I post inventory reserve 

Process: Inventory Valuation

Responsibility area: Calculate and post Inventory Reserve



 The purpose of this document is to explain how to generate the proposition and how to account in ERP the valuation of the stocks at the “fair value” in order to give relevant information about the “real value” of the company to all economic actors (share-holders, legal authorities...).   

Before the closure in the months of March, June, September and December. The final validation and postings should be done until D-5 at the latest. 

SU MAC Team runs the transactions and prepares the Excel files with proposal of rotation and financial depreciation.

Controllers are responsible to analyze the posting proposal sent by SU MAC team and provide the final validation for the depreciation amounts to be posted, indicating the changes to be done to the original posting proposal. In some cases, an additional comment on the largest variances between depreciation proposed and validated is required.


Scope
 WW
Frequency
On a Quarter Basis
References


Attachments

posting scheme for inventory reserve

Hard-Close instruction for inventory reserve

SBS-OP-DRTR-02-092 <<  I post inventory reserve



  Guideline  

The posting of Inventory depreciation can only be carried out after validation of the responsible Controller. In the validation reply to the initial proposal, the depreciation amounts must be indicated for each specific material. 

 
Please check file related with posting scheme for inventory reserve for all the details.
 
  • Manual entry after validation by FRA or GCCO; no direct update of standard price or moving average price in a material master;
  • BFC P/L reporting heading is always R25600 "Write-downs on inventories";
  • Document type to use must be always SB;

  • Posting and document date must be always the last day of the Quarter: 1st 31/03, 2nd 30/06, 3rd 30/09 and 4th (30/11 or 31/12 - according with instructions of I calculate inventory reserves);

  • In SAP, separate documents per impairment type (NRV, Slow-turn and Quality - off-spec / obsolete / damaged), meaning that:
    • It should be performed only one posting per impairment type and per plant (if several exist in the company). 
    • In the document, the assignment should mention the impairment type and the text should mention the type of impairment and the period related (Month/Hard-close).


  • The posting must be reversed on the 1st day of the month of the following quarterly closure: 1st 01/06, 2nd 01/09 and 3rd 01/12.
  • To reverse the posting of the 4th quarter/hard-close on 01/03, we have to change the following elements, since the posting is done in a new fiscal year: 
    • P&L Account to be used is 98340650
    • and Transaction Type to be used in the stock account is F36 (cash-flow).

 

Mandatory fields:

  • P&L Account to use is always 98340600;

  • It is mandatory to insert the appropriate company code cost center to determine the correct Activity Market and CGU of the stock being depreciated. P&L specific cost center (XXXX-75XX);

  • B/S transaction type F25 (allowance) must be used;

  • Both assignment fields (B/S and P&L) should identify the impairment type;

  • Stock Account (B/S) to be used depends of the material Valuation Class (check Table 1). It is mandatory to insert the appropriate profit center for working capital.

    Table 1 

    Valuation ClassB/S AccountB/S Account NameInventory TypeB/S - BFCP/L AccountP/L Account NameP/L - BFC
    Z100

    39100100

    Raw Materials-Valuation Allowances

    Raw Materials

    A39100

    98340600

    		stock depreciationR25600
    Z11039100300Packaging Material-Valuation AllowancesPackagingA3910098340600stock depreciationR25600
    Z12039100200Industrial Supplies-Valuation AllowancesIndustrial SuppliesA3910098340600stock depreciationR25600
    Z13039700200Goods For Resale-Valuation AllowancesTrading GoodsA3970098340600stock depreciationR25600
    Z14039700400Semi-Finished Products-Valuation AllowancesSemi-Finished ProductsA3970098340600stock depreciationR25600
    Z15039700100Finished Products-Valuation AllowancesFinished ProductsA3970098340600stock depreciationR25600
    Z15039700102FINISHED PRODUCTS - OFF SPECFinished ProductsA3970098340600stock depreciationR25600
    Z15039700102GOODS FOR RESALE - NRVFinished ProductsA3970098340600stock depreciationR25600
    Z15039700201FINISHED PRODUCTS - NRVFinished ProductsA3970098340600stock depreciationR25600
    Z16039100100Industrial Supplies consumed in BOMIndustrial Supplies Consumed in BOMA3910098340600stock depreciationR25600


Mandatory fields:

  • P&L Account to use is always 6310000000;

  • It is mandatory to insert the appropriate reporting cost center at PIF level to determine the correct Activity Market and CGU of the stock being depreciated;

  • B/S transaction type F25 (allowance) must be used;

  • Both assignment fields (B/S and P&L) should identify the impairment type;

  • Stock Account (B/S) to be used depends of the material Valuation Class (check Table 2). It is mandatory to insert the appropriate business area for working capital.

    Table 2 

    Valuation ClassB/S AccountB/S Account NameInventory TypeB/S - BFCP/L AccountP/L Account NameP/L - BFC
    Z1002009000000Finished Goods Manufactured-Write DownsFinished Products

    A39700

    6310000000

    		Inventories-write downsR25600
    Z1012019000000Finished Goods Purchased-Write DownsFinished ProductsA397006310000000Inventories-write downsR25600
    Z0522109000000Raw Materials,Combustible,Energy-Write DownsRaw MaterialsA391006310000000Inventories-write downsR25600
    Z0002109000100Main Raw Materials-Write DownsRaw MaterialsA391006310000000Inventories-write downsR25600
    Z0502109000200Other Raw Materials-Write DownsRaw MaterialsA391006310000000Inventories-write downsR25600
    Z0542109000500Utilities-Write DownsUtilitiesA391006310000000Inventories-write downsR25600
    Z0532109100000Semi-Finished Goods-Write DownsSemi-Finished ProductsA394006310000000Inventories-write downsR25600
    Z0552119000000Gen and Techn Items Excl Packaging-Write DownsIndustrial SuppliesA391006310000000Inventories-write downsR25600
    Z0582119010000Spare Parts-Write DownsIndustrial SuppliesA391006310000000Inventories-write downsR25600
    Z0512119100000Packaging-Write DownsPackagingA391006310000000Inventories-write downsR25600