Acquisition Cost Adjustments impact on Item Cost and Inventory Valuation
in Costing
Summary:
We are using average costing method and we have a scenario where the item cost updates are not aligned with the GL postings for a PO with Acquisition cost adjustments due to tax rate variances.
Content (please ensure you mask any confidential information):
Following are the details:
PO:
Quantity: 262
Price: 2.55517
Total: 669.45
Invoice:
Line 1: 262*2.55517 = 669.45 (Matched to PO line)
Tax lines total: 78.64 creating a tax rate variance of 78.64
At the time the tax rate variance acquisition cost is posted, the quantity has already been depleted and on hand is zero
The tax rate variances are posted on the credit side on the inventory valuation reducing the original posting of 669.45 to 590.82.
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