Replacement Cost
Definition
The value of replacing a material at a given point in time. The system calculates a material's replacement cost by means of its market price or by adjusting the material price with an inflation index. You can also change a replacement cost manually.
Use
When you create a material, you manually enter an initial replacement cost. If the material is to be revaluated by inflation index only (as specified in the
revaluation method), or if the Market Price Determination program does not find a valid market price, then the Inflation Index Adjustment program uses this initial replacement cost the first time you run it.If you run a replacement-cost valuation program in update mode and it determines a replacement cost, the system automatically updates this value as the replacement cost in the material master.
Structure
The material master contains fields for the replacement cost for the current period and the previous period. The system fills these fields according to the period for which you run the programs – either under Current period or Previous period (see
Market Price Determination and Inflation Index Adjustment).Integration
The original currency of the replacement cost is displayed in the Orig. currency field.
The original currency refers only to the currency of the replacement cost before any conversion that the system carries out when it determines the replacement cost. The replacement cost itself, however, is always displayed in your local currency. If the Orig. currency field is blank, then the replacement cost was originally found in your local currency.
You can also set the original currency manually.