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2587232 - Inventory Valuation per Company & G/L Account Determination

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Symptom

When a company runs a perpetual inventory system (continuous stock system) and the setting Manage Item Cost per Warehouse is not selected (Administration → System Initialization → Company Details → Basic Initialization tab), or when it uses a valuation method that handles the inventory at the company level (e.g. Serial/Batch Valuation Method), it is not recommended to set up G/L Account Determination by warehouse. Or, if you do so, you should consider using the same G/L Account throughout all warehouses.

If you set up different G/L Accounts for different warehouses (WHs), you might end up with non-zero balance on individual G/L accounts, even though the overall balance, cumulative value and cumulative quantity for an item will be zero.

Reproducing the issue

Example Scenario:

Let's take as an example the valuation method Serial/Batchwhich always manages cost at the company level (the system will disregard the selection of the above mentioned field Manage Item Cost per Warehouse for this valuation method), and consider the following:

  1. Create an item managed by batches and valuated by the Serial/Batch valuation method.
  2. Receive into WH01 10 units of batch A with a unit cost of 10$. The system posts a debit of 100$ into the G/L Account linked to WH01.
  3. Receive into WH02 10 units of batch A with a unit cost of 20$. The system posts a debit of 200$ into the G/L Account linked to WH02. As a result, the value of batch A is recalculated to a new unit cost of 15$ across both WHs. 
  4. Issue the entire quantity of the item and batch A from both WHs. The system posts a credit of 150$ into the G/L Accounts linked to the WHs. 

Actual behavior:

As you can see in the screenshots below, the final cumulative value and cumulative quantity is zero but the balance per individual G/L Account is not zero.

  • Inventory Audit Report by G/L Accounts

[img] [/img]

  •  Inventory Audit Report by Item 

[img] [/img]

Note:

This scenario is not restricted to the above example. The same situation can occur for other Valuation Methods.

For items valuated by the valuation method Serial/Batch use the Batches and Serials Inventory Audit Report that displays results by serial numbers or batches.

Cause

Functionality description

Solution

This is correct system behavior.

Further information is available in the following documents:

  • How to Set Up and Use Serial/Batch Valuation Method in SAP Business One - Notice the recommendation related to the Multiple Branches feature and blocking multiple receipts for the same batch.
  • How to Set Up and Manage Perpetual Inventory System in SAP Business One - Check the section about unexpected report results, and explanations related to price system managed per warehouse or per company, and running the Inventory Audit Report for some/all warehouses and grouped/not grouped by warehouse.
  • Related SAP Notes
  • Online Help

Please discuss with your accountant what is the best valuation method of items for your company and which G/L Account Determination to apply.

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