Setting up Inventory Revaluation

To set up Inventory Revaluation you must do the following:

  • Define a Revaluation Profile.
  • This includes User Defined Cost Definition Code and Period. These User Defined Costs are the new cost to be used to revalue the inventory.
  • Define Ledger Interfaces with a value type of Inventory Costs.
  • Set a standard cost on the Item Costs form. If this is not done, the ledger entries resulting from the Inventory Revaluation may be incorrect.

Revaluation Period

The object of Revaluation Period revaluation is to identify inventory that is on-hand at the end of this revaluation period. This is the quantity of inventory to be revalued and for which an adjustment must be posted.

For allocatable items, the system reviews all receipts in the relevant periods, and any issues against which they were allocated, in order to determine the remaining quantity on-hand. Actualised receipts are included where the actualisation of the receipt occurred in or before the revaluation period. Actualised issues are deducted where the actualisation of the issue occurred in or before the revaluation period. Any unallocated actualised issues are deducted where the actualisation of the issue occurred in or before the revaluation period.

For non-allocatable items, the system reviews all receipts and issues in the relevant periods in order to determine the quantity on-hand for each item/location combination. Actualised receipts are included where the actualisation of the receipt occurred in or before the revaluation period. Actualised issues are deducted where the actualisation of the issue occurred in or before the revaluation period.

Current Period

The object of Current Period revaluation is to create adjustments for all inventory movements, which have occurred since the end of the revaluation period (and which were recorded at the old standard cost), so that both Order Fulfilment and the Financials ledgers reflect how they would look if those movements had occurred with the new standard cost.

Therefore, for all receipts and issues in the current period, whether allocated or not, and for each eligible transaction, the revaluation includes a revaluation quantity. For the current period, the revaluation quantity is identical to the quantity on the original receipts and issues.

The revaluation amount is calculated as follows: ((revaluation quantity multiplied by new standard cost) minus (revaluation quantity multiplied by current standard cost)).

The currency setting is taken from the revaluation profile. That is, whether the revaluation will use the base currency values or reporting currency values as a basis for calculations. If base currency values are used, the reporting currency revaluation values are calculated using either a User Defined Cost record for that currency, if one exists, or by using the rate entered at run time. If reporting values are used as the basis, the base currency revaluation values are calculated using the same process.