Inventory Valuation-FI

[Former Member]

Dear Expert,

What is term "Inventory Valution". What is the use and Effect of it in FI?

Rgds

PK

Moderator: Please, search available SAP material for basic terms

[Former Member]

Hi,

Further to your mail, please find the following:

Valuation of the Inventory is as per Accounts Standards (AS2). Since it belongs to part of Current Assets of Balance sheet Item. The value of stock buying and cost of put to use and activities of the product will keep on changes in SAP, further to the following parameters at Material Master:

Valuation Category: Determines whether stocks of the material are valuated together or separately.

Valuation Class: The valuation class has the following functions:

u2022 Allows the stock values of materials of the same material type to be posted to different G/L accounts.

u2022 Allows the stock values of materials of different material types to be posted to the same G/L account.

u2022 Determines together with other factors the G/L accounts updated for a valuation-relevant transaction (such as a goods movement).

Price Control: Indicates the price control used to valuate the stock of a material. You have the option either Standard or Moving Average Price

The valuation would be standard cost estimate and standard cost run. Further to Standard Cost, Unit Costing, Batch Costing, Mixed Costing and Material Ledger concepts are available in SAP. Each of them are unique with each other with advantages and disadvantages.

Prior to taking the balance sheet finding the value of the stock / inventory is periodical activities along with WIP.

Inventory Valuation is cited as one of the biggest advantages of using Moving Average price control. Inventory valuation would serve the exact price of the inventory with correct price. The Tables would help you for the same are MBEW or MBEWH.

Further to the above, the Inventory Valuation Method is intended as a managerial report to check what-if scenarios. For instance, you can see what happens if you value an item based on a different costing method. This report is not intended to be used as report for auditing. For auditing purposes use the Inventory Audit Report.

You can use any standard method for the inventory valuation. You can also define various criteria to restrict the selection for inventory valuation.

Goto Inventory->Inventory Report->Inventory Valuation Report.

You will have to export to excel and consolidate the results.

Please note It can be run for other costing methods than actually selected for an item. For the selected method of valuation for an item, please run Inventory Audit Report. Exporting will work for you.

Do prepare personal notes slowly and do elaborate continuously to update your self.

Regards

VG

[Former Member]

Hi,

in every accounting standard (US-GAAP, IFRS,...) are rules defined how to valuate your inventory.

This is to ensure that your inventory value is displayed in your financial statements according to the reporting standards.

For example: In the actual fiscal year you have a raw material on stock (1 kg) valuated with standardpreis which is 100 / kg.

For your fiscal year-end-closing you determine a inventory value based on one of the accounting principles (eg lowest value principle) that is 90 EUR / kg. So you have to revaluate your inventory from 100 EUR to 90 EUR.

best regards, Christian