Inventory Valuation for Year End Closing SAP Best Practices
Purpose, Benefits, and Key Process Steps • Purpose • Within the inventory valuation at the year end, the valuation of the material has to be reviewed considering several valuation approaches. The single-level materials could be determined by lowest value on base of the market price. The produced materials should also be valuated with the lowest value by using the inventory costing with own setting for the valuation variant. • Benefits • Valuation can consider the valuation request on the basis of local requirements for valuation approaches. • Key Process Steps • Stock valuation for raw materials, packaging materials and trading goods on base of lowest possible value. • Inventory valuation for semi-finished and finished materials on base of local requirements for valuation approaches. • Stock value adjustment.
Required SAP Applications and Company Roles • Required SAP Applications • Enhancement package 5 for SAP ERP 6.0 • Company Roles • Warehouse Manager • Enterprise Controller • Product Cost Controller • General Ledger Accountant
Detailed Process Description • Stock valuation, using lowest value principle for raw materials, packaging materials and trading goods. • Additional devaluations by movement rate. • Inventory costing for finished and semi-finished products, in accordance with the lowest possible value principle. • Stock value reporting in form of a comparison analysis. • Manual stock value adjustment posting in the Financial Accounting component.
Process Flow Diagram Inventory Valuation for Year End Closing Event Procurement Posting Valuation Planning Warehouse Manager Determination of Lowest Value for Raw Materials, Packaging Materials and Trading Goods, on the Basis of Market Prices Procurement of Raw Materials, Packaging Materials and Trading Goods Stock Valuation of Semi Finished and Finished Products – Determination of Lowest Value Using Inventory Costing Analyzing Stock Valuation for Materials Using Price Comparison for Each Material Stock Account / Material Type / Material Enterprise Controller Copy Inventory Controlling Version Post Book Depreciation as planned values Revaluation: Set Old Posted Values Depreciation to Zero Activity Price Planning Change to Calculate Rates Based on Capacity (Optional) Plan Reconciliation Plan Based on Capacity Product Cost Controller Plan Price Calculation Price Update - Marking General Ledger Accountant Stock Value Adjustment
Diagram Connection Legend <Function> Hardcopy / Document External to SAP Financial Actuals Business Activity / Event Budget Planning Unit Process Manual Process Process Reference Existing Version / Data Sub-Process Reference Process Decision System Pass/Fail Decision