.
The balance sheet valuation function in Inventory Accounting provides different procedures and methods for the periodic valuation of inventories:
(First In, First Out)
Market price analysis can be oriented toward the procurement market or the sales market.
¡ Valuation based on replacement cost (oriented toward the procurement market)
¡ Loss-free valuation (oriented toward the sales market)
Lower of cost or market (LCM) is a separate procedure that can be executed independently of the other valuation procedures.
· Flat-rate writedown based on range of coverage
Flat-rate writedown based on range of coverage (ROC) is an optional inventory writedown, being typically used for materials that have remained in inventory for long periods of time and are infrequently moved.
Writedown based on range of coverage is calculated as the quotient of the inventory and the consumption.
You have implemented Inventory Accounting.
You have the necessary authorizations for balance sheet valuation.
1. You start the balance sheet valuation process by creating rules for balance sheet valuation.
You can display the current rule for balance sheet valuation.
2. You build intermediate layers for balance sheet valuation.
You can display the intermediate layers.
3. You prepare the market prices.
4. You execute balance sheet valuation.
You receive a list of the balance sheet values by account, showing the writedown amounts for G/L accounts and profit centers.
You can see the prices under Display Material Prices (transaction FAIV03).
You can accept the balance sheet prices as inventory prices (Price Release, transaction FAIV01).