Example: Replacement Cost Valuation (Venezuela)
You want to adjust your inventories for inflation effects in period 6. Assume that the total value of stock at the end of the period before last (period 5) is VEF 10.4. You have closed period 6 and have run the Inflation Index Adjustment program, and have an index-adjusted RCTV of VEF 13.5. The system calculates the inflation value as the difference between these, 13.5 - 10.4 = 3.1. These three values are displayed at the top of the report output.
Then, the system updates these values for each goods movement:
Total value PBL: the amount of each goods issue is subtracted from the total value, and the amount of each goods receipt is added to the total value.
Inflation amount: only goods issues with movement types marked as relevant for revaluation affect the inflation amount. The report calculates the inflation amount as follows: for relevant goods issues, it calculates the percentage change in the total value, and calculates the same percentage for the inflation amount. For example, the first goods issue below reduces the total value by 3, a decrease of 24,2%. Since that is relevant, the report reduces the inflation amount by the same percentage. Note that the amounts in the example below are rounded; a decrease of 24,2% reduces the inflation amount to 2.3498, rounded up to 2.35 below.
Replacement cost total value: for each goods movement, it is calculated as the total value plus the inflation amount.
Assume we have the following movements, which would be reflected in the (condensed) output as shown below:
Goods receipt for VEF 2
Goods issue for VEF 3
Goods receipt for VEF 1
Goods issue for VEF 1.2
Mat. Doc.
MvT.
Relevant
Total Val. PBL
Inflation Amount
Rpl.Cost TV
10.4
3.1
13.5
4900007695
501
12.4
3.1
15.5
4900007697
201
X
9.4
2.35
11.75
4900007696
501
10.4
2.35
12.75
4900007699
201
X
9.2
2.079
11.279