Replacement Cost Valuation (Colombia) 

Use

You use this program to calculate the replacement cost total value (RCTV) based on goods movements in the previous period. You run it after you have closed the period and run the Inflation Index Adjustment program. You must run this program in conjunction with the Inflation Index Adjustment program to fulfill legal requirements for adjusting inventories for inflation effects in Colombia.

Activities

To access the report, from the SAP Easy Access menu, choose Logistics ® Materials Management ® Valuation ® Balance Sheet Valuation ® Replacement Cost Valuation ® Replenishment Value Procedure (Colombia).

Prerequisites

You need to make a number of Customizing settings before you can run the program, in Customizing for Materials Management (MM), under Valuation and Account Assignment ® Balance Sheet Valuation Procedures ® Configure Replacement Cost Procedure (Inflation):

• Maintain Inflation Indexes

Make settings following the standard procedure, noting that you must use the Percentage index format in Colombia, and all index values must be marked as Definitive.

• Maintain Time Base and Exposure to Inflation Variants (TBE variants)

Maintain the TBE variant to fulfill a regular monthly calculation. Here you need to assign a posting variant you have defined in the activity, Maintain Posting Variants (in Customizing for Financial Accounting (FI), under Asset Accounting ® Special Valuation ® Revaluation of Fixed Assets ® Revaluation for the Balance Sheet ® Inflation Accounting ® Maintain Posting Variants). In most cases, a posting variant is not required for MM, but in Colombia it is.

• Inflation Methods ® Maintain Inflation Methods and Assign Inflation Methods to Company Codes

Under the FI section of the inflation method, maintain the following fields: Doc. type (LC), Post.key (cr.), and Post.key (dr.). Under the MM section, set the following indicators: MM active, Post repl. cost, and Don’t post to MM. Leave the fields Man. RC change and Indexing method blank.

• Maintain Material Inflation Classes

Maintain material inflation classes for each valuation area. Specify only index revaluation (no market price) as the revaluation method.

• Goods Issue Revaluation ® Maintain Movement Types

Mark all movement types that are to be revaluated by the replacement cost valuation.

• Maintain account determination for inflation adjustment as follows:

¡      Create required inflation adjustment accounts and offsetting accounts under Account Determination ® Maintain Inflation Adjustment Accounts.

¡      Assign accounts to valuation classes of all materials that are subject to inflation revaluation, under Goods Issue Revaluation ® Configure Automatic Postings – for the chart of accounts assigned to your company code (for example, CACO) and transaction key WGB.

¡      Assign an offsetting account to your inflation adjustment accounts, under Account Determination ® Assign Inflation Adjustment Accounts to G/L Accounts. Assign a specific account for definitive inflation gain or loss

• Maintain account determination for replacement cost valuation as follows:

You need to maintain an account for the inflation adjustment of goods movements in the activity, Configure Automatic Postings. For your company code’s chart of accounts and transaction key WGI, specify in the field Valuation modif. the movement type that is subject to replacement cost valuation, as well as the valuation classes of all materials that are subject to inflation revaluation.

Lastly, when you create a material, you need to assign a material inflation class in the inflation view. Note that you do not enter the replacement cost or replacement cost total value manually – since the system calculates these values automatically with the Inflation Index Adjustment and Replacement Cost Valuation (Colombia) programs. 

Features

The report retrieves the total value of stock at the end of the period before last and the index-adjusted RCTV, and evaluates all relevant goods movements in the period; the inflation value is the RCTV minus the total value.

The output displays a line for each goods movement, which includes:

·       Material document and relevant line item

·       Movement type

Goods issues marked as relevant for revaluation (in Customizing) influence the inflation value.

·       Whether the goods movement is taken into account in the revaluation (X = yes)

The system takes into account all goods issues with a movement type marked as relevant for revaluation in Customizing (see above). Goods receipts are also reported since they represent a goods movement; their values affect the total value of the goods, but not the inflation value.

·       FI document

This can be an FI document that corresponds to a material document, or one created independently in FI.

·       Total value of goods (starts with the total value at the end of the period before last, and is recalculated after each goods movement)

·       Inflation value (recalculated after each movement relevant to revaluation)

·       Replacement cost total value (recalculated after each goods movement)

Example

You want to adjust your inventories for inflation effects in period 6. Assume that the total value of stock at the end of the period before last (period 5) is COP 2700. You have closed period 6 and have run the Inflation Index Adjustment program, and have an index-adjusted RCTV of COP 3000. The system calculates the inflation value as the difference between these, 3000 – 2700 = 300. These three values are displayed at the top of the report output.

Then, the system updates these values for each goods movement:

• Total value PBL: the amount of each goods issue is subtracted from the total value, and the amount of each goods receipt is added to the total value.
• Inflation amount: only goods issues with movement types marked as relevant for revaluation affect the inflation amount. The report calculates the inflation amount as follows: for relevant goods issues, it calculates the percentage change in the total value, and calculates the same percentage for the inflation amount. For example, the first goods issue below reduces the total value by 200, a decrease of 7.4%. The report then reduces the inflation amount by the same percentage. Note that the amounts in the example below are rounded to the nearest whole COP; a decrease of 7.4% reduces the inflation amount to 277.78, rounded up to 278 below.
• Replacement cost total value: for each goods movement, it is calculated as the total value plus the inflation amount.

Assume we have the following movements, which would be reflected in the (condensed) output as shown below:

• Goods issue for COP 200
• Goods issue for COP 150
• Goods receipt for COP 400
• Goods issue for COP 300

Mat. Doc.	MvT.	Relevant	Total Val. PBL	Inflation Amount	Rpl.Cost TV
			2700	300	3000
1234567891	201	X	2500	278	2778
1234567892	201	X	2350	261	2611
1234567893	561		2750	261	3011
1234567894	201	X	2450	233	2683