Material Valuation changes in SAP

 Material Valuation changes in different scenario's in SAP

 Material Valuation changes in SAP Inventory Management 

                    Most goods movements in Inventory Management lead to changes in stock quantity and therefore in stock value.

Ø  In the case of goods receipts, the stock value increases

Ø  In the case of goods issues, the stock value is reduced.

For materials valuated at a moving average price, the material price can also change in the case of goods receipts for purchase orders. This is the case if the purchase order price differs from the material price.

Planned Delivery Costs for a purchase order are also included in valuation when goods are received. When the goods receipt is posted, provisions are created for planned delivery costs; thus the material is immediately valuated at the expected price.

A subsequent debit/credit when the invoice is received is only necessary if there are variances between the stipulations of the order and the invoice.

It is also possible to post the net value of goods received. In this way, cash discounts that have been agreed upon are taken into account in valuation at this point. This means that when a goods receipt is posted for a material with moving average price control, the value of the order minus the cash discount is debited.

Material price changes can also occur during the following transactions in Inventory Management:

Ø  Delivery Free of Charge

Ø  Transfer Posting

Ø  Goods Receipt Without a Purchase Order

Ø  Initial Entry of Inventory Data

Ø  Goods Issue

Ø  Goods Receipt Reversal

Delivery Free of Charge:

           If a delivery free of charge is posted for a material, for example as a rebate in kind, a goods receipt is posted for this material, but no invoice receipt. The account postings at goods receipt depend on the price control defined for the material.

Standard Price:

When a delivery free of charge is posted, the stock of the material increases by the quantity of goods received.

For a material valuated at a standard price, the total value of the material must increase in relation. Therefore, the stock account is credited with the value of the delivered quantity x standard price. The offsetting entry is made to the "Income from price differences" account.

Moving Average Price:

For a material valuated at a moving average price, no accounts are credited or debited when the delivery free of charge is posted, since there is no change in value. The total stock quantity of the material increases in the material master record, while the total value remains unchanged. Thus, the moving average price decreases.

Transfer Posting:

There are various types of transfer postings. A material document is created for every transfer posting. An accounting document is only created for transfer postings that lead to a change in value. These are:

§  Transfer Posting: From Plant to Plant

§  Transfer Posting: From Consignment to Company-Owned Stock

§  Transfer Posting: From Material to Material

§  Transfer Posting: From Valuation Type to Valuation Type

There are two ways to make a transfer posting from plant to plant:

§  In Two Steps

First we post the stock withdrawal in the issuing plant. Later we post the receipt into stock at the receiving plant. In the time between the two postings, the material is placed in "stock in transfer" at the receiving plant. Two material documents are created.

§  In One Step

we post the stock withdrawal in the issuing plant and the receipt into stock at the receiving plant simultaneously. One material document is created.

The value of the stock transfer is posted upon withdrawal of the material. The material master records change as follows:

§  In the issuing plant , the stock is reduced by the quantity transferred, and the value is reduced accordingly:

Transfer posting value = transfer posting quantity x price in issuing plant

§  In the receiving plant , the stock is increased by the quantity transferred, and the value is increased in accordance with the price control defined for the material.

If the price in the receiving plant differs from that in the issuing plant, the transfer posting results in price differences. These differences are posted to the stock account (in the case of price control V ) or to an "Expense/income from stock transfer" account (in the case of price control S ), depending on the type of price control defined in the receiving plant.

   

If the price in the receiving plant differs from that in the issuing plant, the transfer posting results in price differences. These differences are posted to the stock account (in the case of price control V ) or to an "Expense/income from stock transfer" account (in the case of price control S ), depending on the type of price control defined in the receiving plant.

The value of the transfer posting is calculated based on the price in the issuing plant: 50 pieces x $10/piece = $500. Consequently, the total value is reduced by $500 in the issuing plant and increased by $500 in the receiving plant.

The transfer posting leads to the creation of an accounting document. If the plants involved belong to different company codes, an accounting document is created for each company code. In this case, the offsetting entry is made to the company code clearing account.

Transfer Posting: From Consignment to Company-Owned Stock

Consignment goods are goods that are stored at your company site but belong to a vendor. The vendor makes the goods available to you but does not invoice them right away. The goods are invoiced at a previously agreed-upon consignment price once you have withdrawn them from storage.

Consignment stock is not subject to valuation in your company. When you transfer consignment stock to company-owned stock, the quantity transferred is valuated as follows:

Transfer posting value = quantity transferred x consignment price

The transfer posting value is posted to the material's stock account and the offsetting entry is made to the "Payables from consignment stores" account. This account is cleared by Invoice Verification when the consignment withdrawal is settled.

If the consignment price differs from the material price, the transfer posting leads to price differences. Depending on the type of price control, these differences are posted to the stock account (price control V ) or to an "Expense/income from consignment withdrawal" account (price control S ).

Transfer Posting: From Material to Material:

If we manage similar materials under different material numbers, we may occasionally need to transfer the stock of one material to another material.

The material master records change due to the transfer posting as follows:

Ø  The stock of the issuing material is reduced by the quantity transferred, and the value is reduced accordingly:

Value = quantity x price of the issuing material

Ø  The stock of the receiving material is increased by the quantity transferred. The increase in value depends on the type of price control:

If the price of the receiving material differs from that of the issuing material, the transfer posting results in price differences. These differences are posted to the stock account (in the case of price control V ) or to an "Expense/income from stock transfer" account (in the case of price control S ), depending on the price control defined for the receiving material.

Transfer Posting: From Valuation Type to Valuation Type

In the case of materials subject to split valuation, you can transfer stock from one valuation type to another.

The material master records change due to the transfer posting from one valuation type to another as follows:

Ø  The stock of the issuing valuation type is reduced by the quantity transferred, and the value is reduced accordingly:

Value = quantity x price of the issuing valuation type

Ø  The stock of the receiving valuation type is increased by the quantity transferred. The increase in value depends on the type of price control defined.

If the price of the receiving valuation type differs from that of the issuing valuation type, the transfer posting results in price differences. These differences are posted to the stock account (in the case of price control V ) or to an "Expense/income from stock transfer" account (in the case of price control S ), depending on the type of price control defined for the receiving valuation type.

If we post a transfer from a valuation type subject to price control S to a valuation type subject to price control V, the valuation header record does not change. However, If we post a transfer from a valuation type subject to price control V to a valuation type subject to price control S, the valuation header record changes when price differences occur. Because the price differences are posted to a price difference account, the value of the total stock managed in the valuation header record changes.