Valuation Procedure
Definition
Enables warehouse inventories and goods movements to be valuated based on different approaches.
The valuation procedure determines how business transactions affect the inventory value and therefore the inventory price of inventory objects.
The following valuation procedures are supported in Inventory Accounting:
· Valuation at standard price
· Valuation at moving average price (MAP)
Changing the valuation procedure does not affect posted values. The valuation procedure can therefore be changed at any time.
Use
Business transactions post values in Financial Accounting and update one or more subledgers. All business transactions that can result in a change in the inventory are relevant to valuation procedures.
Goods movements and the allocation of differences through clearing runs and debits or credits of a material.
Each business transaction consists of receiving and issuing units. Each of these units forms at least one document line item.
Business transactions are valuated in two steps:
1. Determination of the external value
2. Determination of the value for each line item
This value is cleared against the receiving or issuing unit.
If the external value of the business transaction differs from the value of a line item, additional line items are generated. Therefore it must be decided independently for each inventory object which value is used to post the inventory change. If this value differs from the external value, the difference must be posted as a price difference.
The valuation procedure influences the amount and frequency of price difference postings.
Valuation of Inventory Changes
Goods Receipt from Vendor
Business Transaction |
Standard Price |
Moving Average Price |
Standard purchase order - To make-to-stock inventory - To sales order or project inventory - To inventory in transit |
Inventory price (standard price) |
External value (such as purchase order price) |
Without purchase order - To inventory
|
Inventory price (standard price) |
Inventory price (moving average price) |
Delivery free of charge - To make-to-stock inventory
|
Inventory price (standard price) |
External value (= zero) |
Subcontracting - To make-to-stock inventory
|
Inventory price (standard price) |
Inventory price (moving average price) |
Consignment order - To consignment inventory
|
Not relevant to FIN |
|
Goods Receipt from Transfer
Business Transaction |
Standard Price |
Moving Average Price |
- To make-to-stock inventory
|
Inventory price of receiver (standard price) |
External value (inventory price of sender) |
Goods Receipt from Customer (Return)
Business Transaction |
Standard Price |
Moving Average Price |
With or without reference to order |
Inventory price (standard price) |
1. Preliminary cost estimate for production order 2. Inventory price (moving average price) |
(Internal) Goods Receipt from Production
Business Transaction |
Standard Price |
Moving Average Price |
With production order - To make-to-stock inventory - To sales order or project inventory |
Inventory price (standard price) |
Inventory price (moving average price) |
Without production order |
Inventory price (standard price) |
Inventory price (moving average price) |
(Internal) Goods Receipt from Consumption
Business Transaction |
Standard Price |
Moving Average Price |
Return from cost center or project |
Inventory price of receiver (standard price) |
Inventory price (moving average price) |
Inventory differences with account assignment - Make-to-stock inventory - Sales order or project inventory |
Inventory price of receiver (standard price) |
Inventory price (moving average price) |
(Internal) Goods Receipt Without Reference
Business Transaction |
Standard Price |
Moving Average Price |
Inventory differences |
Inventory price (standard price) |
Inventory price (moving average price) |
Initial stock entry without external value |
Inventory price (standard price) |
Inventory price (moving average price) |
Initial stock entry with external value |
Inventory price of receiver (standard price) |
External value |
Goods Issue from Inventory
Business Transaction |
Standard Price |
Moving Average Price |
Make-to-stock inventory - For sales order - For consignment inventory - To inventory in transit - For subcontracting (provision) - Return to vendor without reference to order |
Inventory price (standard price) |
Inventory price (moving average price) |
Make-to-stock inventory - Return to vendor with reference to order
|
Inventory price (standard price) |
External value (purchase order price) |
(Internal) Goods Issue from Inventory
Business Transaction |
Standard Price |
Moving Average Price |
Make-to-stock inventory - For production - For consumption / internal use - Inventory differences |
Inventory price (standard price) |
Inventory price (moving average price) |
Settlements
Business Transaction |
Standard Price |
Moving Average Price |
WIP |
Inventory value does not change. Price differences |
Value is cleared against inventory. Dependency on stock coverage |
GR/IR |
Inventory value does not change. Price differences |
Value is cleared against inventory. Dependency on stock coverage |
Material Debits and Credits
Business Transaction |
Standard Price |
Moving Average Price |
Make-to-stock inventory |
Inventory value does not change. Price differences |
Value is cleared against inventory. Dependency on stock coverage |