Valuation Level of Lowest Value Determination

Each time you determine the lowest value, you can decide which valuation level it should be carried out at:

  • Lowest Value Determination at Valuation Area Level

In this case, the system only accesses data from the valuation area. Lowest market prices, ranges of coverage, and movement rates for the material in other valuation areas are not included in the calculation.

  • Lowest Value Determination at Company Code Level

In this case, the system accesses information from the entire company code. The lowest market price is formed using the prices in all valuation areas in this company code. The movement rate is calculated based on accumulated receipts and issues and stocks in all the valuation areas.

Object documentation 

To be able to carry out lowest value determination at company code level using current market prices, all materials in the valuation areas in this company code must be valuated in the same way. For example, if a material is subject to split valuation according to valuation category H in one valuation area and the same material is not subject to split valuation in another valuation area, the system cannot determine the lowest market price.

Lowest value determination at company code level usually produces different results to those produced by lowest value determination at valuation area level.

Valuation Levels

If you set the dividing line between movement and non-movement at 10% and determine the lowest value on multiple levels, this leads to the results shown in the following table (with 20% devaluation and provided that the market price determined is lower than the current valuation price).

Results of Lowest Value Determination on Multiple Levels

 

Company code

Valuation area 1

Valuation area 2

Tax price 1

13.50

14.00

13.50

Tax price 2

13.50

14.00

10.80

Stock

500

300

200

Balance sheet value

6750

4200

2160

The total balance sheet value for the individual valuation areas is not necessarily smaller than the balance sheet value at company code level. For example, if the dividing line between fast-moving and slow-moving is 13%, material A would be classified as slow/non-moving at the company code level. The tax price 2 is then reduced and the balance sheet value would also decrease.