Period-End Closing for Integrated Components
In continuation to part 1 Period-End-Blog in this blog post, we will have an overview of the Year-end activities. We will discuss Year-End Closing,
Inventory Valuation for Year-End Closing
Balance sheet valuation in Inventory Accounting enables you to evaluate your inventories at the end of reporting periods according to local legislation and international accounting standards. Standard settings are provided including settings for the overhead structure, valuation variant, and stock valuation with devaluation based on movement rate.
You can perform the stock valuation for raw materials and trading goods. To perform a material valuation for balance sheet purposes using the lowest value principle, physical inventory prices are required. These prices are used to calculate the value for balance sheet valuation. The lowest value based on market prices should be determined. The system searches for the lowest price (or alternatively the most recent price) among the various prices stored for each material. The determination can be done at the material level or based on other selections, for example, the material type used. The system determines a costing result that can differ from the costs of goods manufactured. This value is updated in the material master to determine the lowest value. The system compares the costing result with the current price in accordance with price control and the price from the previous period. The lowest value is then updated in the commercial price.
You can also perform the stock valuation of semi-finished and finished products based on the lowest value principle, the net realizable value is entered manually based on the market price in the Commercial Price field of the Material Master. Net realizable value is determined manually offline.
In addition, you can analyze stock valuation for materials. The price comparison report supplies the current stock values and the lowest stock value at various aggregation levels: material stock account, material type, and material. The difference between the stock values can then be posted in FI as a stock value adjustment.
Adjust stock value by posting manually to the relevant stock adjustment account. A stock value adjustment represents a balance sheet valuation. Therefore, you should not post it to the material stock accounts for updating the goods movements.
Standard Cost Calculation
Standard cost calculation enables you to update standard costs for products as part of annual operations planning. You plan activity prices for the following year manually (you can enter fixed and variable prices), then you create a costing run for the first day of the new year, and finally, you execute the run to update the current prices in the relevant material master data.
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