Inflation Accounting for Materials Management (MM)  

Use

This solution enables you to carry out replacement cost valuation for your materials. Depending on your business and legal requirements, you can revaluate materials – based on their market price, an inflation index, or both – and subsequently adjust your stock. Using the replacement costs, you can also revaluate goods issues for these materials.

Prerequisites

In addition to the Customizing activities described below, you must maintain the inflation data in your material master records.

If you require that all relevant invoices and credit memos are included in the inflation adjustment processes, you must post them using Logistics Invoice Verification.

Due to legal requirements, some functions are applied differently in Chile.

Features

The Inflation Accounting solution for MM determines a replacement cost for your materials, based on either the market price or the inflation index. If you run the replacement-cost valuation reports in update mode, the system calculates the specific inflation effect and posts the specific gain or loss at the material G/L account level.

If you want to calculate the general effect of inflation for your materials at the G/L account level, you must run the Inflation Adjustment of G/L Accounts report in Financial Accounting (FI).

Activities

Customizing

When you first install the SAP System, you have to make global settings for the Inflation Accounting solution. These objects are referred to as global settings since they are also used by the Inflation Accounting solution in the Financial Accounting (FI) and Assets Accounting (FI-AA) components; note in the corresponding documentation, however, that the Customizing settings vary from component to component.

In Customizing for Materials Management (MM), make your global settings by choosing Valuation and Account Assignment ® Balance Sheet Valuation Procedures ® Configure Replacement Cost Procedure ® Global Inflation Settings. You define the following:

In addition, you have to make MM-specific settings. In Customizing for MM, choose Valuation and Account Assignment ® Balance Sheet Valuation Procedures ® Configure Replacement Cost Procedure ® Replacement-Cost Valuation Settings. You must define material inflation classes and assign them to your materials. Depending on the replacement-cost valuation procedure and the type of update you specify, you can define additional settings in these activities.

Closing

When the time comes to adjust your materials, typically at period end, you run the appropriate reports: