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Former Member

Reflect budget consumption on WBS with capital inventory

Hello experts,

We have a situation where company buys costly components that are installed on equipments and capitalized when installed.

The particular case is that those are sitting in inventory sometimes for months (because some components could be repaired and others must be replaced by new ones)

The related replacement costs are budgeted on a specific project for the year. When a component needs to be replaced and is not in stock it goes through a normal procurement process: reservation, PR, PO, good receipt and is placed in inventory. In accounting it's a capital inventory account. Only at the time of good issue the actual cost is reflected in the WBS entered in the reservation.

For the business it's an issue because during weeks, months, it's like there is no commitment/cost incurred in relation to the project/WBS.

What would be the best practice to reflect commitment/costs on the WBS while the material is "only" in inventory ?

Best regards,

Guillaume

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