OVERVIEW
Inventory revaluation is the process of adjusting inventory costs to account for changes in recorded costs. Exchange rate fluctuations, supply chain disruptions, damage, or spoilage may be the cause of these modifications. Revaluing inventory involves comparing the item's recorded value to its market worth. Businesses can make sure that their financial accounts appropriately reflect the worth of their inventory by revaluing their stock, which is essential for making wise business decisions.
1.1 WHY WE NEED INVENTORY REVALUATION
Revaluation is necessary to ensure that the recorded inventory value on the balance sheet reflects its true value. There are various circumstances when Inventory revaluation is necessary are mentioned below:
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When inventory revaluation is done business can ensure that their financial statements accurately reflect the value of their inventory, which is very important for making informed business decisions.
2.INVENTORY REVALUATION
Navigate to Menu ->Financial Management -> Posting Set up -> Inventory Revaluation or search for Inventory Revaluation in search utility available in Menu itself.
2.1 INVENTORY REVALUATION HEADER
When the Inventory revaluation screen is opened, the system shows the Inventory revaluation screen as given in the below screenshot:
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Tenant and Organization are auto-populated based on user login.
The Document number will be auto-generated by the system based on the Document type selection.
Enter the Document Date, on which the transaction of revaluation is processing.
Account Date would be auto-populated based on the document date, but user can change it according to the impact of account consequences.
Document Date and Account Date should be same and it should be equal to the system date, when Revaluation Type= On Available Quantity. Otherwise, system will not allow to save the record and throw an error message.
User needs to select Revaluation Type among two values, either ‘On Available Quantity’ or ‘On Sold/Consumed Quantity’.
‘On Available Quantity’ is used to do the revaluation of the cost of the product as per the current quantity of the product.
‘On Sold/Consumed Quantity’ is used to do the revaluation of the cost of the product as per the sales and inventory use transactions.
If Revaluation Type=On Sold/Consumed Quantity, then system will display Revaluation Period field. This field will display period of previous month to revaluate the cost of the product. Also, Costing methods related to Purchase order will not be visible in Case of Sold/Consumed quantity Revaluation type. Such as, Average PO, Last PO and Weighted Average PO.
User has to select the Accounting Schema from the dropdown, which defines the rules used in accounting such as costing method, currency and calendar. All the active accounting schemas will be visible in the dropdown as per the selected organization.
Needs to select the Currency Rate Type, which helps to convert the price to other currency if there are multiple accounting schemas during posting of the transaction. For e.g. Spot, Average, Company & Period End etc.
User has to select the Costing Level and Costing Method, which helps to filter the product categories to revaluate the cost of the assigned products.
User has the option to select the value in Product Category and Product field, to revaluate the cost for particular category or product.
Warehouse is mandatory to select, so that system will generate the Revaluation lines for the product category and products to the respective warehouse and locator.
Cost Type field will display, when Costing Method=Standard Costing. User has to select the particular cost type value against which the cost of the product available on costing info screen.
Generate Revaluation Lines button helps to generate Revaluation lines only, after inserting values in all the required fields. Field value combinations should be correct to generate the lines.
Total Differencewill get updated from revaluation lines only in case of "On Available quantity" Revaluation type.
Document Status is a system maintained field and will be updated by the system automatically based on some events done by the users on the Inventory Revaluation record.
2.2 REVALUATION LINE
The user would be able to generate the Inventory Revaluation lines by click on Generate Revaluation Lines. All lines would be generated according to the selecting values in the fields on the header, such as Costing Level, Costing Method, Product Category, Product and Warehouse.
2.2.1 REVALUATION TYPE – ON AVAILABLE QUANTITY
User can perform Revaluation in case of all costing methods and all costing levels. Once the header fields are filled correctly, System will generate Revaluation lines with respect to the products as per filled values. It must be ensured that user cannot enter or edit any details on the line except Revaluated Cost, because all other fields would show in read only mode. Revaluation Line would show in the system as given in the below screenshot:
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If there are multiple revaluation lines, then system will add all the total difference values of each line and show its total on the header as per the above screenshot.
After completing the Document, system will update the current cost on cost queue tab of costing info screen . The cost will be changed only in the Selected warehouse line as selected on Header of Revaluation screen .
System will also update the M_Transaction ID on the Product transaction tab after completing the Revaluation document.
2.2.2 REVALUATION TYPE – ON SOLD/CONSUMED QUANTITY
All Fields such as product, product category, costing method, costing level, UOM and Attribute set instance will be auto filled on the basis of selected values on the header tab by clicking on Generate Revaluations Lines. Also, user has to fill another field ‘Revaluation Period’, which is used to define the period for revaluation as shown in given below screenshot.
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