We are pleased to announce the availability of KB3006787 Procurement accounting charges as product cost with product receipt
The KB introduces the capability of accounting for Misc. charges already at time of posting Product receipt.
This capability will provide customers with the opportunity to better estimate cost of purchase and avoid cost fluctuations at time of Invoice.
Setup
As this capability directly impacts valuation of inventory assets and thus can be considered a change in accounting principle, the feature will be controlled by a new parameter.
Path: Procurement and sourcing/Setup/Procurement and sourcing parameters.
We recommend the following parameter settings for accounting of inventories. Applying these recommended settings will make reconciliation to General ledger simpler at end of fiscal period.
Module/Form | Parameter | Recommended setting |
Inventory Management/Item model group | Post physical inventory | Yes |
Inventory Management/Item model group | Post financial inventory | Yes |
Inventory Management/Item model group | Accrue liability on product reciept | Yes |
Accounts payable/Accounts payable parameters | Post product reciept in ledger | Yes |
Procurement and sourcing/Procurement and sourcing parameters | Generate charges on product reciept | Yes |
Accounts receivable/Accounts receivable parameters | Post packing slip in ledger | Yes |
Production control/Production control parameters | Post picking list in ledger | Yes |
Production control/Production control parameters | Post reports as finished in ledger | Yes |
Note: If you want to account for Misc. charges at time of posting product receipt and have check marked “Generate charges on product receipt”, you must as minimum also check mark “Post physical inventory” and “Post product receipt in ledger”.
Defining misc. charges
Before the misc. charge will be accounted at time of posting product receipt, it has to fulfil certain requirements.
Misc. charge code
The misc. charge code has to be configured so it will be accounted as Inventory asset.
In the Fast tab Posting under field group Debit the Type has to be Item. The Credit type can be either Ledger or Vendor.
Misc. charge calculation categories
Not all misc. charge calculation categories will post at time of product receipt. The table below lists the misc. charge calculation categories applicable and how the value is calculated.
Misc. charge calculation category | Applicable charge value on product receipt line | Applied amount |
Pcs | As per purchase order line applicable charge value | Received Quantity x Pcs value rate |
Percent | As per purchase order line applicable charge value | Receipt net amount x % value |
Proportional * | (Purchase order line applicable charge value / ordered quantity) * Received quantity | (Received quantity / Ordered quantity) x "PO line proportional value" |
*Proportional: A new misc. charge calculation category delivered as part of the KB
Note: Misc. charge calculation category = Fixed. No cost will be accounted for at the time of posting product receipt. The cost will still be accounted for at the time of Invoice.
Note: Sales tax on misc. charges will not be posted at the time of product reciept.
Auto charges
Auto charges will now be applied on the time of product receipt if records correspond to the rules defined above.
Example (based on Dynamics Ax2012R3)
Prerequisite for the example:
Item: Misc. charge D1
Valuation method: Moving average
Auto charge: 10.00 Category = Percent
Misc. Charge: 200.00 Category = Proportional
Indirect cost: 1.00 % on purchased price + Misc. charge cost
1: A purchase order of 10 pcs is created. The unit cost is agreed at 100.00
2. Add misc. charge manually
3. Allocate the misc. charges
4. Confirm the PO
5. Post the product receipt.
Because of insufficient stock at the supplier, a partial delivery of 5 pcs will be received
Select “Receive now quantity” in field Quantity and generate the product receipt.
Press button Charge. The user can validate the misc. charges calculated by the system for the specific product receipt prior to posting:
Line net amount = 5 x 100.00 = 500.00
Charge code 04: 500.00 x 10% = 50.00
Charge code INS: 5/10 x 200.00 = 100.00
Press OK to post product receipt.
6. Validate posting of the product receipt.
Purchase cost transactions
- Validating the voucher
Account Name Calculation Direction Amount
600510 Indirect cost absorption 650 *1% Credit 6.50
142100 Inventory 500.00 + 100.00 + 6.50 Debit 656.50
150690 Purchase accrual 5*100.00 Credit 500.00
600150 Auto Misc. charge absorption 500.00 * 10% Credit 50.00
606200 Misc. charge absorption (5/10) * 200.00 Credit 100.00
Validating the physical cost amount on Inventory transaction
7. Post a product receipt of the remaining 5 pcs.
The postings are identical with the above
Account Name Calculation Direction Amount
600510 Indirect cost absorption 650 *1% Credit 6.50
142100 Inventory 500.00 + 100.00 + 6.50 Debit 656.50
150690 Purchase accrual 5*100.00 Credit 500.00
600150 Auto Misc. charge absorption 500.00 * 10% Credit 50.00
606200 Misc. charge absorption (5/10) * 200.00 Credit 100.00
8. Post a vendor invoice of all 10 pcs and validate postings
The system will automatically reverse the misc. charges postings done at time of product receipt.
The system will automatically apply the same misc. charges codes at time of Invoice
New calculations will be performed as the base amount (unit price) could have changed
Additional misc. charges code can be added
For simplicity reasons no change in unit price or additional misc. charges are added in this example.
- Voucher of Invoice
Account Name Direction Amount
600510 Indirect cost absorption Credit 0.00
142100 Inventory Debit 0.00
150690 Purchase accrual Debit 1000.00
600150 Auto Misc. charge absorption Credit 0.00
606200 Misc. charge absorption Credit 0.00
211100 Vendor Balance Credit 1000.00
Note: You will see a few 0.00 postings in the voucher. These are related to a current limitation in the posting engine and are not addressed as part of this KB. The postings are not effecting any balances in General ledger.
Inventory transactions after invoicing
Released versions
KB3006787 “Procurement accounting charges as product cost with product receipt” is currently available for following releases of Microsoft Dynamics AX:
Microsoft Dynamics AX 2012 R3
KB is planned to be released for Microsoft Dynamics AX 2012 R2 end of year 2014