Inflation Index Adjustment (SAP Library)

Inflation Index Adjustment

Use

In many cases, you use this program to revaluate your materials by means of a predefined inflation index. If your local currency is specified for your materials, the program determines each material's replacement cost by means of the inflation index you have maintained in Customizing.

The program also enables you to revaluate materials specified in a foreign currency on the basis of exchange rate differences – for imported materials, for example. In this case, the system adjusts each material price based on a foreign currency according to the exchange rate difference between the dates entered in your time base and exposure to inflation variant (TBE variant) (see Replacement Cost Calculation via Inflation Index).

You execute the Inflation Index Adjustment program for materials with the revaluation method only index revaluation (no market price). The report also covers materials for which no valid market price was determined using the Market Price Determination program. You can only run the Inflation Index Adjustment program for the previous period.

Prerequisites

To run the Inflation Index Adjustment program:

All the prerequisites for the Replacement Cost Valuation programs have been fulfilled.

You have maintained the inflation data in material master records for materials you want to adjust.

Before you run the program for the first time, make sure that values are entered for the replacement cost and the revaluation date (for the previous period). The program cannot run if either of these fields are empty.

If you want to adjust your materials on the basis of exchange rate differences, before you run the report you must enter the foreign currency in the Orig. currency (Original currency - previous period) field, under Previous period.

You have already run the Market Price Determination program – provided the materials to be adjusted have revaluation methods related to the market price.

Features

To access the report, from the SAP Easy Access screen, choose Logistics ® Materials Management ® Valuation ® Balance Sheet Valuation ® Replacement Cost Valuation ® Inflation Index Adjustment.

Selection

On the selection screen, you can specify:

The posting period you want materials to be adjusted for

This must be the previous period.

Which materials you want to revaluate

Whether a provisional index is to be used in the material revaluation

If you select Provisional run, the system uses provisional index values to determine the material's replacement cost. Otherwise, it uses a definitive inflation index.

Recommendation

If you use a provisional index, we recommend that you do not post a price change.

Whether an update is to occur

If you select Update run, the system updates material master fields and logs all changes. Otherwise, the results of the program are simulated; in this case, you can generate a log if you select Create log.

Running the Program in Update Mode

If you run the program in update mode, the system updates the material master as follows (under Previous period):

Replacement cost

The replacement cost is always shown in the local currency. If the system performed a double currency conversion for your material, it enters the foreign currency in the Orig. currency field.

Revaluation date

The system sets this to the last day of the previous period.

Processing date for definitive or provisional index adjustment

Again, the system sets this to the last day of the previous period.

If addition, if the appropriate Customizing settings are made, the system posts a price change in Financial Accounting, and updates the material's valuation price.