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LIFO/FIFO Methods
The
LIFO procedure is a type of key date valuation (mostly the
balance sheet date) that enables the increase in stock per fiscal year to be
valuated separately. To do this,
layers are formed per fiscal year.
There are two procedures:
The layers are based
on quantity and value.
- Index LIFO method (Dollar Value
Method)
The layers are only
based on value.
In addition, it is possible to group materials
together in
LIFO pools and valuate them together.
The FIFO procedure is a valuation method which
calculates the value of
the stock on the basis of the last receipts.
This
enables you to valuate stock in the most
realistic fashion.
Actions
For LIFO/FIFO valuation, you must make the
following settings:
1. In
Customizing:
a) Set the
control parameters.
b) Define the
valuation levels.
c) Define
LIFO/FIFO-relevant movements.
d) Define LIFO
pools (ONLY with pool formation).
e) Set the
automatic assignment of materials to LIFO pools (ONLY with pool
formation).
2. In the
material master record:
a) Define
whether a material is to be valuated according to the LIFO/FIFO
procedure.
b) Set the
manual or automatic assignment of a material to a LIFO pool (ONLY with pool
formation).