MM Material Valuation PDF

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Copyright 1998 SAP AG. All rights reserved.
No part of this brochure may be reproduced or transmitted in any form or for any purpose without
the express permission of SAP AG. The information contained herein may be changed without
prior notice.
SAP AG further does not warrant the accuracy or completeness of the information, text, graphics,
links, or other items contained within these materials. SAP AG shall not be liable for any special,
indirect, incidental, or consequential damages, including without limitation, lost revenues or lost
profits, which may result from the use of these materials. The information in this documentation is
subject to change without notice and does not represent a commitment on the part of SAP AG for
the future.
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Material Valuation Tasks .......................................................................................................... 11
Control of Material Valuation .................................................................................................... 12
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Automatic Changes: Inventory Management ........................................................................... 15
Automatic Changes: Invoice Verification.................................................................................. 16
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Standard Price: Value Calculation............................................................................................ 27
Value Calculation with Standard Price Control: Example ................................................... 28
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Moving Average Price: Value Calculation ................................................................................ 30
Value Calculation with Moving Average Price Control: Example........................................ 31
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Goods Receipt with No Price Variance .................................................................................... 38
Goods Receipt with Price Variance.......................................................................................... 39
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Transfer Posting, From Plant to Plant ...................................................................................... 45
Transfer Posting, From Consignment to Company-Owned Stock ........................................... 47
Transfer Posting, From Material to Material ............................................................................. 48
Transfer Posting, From Valuation Type to Valuation Type ...................................................... 49
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Initial Entry of Inventory Data: Material with a Standard Price ................................................. 51
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Initial Entry of Inventory Data: Material with a Moving Average Price ..................................... 52
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Material with a Standard Price ................................................................................................. 56
Material with a Moving Average Price ...................................................................................... 57
Material with a Moving Average Price without Stock Coverage.......................................... 58
Subsequent Debit/Credit .......................................................................................................... 59
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Credit Memos: Account Movements ........................................................................................ 61
Credit Memos: Example ...................................................................................................... 62
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Examples .................................................................................................................................. 67
Gross Goods Receipt - Gross Invoice Receipt ................................................................... 68
Gross Goods Receipt - Net Invoice Receipt ....................................................................... 69
Net Goods Receipt - Net Invoice Receipt ........................................................................... 70
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Valuation Category ................................................................................................................... 74
Valuation Type.......................................................................................................................... 75
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Entering a Change with Effect from a Future Date .................................................................. 81
Entering a Future Price ....................................................................................................... 82
Activating a Future Price ..................................................................................................... 83
Entering a Change with Immediate Effect ................................................................................ 84
Price Change: Individual Processing .................................................................................. 85
Price Change: Collective Processing .................................................................................. 86
Step-By-Step Entry ........................................................................................................ 87
Collective Entry .............................................................................................................. 88
Posting a Price Change to the Previous Period or Previous Year ........................................... 89
Price Change in the Previous Period Only.......................................................................... 90
Price Change in the Previous and Current Period .............................................................. 91
Displaying a Price Change ....................................................................................................... 92
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Material Debits/Credits: Individual Processing ......................................................................... 94
Material Debits/Credits: Collective Processing......................................................................... 95
Displaying Posted Debits and Credits ...................................................................................... 96
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Account Movements: Price Change ......................................................................................... 98
Account Movements: Material Debits/Credits .......................................................................... 99
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Posting to a Previous Period Due to a Current Stock Shortage - MAP ................................. 107
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Period Under Review.............................................................................................................. 111
Lowest Value Determination: Price Fields in the Material Master.......................................... 112
Lowest Value Determination: Devaluation ............................................................................. 113
Valuation Level ....................................................................................................................... 114
Valuation Level: Example.................................................................................................. 115
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Lowest Values Determination Based on Market Prices: Price Sources................................. 118
Lowest Values Determination Based on Market Prices: Results ........................................... 120
Lowest Values Determination Based on Market Prices: Base Price...................................... 121
Running Lowest Values Determination Based on Market Prices........................................... 122
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Lowest Values Determination Based on Range of Coverage: Calculating the Range of
Coverage ................................................................................................................................ 125
Lowest Values Determination Based on Range of Coverage: Devaluations ......................... 126
Lowest Values Determination Based on Range of Coverage: Base Price ............................ 127
Lowest Values Determination Based on Range of Coverage: Results.................................. 128
Running Lowest Value Determination Based on Range of Coverage ................................... 129
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Calculating the Movement Rate ............................................................................................. 132
Lowest Values Determination Based on Movement Rate: Devaluations............................... 133
Lowest Values Determination Based on Movement Rate: Base Price .................................. 134
Lowest Values Determination Based on Movement Rate: Results........................................ 135
Running Lowest Value Determination Based on Movement Rate ......................................... 136
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Lowest Valuation Determination: Listing Price Variances...................................................... 139
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Price Levels: Example ............................................................................................................ 141
Balance Sheet Values per Account: Generating a List .......................................................... 142
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LIFO Valuation: Example........................................................................................................ 145
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The Quantity LIFO Method ..................................................................................................... 148
Determining the Value of a Layer: Example...................................................................... 149
The Index LIFO Method.......................................................................................................... 151
Index LIFO Method: Example ........................................................................................... 152
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Periodic Receipts - Single Receipts: Example ....................................................................... 159
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Introduction to LIFO Valuation................................................................................................ 161
Determination of the Valuation Level ................................................................................ 162
Determination of Pool Settings.......................................................................................... 163
Displaying Assignments ............................................................................................... 164
Material Master Record Maintenance ............................................................................... 165
Maintaining Single Records ......................................................................................... 166
Maintaining Several Records ....................................................................................... 167
Checking Material Master Records.............................................................................. 168
Changing Pool Structures ................................................................................................. 169
Changing Assignments ................................................................................................ 170
Grouping Together Pools ............................................................................................. 171
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Versions: Example of Value Comparison............................................................................... 174
Versions: Example of Intermediate Results ........................................................................... 175
Copying Versions ................................................................................................................... 176
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Displaying Layers ................................................................................................................... 178
Changing Layers .................................................................................................................... 179
Deleting Layers....................................................................................................................... 180
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Lowest Value Comparison: Single LIFO Valuation ................................................................ 183
Lowest Value Comparison: Pool LIFO Valuation ................................................................... 184
Lowest Value Comparison at Pool Level: Example ............................................................... 185
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Determining the FIFO Value................................................................................................... 190
Data Updates in FIFO Valuation ............................................................................................ 192
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Valuation Level Determination ............................................................................................... 194
Base Year Determination ....................................................................................................... 195
Method Determination ............................................................................................................ 196
Selection of Movements Relevant to FIFO............................................................................. 197
Selection of Materials Relevant to FIFO................................................................................. 198
Adopting Data Posted in a Posting Period ............................................................................. 199
Periodic Receipts - Single Receipts: Example.................................................................. 200
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FIFO Valuation: Results List................................................................................................... 202
Valuation at Valuation Area Level ..................................................................................... 203
Valuation at Company Code Level.................................................................................... 204
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The SAP R/3 System consists of various components that are linked, allowing different
departments within a company to work together.
Material Valuation is part of the MM Materials Management module. This module includes the
following application areas:
Purchasing
Inventory Management
Invoice Verification
Material Valuation is not an independent application area, since most Material Valuation
functions take place automatically in the SAP R/3 System. Depending on how a company is
structured, tasks that have to be carried out manually belong to either Inventory Management or
Invoice Verification.
Material Valuation represents a link between Materials Management and Financial Accounting,
since it updates the G/L accounts in Financial Accounting.

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The central task of Material Valuation is to determine and record the stock value of a material.
The stock value is calculated using the following simple formula:
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Thus, if the stock quantity or the material price changes, the stock value changes.
In addition, Material Valuation has the following tasks:
Adjusting material prices to market prices
Revaluating
Taking physical inventories
Valuating stocks for balance sheet purposes
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Material valuation is controlled by:
System settings
Material master records
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By customizing the SAP R/3 System, Material Valuation can be adapted to the requirements of
your company. The system settings determine:
The level at which materials are valuated
The types of goods movements relevant for valuation
The accounts posted during a transaction
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As a rule, a material master record is created for every material in the SAP R/3 System. The
information contained in this record also includes valuation data for the material. When
maintaining the material master record, you must decide:
Whether a particular material should be valuated
Whether different sub-stocks of a material should be valuated differently
Whether the stock of a material should be valuated at a constant price (standard

price) or should the price change in accordance with the delivered price (moving
average price)
In which G/L account the stock value of a material should be managed
The stock quantity and value of a material and the material price are also recorded in the material
master record.

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There are two types of changes in Material Valuation:
Automatic Changes [Page 14]
Manual Changes [Page 17]
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Changes in Material Valuation due to goods receipts and invoice receipts occur automatically
when the relevant transaction is posted.
The extent to which the stock value changes depends on the sequence in which the goods
receipts and invoice receipts are posted. The SAP R/3 System allows for both possibilities:
When goods are received before the invoice, the stipulations in the order are used as
the basis for posting
When the invoice is received before the goods, the details on the invoice are used as
the basis for posting
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Automatic Changes: Inventory Management [Page 15]
Automatic Changes: Invoice Verification [Page 16]

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Most goods movements in Inventory Management lead to changes in stock quantity and
therefore in stock value. In the case of goods receipts, the stock value increases; in the case of
goods issues, it decreases.
For materials with a moving average price, the material price can also change when goods are
received for purchase orders. This is the case if the purchase order price differs from the material
price.
Planned delivery costs for a purchase order are also included in valuation when goods are
received. When the goods receipt is posted, provisions are created for planned delivery costs;
thus the material is immediately valuated at the expected price. A subsequent debit/credit when
the invoice is received is only necessary if the stipulations of the order and the invoice vary.
It is also possible to post the net value of goods received. This way, cash discounts that have
been agreed upon are taken into account in valuation at this point. This means that when a
goods receipt is posted for a material with moving average price control, only the value of the
order minus the cash discount is debited.
Material price changes can also occur during the following transactions in Inventory
Management:
Deliveries free of charge
Transfer postings
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When you post an invoice, the stock quantity of a material remains unchanged; thus, a change in
stock value can only occur if the material price changes. If a material has a moving average
price, the stock value changes if the purchase order price and the invoice price differ. When this
is the case, the material received could not have been valuated at the actual delivered price
when the goods receipt was posted. Valuation must therefore be adjusted to the actual delivered
price of the material when the invoice is posted.
Invoices for delivery costs change valuation if they are entered as unplanned delivery costs.
Planned delivery costs change valuation only if they differ from the amount posted at goods
receipt.
Cash discount granted in an invoice is taken into account in valuation only if an invoice is posted
at net value. If a goods receipt is posted at net value, a change in value only occurs if the amount
of cash discount granted in the invoice deviates from that specified in the purchase order.
These Invoice Verification transactions are also relevant in valuation:

Posting credit memos
Posting subsequent debits/credits
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In addition to automatic changes, the system allows the following changes in Material Valuation
to be made manually:
Revaluating a material through a price change or a material debit or credit
Price change
If the material price no longer corresponds to the current market price, it can be
adjusted by making a price change.
Material debit or credit

If the stock value of a material is to be increased or decreased, a credit or debit
posting can be made manually for this material.
Posting of physical inventory differences

If a physical inventory reveals differences in quantity between the physical stocks and
the book inventory, the book inventory balance must be manually corrected (that is,
the physical inventory differences must be posted). If you correct a stock quantity the
value of the stock changes.
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Valuation in the SAP R/3 system takes place within the following structures:
The Valuation Area [Page 20] specifies the level at which valuation is organized.
The Valuation Class [Page 21] contains materials with similar properties that have
been grouped together for accounting purposes.
The Valuation Category [Page 22] specifies the criteria according to which materials
are to be split-valuated.
The Valuation Type [Page 23] specifies the characteristic used for split valuation.
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The valuation area specifies the level at which a material is valuated. A valuation area Is defined
either:
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All the stocks of a particular material in the company are valuated together.
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All the stocks of a particular material in an individual plant are valuated together.
Stocks in other plants are not included in this valuation area.
The level at which valuation should take place is defined in the Customizing system.

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So that you do not have to manage a separate stock account for every material, you can group
together different materials with similar properties into valuation classes.
The following table contains examples of possible valuation classes

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3001
Colors
3002
Paints
3011
Oils
3021
Foam materials
3030
Operating supplies
3040
Spare parts
3100
Trading goods
Which valuation class a material can be assigned to depends on the material type. The following
assignments can be defined in Customizing:
All materials with the same material type are assigned to just one valuation class
Different materials with the same material type are assigned to different valuation
classes
Materials with different material types are assigned to the one valuation class
A material is assigned to a valuation class in the material master record. The system checks
whether the material type allows the material to be assigned to the valuation class specified.
The system refers to the valuation class of a material to determine which stock account to post to
when a posting is made for this material.
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The SAP R/3 system allows different stocks of a material to be valuated separately according to
different criteria, for example:
Procurement
You can valuate a material differently depending on whether it is manufactured inhouse or procured externally.
Origin
You can valuate a material differently depending on where it comes from (for
example, home or abroad).
Status
You can valuate a material differently depending on its status (for example, new,
used, repaired).
The valuation categories are defined in Customizing. A material is assigned a valuation category
in the material master record.
The individual characteristics that make up a valuation category are called valuation types. For
example, the valuation types in the valuation category 3URFXUHPHQW are: LQWHUQDO and H[WHUQDO.

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The valuation type is an individual characteristic of a valuation category. For example, within the
valuation category origin the valuation types would be the different countries. Valuation types
are defined in Customizing. You first determine all the valid valuation types for a valuation
category. Then you enter the individual valuation types allowed for a material in the material
master record. For every material with split valuation, you must enter all the valuation types
allowed in the material master record.
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When a material is created, it must be assigned a material type. Examples of material types in
the standard SAP System are:
raw materials
operating supplies
finished products
The material type controls the features of a material and which data must be maintained for the
material.
The following control features are important for valuation:
Is the material managed by quantity?
Is the material managed by value?
Which price control type may be used for the material?
To which valuation class can the material be assigned?
The system administrator can create or change material types in the Customizing system.
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For every material movement, there is a movement type in the SAP R/3 system. The movement
type controls the properties of the movement, for example, which entries are necessary when
posting a material movement, and which updates are carried out when the movement is posted.
The following control features are important for valuation:
Does the material movement cause the quantity to be updated?
Does the material movement cause the value to be updated?
Does the material movement lead to postings in accounting?
Is the material movement relevant for LIFO /FIFO valuation?
The system administrator can create or change movement types in the Customizing system.

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In the SAP System, there are two types of price control:
Standard price
Moving average price
These two types of prices differ in how they handle price variances resulting from goods receipts
or invoice receipts.
You determine which type of price control should be used for a material when you create the
material and enter its accounting data (See 000DQDJLQJ0DWHULDO0DVWHU'DWD You enter one of the
following indicators in the 3ULFHFRQWURO field to determine how the price is controlled:
Standard price
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Standard Price [Page 26]
Moving Average Price [Page 29]
Changing the Type of Price Control [Page 32]
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Valuation using a 6WDQGDUGSULFH results in the following:
All inventory postings are carried out at the standard price
Variances are posted to price difference accounts
Variances are updated
Price changes can be monitored
If a material is assigned a standard price, the value of the material is always calculated at this
price. If goods movements or invoice receipts contain a price that differs from the standard price,
the differences are posted to a price difference account. The variance is not taken into account in
valuation.
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Standard Price: Value Calculation [Page 27]
Value Calculation with Standard Price Control: Example [Page 28]

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When a material is valuated at a standard price, the system calculates values for goods
movements in the following way
Quantity
Quantityold+
Quantity
Value
Quantity
new
Inward
Price Material master

Value
new
Price new =
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Priceold
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Price unitMaterial master
Price Material master

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The following example shows the postings for a goods movement of a material with standard
price control, as well as an extract from the material master record.
Material with standard price $ 1.20 / pc
Stock
: 100 pcs
Purchase order
:
: 100 pcs a $ 1.30 / pc
Goods receipt for this purchase order : 100 pcs
Invoice
: 100 pcs a $ 1.24 / pc
= $ 124.00
Goods
receipt
Balance sheet acct.
GR / IR account
Vendor account
Expenses from price diff.
Income from price diff.
120 +
130 -
Invoice
130 +
124 -
10 +
6 -
Material master record

Stock
100
200
200
Value
Standard
price
120
240
240
1,20
1,20
1,20
In the example, the stock account is posted with only the value of goods received based on the
standard price. Consequently, the value in the material master record increases in proportion to
the quantity. When the invoice is posted, the material master record remains unchanged.
For information purposes, the material master record of a material with standard
price control also keeps track of the moving average price. The moving average
price demonstrates how much on average the delivered price deviates from the
standard price.

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Valuation using a PRYLQJDYHUDJHSULFH results in the following:
Goods receipts are posted at the goods receipts value
The price in the material master is adjusted to the delivered price
Price differences occur only in exceptional circumstances
Manual price changes are usually unnecessary. They are, however, possible.
If a material is assigned a moving average price (MAP), the system automatically adjusts the
price in the material master record when price variances occur. If goods movements or invoice
receipts are posted with a price that differs from the moving average price, the differences are
posted to the stock account. As a result, the moving average price and the value of the stock
change.
The moving average price displayed in the material master record is rounded off.
For valuation calculations, the system always uses the exact price (stock value /
stock quantity).
6HHDOVR
Moving Average Price: Value Calculation [Page 30]
Value Calculation with Moving Average Price Control: Example [Page 31]
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When a material has moving average price control, the system calculates values for goods
movements in the following way
Quantity
Quantity +
new
old
Quantity
Inward
Price
Value new =
Price new =
Value old +
Value
new *
Quantity
Quantity
Inward
Price unit
Inward
Price unit Inward
Material
master
new

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The following example shows the postings for a goods movement of a material with moving
average price control, as well as an extract from the material master record.
Material with MAP of $ 1.20 / pc
Stock
: 100 pcs
Purchase order : 100 pcs a $ 1.30 / pc
Invoice
: 100 pcs a $1.24 / pc
=
$124.00
Balance sheet acct.

GR / IR account
Vendor account
Goods
receipt
Invoice
130 +
130 -
6 130 +
124 -

Stock
Value
MAP
100
200
200
120
250
244
1,20
1,25
1,22
In the example, the stock account is posted with the value of goods received based on the
purchase order price. Since the purchase order price differs from the moving average price, the
value in the material master record does not increase in proportion to the quantity, resulting in a
change in the moving average price. Because the invoice price differs from the purchase order
price, the system adjusts the value in the material master record when the invoice is posted. The
moving average price is therefore changed once again.
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It is possible to change the type of price control under certain conditions:
From standard price to moving average price

This can be changed at any time. The moving average price (which until now has
been updated for informational purposes only) replaces the standard price and is
used for valuation from now on.
From moving average price to standard price

This change is not possible in these cases:
If the material master record is set up as a valuation header record for splitvaluated material (See Structures in Split Valuation [Page 73])
If the standard price comes from costing and is not equal to the moving average
price
If the change is possible, the moving average price becomes the standard price,
which is then used for valuation.
You change the type of price control by overwriting the price control indicator in the material
master record with the new indicator.
Changing the type of price control for a material does not change the value of the material's
stock, since in both cases the current price becomes the new price. This is illustrated by the
following graphic.
Material A
Material A
Price control:
Mov.av.price:
Standard price:
10
Change price
control
Mov.av.price
10
Standard price:
10
Total stock:
100
Total stock:
100
Total value:
1000
Total value:
1000
Material B
Material B
Price control:
Mov.av.price:
Standard price:

Price control:
Change price
control
Price control:
Mov.av.price:
Standard price:
Total stock:
100
Total stock:
100
Total value:
800
Total value:
800
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In the SAP R/3 System, goods receipts and invoice receipts are offset on a clearing account
(GR/IR clearing account).
The following graphic shows the simplest case of a goods receipt posting and an invoice receipt
posting.
Goods receipt for this purchase order: 50 pcs
Invoice : 50 pcs a $ 2.00 / pc = $ 100.00
Goods
receipt
Balance sheet acct.
100 +
GR / IR account
100 -
Vendor
Invoice
100 +
100 -
When goods are received, the value of the goods (TXDQWLW\[QHWRUGHUSULFH) is credited to the
stock account; the offsetting entry is made in the GR/IR clearing account. The GR/IR clearing
account is cleared when the invoice is posted to the vendor account.
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Usually, a goods receipt for a purchase order is valuated. How the material is valuated depends
on the value calculation used and the postings carried out.
6HHDOVR
Value Calculation [Page 36]
Postings [Page 37]
Delivery Costs [Page 40]
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The way the value of the goods receipt is calculated depends on the order in which the receipts
are posted:
Goods receipt before invoice receipt

You receive the invoice after the goods. Consequently, the value of the delivery is not
known at the time of goods receipt. In this case, the value calculation is based on the
purchase order. The value of the goods receipt is calculated on the basis of the
quantity received and the net order price.
Invoice receipt before goods receipt

If an invoice has been posted for a purchase order before goods are received, the
value of the delivery is known at the time of goods receipt. In this case, the value
calculation is based on the invoice. The value of the goods receipt is calculated on
the basis of the quantity received and the invoice price. If the invoice was for a partial
delivery, only the actual quantity invoiced is valuated at the invoice price at goods
receipt. The remaining quantity is valuated at the purchase order price.
Two examples of value calculation are shown here:


Ordered: 100 pieces of material A at $10/piece
Goods receipt: 70 pieces
The value of the goods receipt is calculated as:
70 pieces x $10/piece = $700

Ordered: 100 pieces of material A at $10/piece
Invoice: 50 pieces at $12/piece = $600
The value of the goods receipt is calculated as:
50 pieces x $12/piece + 20 pieces x $10/piece = $800
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The value of the goods receipt is posted to the GR/IR clearing account; the offsetting entry
depends on the type of price control of the material.
6WDQGDUG3ULFH
In the case of a material valuated at a standard price, only the delivered TXDQWLW\[VWDQGDUG
SULFH can be posted to the stock account. If the net order price (or, in the case of invoice receipt
before goods receipt, the invoice price) differs from the standard price, this results in a difference
between this value and the value of goods delivered. The difference is posted to a price
difference account. Since only the delivered TXDQWLW\[VWDQGDUGSULFH is posted to the stock
account, there is no change of value in the material master record.
0RYLQJ$YHUDJH3ULFH
In the case of a material valuated at a moving average price, the delivered quantity x net order
price (or invoice price) is posted to the stock account.
If the purchase order price (or the invoice price) equals the price in the material master record,
there is no change in value for a piece.
If the purchase order price (or the invoice price) does not equal the price in the material master
record, there is a change in value for a piece.
Goods Receipt with No Price Variance [Page 38]

Goods Receipt with Price Variance [Page 39]
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Material master
d
Total stock
1000 pcs
Total value
$5000
Mov.av.price
$5/pc
Material A
Delivery of over 400 pcs

fa purchase order
ith price $5/pc
order
Material master
d
Total stock
1400 pcs
Total value
$7000
Mov.av.price
$5/pc
Material A
= $5000 + 400 pcs *

$
Since the purchase order price equals the moving average price, the ratio of total value to total
quantity remains unchanged when the goods receipt is posted:
5000/1000 = 2000/400 = (5000 + 2000)/(1000 + 400) = 5.00

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Total stock
1000 pcs
Total value
$5000
Mov.av.price
$5/pc
Material A
Delivery of over 400 pcs for

a purchase order with
order price $5.70/pc
Total stock
1400 pcs
Total value
$7280
Mov.av.price
$5.20/pc
Material A
= $5000 + 400 pcs * $5.70/pc
Since the purchase order price is higher than the moving average price in the material master
record, the ratio of total value to total quantity increases when the goods receipt is posted:
$7280 / 1400 pieces = $5.20/piece > $5/piece
If the purchase order price is lower than the moving average price, the moving average price is
reduced when the goods receipt is posted.
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In the SAP R/3 System, planned delivery costs can be entered in a purchase order. In the
standard system, these delivery costs can be:
Freight charges
Customs costs
Miscellaneous costs
Additional types of delivery costs can be defined in the Customizing system.

If a goods receipt is posted for a purchase order with planned delivery costs, the delivery cost
amount planned for the received quantity is posted to a clearing account (for every type of
delivery cost there is a separate clearing account). The offsetting entry is made to either the
stock account or a price difference account, depending on the type of price control defined for the
material.
The corresponding clearing account is cleared when the goods invoice or a separate invoice from
Invoice Verification is posted.
The following graphic shows how planned delivery costs are posted at goods
receipt and invoice receipt.
Purchase order: 100 pcs a $ 1.30 / pc
Planned delivery costs
Freight $ 0.10 / pc
Customs $ 6.00
Goods receipt for this purchase order : 100
Invoice
: 100 pcs a $ 1.30 / pc

plus freight $ 0.10 /
Customs
= $130.00
= $10.00
$6.00
=
$146.00
Goods
receipt
Balance sheet acct.
146 +
GR / IR account
130 -
Vendor account
Freight clearing
Customs clearing

Invoice
130 +
146 -
10 -
10 +
6 -
6+
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If you post a goods receipt without a purchase order, the goods receipt is valuated on the basis
of the valid price in the material master record. Thus, the price in the material master record is
not changed by the transaction; the stock quantity and the stock value increase proportionally.
A goods receipt without a purchase order is posted to the stock account; the offsetting entry is
made to a "stock change" account.
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If a delivery free of charge is posted for a material, for example as a rebate in kind, a goods
receipt is posted for this material, but no invoice receipt. The account postings at the goods
receipt depend on the price control defined for the material.
6WDQGDUG3ULFH
When a delivery free of charge is posted, the stock of the material increases by the quantity of
goods received.
For a material valuated at a standard price, the total value of the material must increase in
relation. Therefore, the stock account is credited with WKHTXDQWLW\WREHGHOLYHUHG[VWDQGDUG
SULFH. The offsetting entry is made to the "Income from price differences" account.
0RYLQJ$YHUDJH3ULFH
For a material valuated at a moving average price, no accounts are credited or debited when the
delivery free of charge is posted, since there is no change in value. The total stock of the material
increases in the material master record, while the total value remains unchanged. Thus, the
moving average price decreases.

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Material A
Total stock
1000 pcs
Total value
$3150
Mov.av.price
$3.15/pc
Free delivery for

50 pcs
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Total stock
1050 pcs
Total value
$3150
Mov.av.price
$3/pc

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In the SAP R/3 System, there are various types of transfer postings. A material document is
created for every transfer posting. An accounting document is only created for transfer postings
that lead to a change in value. These are:

Transfer Posting, From Plant to Plant [Page 45]
Transfer Posting, From Consignment to Company-Owned Stock [Page 47]
Transfer Posting, From Material to Material [Page 48]
Transfer Posting, From Valuation Type to Valuation Type [Page 49]
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You can make a transfer posting from plant to plant:
In two steps
First you post a stock withdrawal in the issuing plant. At a later stage, you post a
receipt into stock at the receiving plant. In the time between the two postings the
material is placed in stock in transfer at the receiving plant. Two material documents
are created.
In one step
You post the stock withdrawal in the issuing plant and the receipt into stock at the
receiving plant simultaneously. One material document is created.
The value of the stock transfer is posted upon withdrawal of the material. The material master
records change as follows:
,VVXLQJSODQW
Here the stock is reduced by the quantity transferred, and the value is reduced
accordingly:
WUDQVIHUSRVWLQJYDOXH WUDQVIHUSRVWLQJTXDQWLW\[SULFHLQLVVXLQJSODQW
5HFHLYLQJSODQW
Here the stock is increased by the quantity transferred; the value is increased in
accordance with the price control defined for the material.
If the price in the receiving plant differs from the price in the issuing plant, the transfer posting
leads to price differences. These differences are posted to different accounts, depending on the
type of price control in the receiving plant. In the case of moving average price control (V), the
differences are posted to the stock account. In the case of standard price control (S), the
differences are posted to an "Expense/income from stock transfer" account.
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Material master
d
Plant
0001
Price control
Price
Stock
Value
either
$10
$100 pcs
$1000
Transfer posting 50
Material A from Plant
0001
to Plant 0002
Material master
d
Plant
Price control
Price
Stock
Value
0001
either
$10
50 pcs
$500
Material A
Plant
0002
Price control
Price
Stock
Value
Plant 0001
V
$12.50
200 pcs
$2500
Plant 0002
Material A
Plant
0002
Price control
Price
Stock
Value
V
$12
250 pcs
$3000
The value of the transfer posting is calculated on the basis of the price in the
issuing plant: 50 pieces x $10/piece = $500. Consequently, the total value in the
issuing plant is reduced by $500, and the total value in the receiving plant is
increased by $500.
The transfer posting leads to the creation of an accounting document. If the plants
involved belong to different company codes, an accounting document is created
for each company code. In this case, the offsetting entry is made to the company
code clearing account.

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Consignment goods are goods that are stored at your company site but belong to a vendor. The
vendor makes the goods available to you but does not invoice them right away. The goods are
invoiced at a previously agreed-upon consignment price once you have withdrawn them from
storage.
Consignment stock is non-valuated in your company. When you transfer consignment stock into
company-owned stock, the quantity transferred is valuated as follows:
7UDQVIHUSRVWLQJYDOXH TXDQWLW\WUDQVIHUUHG[FRQVLJQPHQWSULFH
The transfer posting value is posted to the materials stock account and the offsetting entry is
made to the "Payables from consignment stores" account. This account is cleared by Invoice
Verification when the consignment withdrawal is cleared.
If the consignment price differs from the material price, the transfer posting leads to price
differences. These differences are posted to different accounts, depending on the type of price
control defined for the material in the receiving plant:
Moving average price control (V)

The differences are posted to the stock account
Standard price control (S)

The differences are posted to the Expense/income from consignment withdrawal
account
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If you manage similar materials under different material numbers, you may occasionally need to
transfer the stock of one material to another material.
The material master records change as follows due to such a transfer posting:
Issuing material
The stock of theLVVXLQJPDWHULDO is reduced by the quantity transferred, and the
value is reduced accordingly:
7UDQVIHUSRVWLQJYDOXH TXDQWLW\[SULFHRIWKHLVVXLQJPDWHULDO
Receiving material
The stock of theUHFHLYLQJPDWHULDO is increased by the quantity transferred. The
increase in value depends on the type of price control:
If the price of the receiving material differs from the price of the issuing material, the
transfer posting leads to price differences. These differences are posted to different
accounts, depending on the type of price control defined for the receiving material:


The differences are posted to the stock account

The differences are posted to an "Expense/income from stock transfer" account
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For split-valuated materials, it is possible to transfer stock from one valuation type to another.
The material master records change due to the transfer posting as follows:
Issuing valuation type

The stock of theLVVXLQJYDOXDWLRQW\SH is reduced by the quantity transferred; the
value is reduced accordingly:
7UDQVIHUSRVWLQJYDOXH TXDQWLW\[SULFHRIWKHLVVXLQJYDOXDWLRQW\SH
Receiving valuation type

The stock of theUHFHLYLQJYDOXDWLRQW\SH is increased by the quantity transferred.
The increase in value depends on the type of price control defined.
If the price of the receiving valuation type differs from the price of the issuing
valuation type, the transfer posting leads to price differences. These differences are
posted to different accounts, depending on the type of price control defined for the
receiving valuation type:

The differences are posted to the stock account.

The differences are posted to an "Expense/income from stock transfer" account.
If you post a transfer from a valuation type with price control S to a valuation type
with price control V, the valuation header record does not change. If, however,
you post a transfer from a valuation type with price control V to a valuation type
with price control S, the valuation header record changes when price differences
occur. Because the price differences are posted to a price difference account, the
value of the total stock managed in the valuation header record changes.
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You enter initial inventory data when you transfer stocks (for example, from an existing system)
into the SAP R/3 System. This procedure is first performed at the beginning of the productive
phase with the SAP R/3 System. In addition, it is possible to enter initial inventory data when the
SAP R/3 System is active, both for new materials and for materials for which stocks already exist.
Before you can enter initial inventory data for a new material, you must create a material master
record for this material.
The valuation of the stocks to be entered depends on:
The price and type of price control defined in the accounting data of the material
master record
Whether you enter a value for the quantity entered
0DWHULDOZLWKD6WDQGDUG3ULFH
For a material with a standard price, the initial entry of inventory data is valuated on the basis of
the standard price. If you enter an alternative value during the initial entry of inventory data, the
difference is posted to a price difference account.
0DWHULDOZLWKD0RYLQJ$YHUDJH3ULFH
For a material with a moving average price, the initial entry of inventory data is valuated as
follows:
If you enter a value on entering initial data, the quantity entered is valuated at this
price. If the price based on this value differs from the moving average price, the
moving average price changes when initial data is entered (see example).
If you do not enter a value on entering initial data, the quantity entered is valuated at
a moving average price. In this case, the moving average price does not change.
Initial Entry of Inventory Data: Material with a Standard Price [Page 51]
Initial Entry of Inventory Data: Material with a Moving Average Price [Page 52]

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3ULFH
Price control
Standard price
10
Total stock
Total value
Price control
Enter inventory data
100 pcs with
value 1500
Standard price
S
10
Total stock
100
Total value
1000
Entry inventory data

Stock account
1000 +
Account for entry of inv.data
1500 -
Price difference account
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$YHUDJH3ULFH
Price control
Mov.av.price
10
Total stock
100
Total value
1000
Enter inventory data

100 pcs with
value 1500
Price control
Mov.av.price
12.50
Total stock
200
Total value
2500
Entry inventory data

Stock account
1500 +
Account for inventory data
1500 -
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For both materials valuated at a standard price and materials valuated at a moving average
price, goods issues are always valuated at the current price. Consequently, a goods issue
reduces the total value and the total quantity in relation to the price, and the price remains
unchanged.
Material master
Material master
Price control
Mov.av.price
10
Total stock
100
Total value
1000
Goods issue
40 pcs
Price control
Mov.av.price
10
Total stock
60
Total value
600
= 1000 - 40 * 10
Goods issues do not change the moving average price that is recorded for
informational purposes for materials with standard price control.
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Invoice verification takes place at the end of materials procurement. When goods are delivered
for a purchase order, the vendor sends an invoice for a certain amount.
In the SAP R/3 System, the goods receipt and the invoice receipt are managed on a GR/IR
clearing account. Either the goods receipt or the invoice receipt for a purchase order can be
entered first. When a goods receipt is entered before an invoice, the posting of the invoice clears
the GR/IR clearing account. When an invoice is entered before a goods receipt, the posting of
the goods receipt clears the GR/IR clearing account.
If price differences occur between the purchase order and the invoice, the account movements
vary depending on the sequence of goods and invoice receipt:

If the invoice receipt is posted before the goods receipt, the invoice price becomes
the basis for the posting. The goods receipt that follows is posted with the value
posted at invoice receipt.

Goods are received before the invoice. In this case, the goods receipt is posted at the
net order price. If the invoice price differs from the net order price, the value posted at
goods receipt must be corrected when the invoice is posted.
In either case, the invoice receipt is posted at the value of the invoice (invoiced quantity x invoice
price). The account movement depends on the price control defined for the material:
Standard price
For a material valuated at a standard price, the price difference is posted to an
income or expense account.

For a material valuated at a moving average price, the price difference is posted to
the stock account, provided there is sufficient stock coverage for the quantity
invoiced. If this is not the case, only the amount for the available quantity is posted to
the stock account; the remaining amount is posted to a revenue or expense account.
Material with a Standard Price [Page 56]

Material with a Moving Average Price [Page 57]
Material with a Moving Average Price without Stock Coverage [Page 58]
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Material with standard price $ 1.20 / pc
Stock
: 100 pcs
Purchase order
:
: 100 pcs a $ 1.30 / pc
Invoice
: 100 pcs a $ 1.24 / pc
= $ 124.00
Goods
receipt
Balance sheet acct.
GR / IR account
Vendor account
120 +
130 -
Invoice
130 +
124 -
10 +
6 -

Stock
100
200
200
Value
Standard
price
120
240
240
1,20
1,20
1,20
At goods receipt, $130 are posted to the GR/IR clearing account, based on the net order price.
However, only the product of the VWDQGDUGSULFH[TXDQWLW\RIJRRGVUHFHLYHG can be posted
to the stock account; the remaining amount must be posted to a price difference account.
Since the invoice price differs from the net order price, a balance occurs between the GR/IR
clearing account and the vendor posting when the invoice is entered. Since the material is
valuated at a standard price, this difference is automatically posted to a price difference account.
Thus, the invoice receipt does not lead to a change in the material master record.

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Stock
: 100 pcs
Invoice
: 100 pcs a $1.24 / pc
=
$124.00
Balance sheet acct.

GR / IR account
Vendor account
Goods
receipt
Invoice
130 +
130 -
6 130 +
124 -

Stock
Value
MAP
100
200
200
120
250
244
1,20
1,25
1,22
At goods receipt, $130 are posted to the GR/IR clearing account and to the stock account, based
on the net order price.
Since the invoice price differs from the net order price, a balance occurs between the GR/IR
valuated at a moving average price, this difference is automatically posted to the stock account.
Thus, the invoice receipt leads to a change in value and in the moving average price in the
material master record.
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Stock
: 100 pcs
Goods withdrawal: 120 pcs
Invoice
: 100 pcs a $ 1.40 / pc
= $140.00
Goods
receipt
Balance sheet acct.
GR/IR account
Vendor account
+100 pcs with value of

$130.00
-120 pcs with value of
$150.00
Balance sheet acct.

Cost center
130 +
130 -
Goods
withdrawal
Invoice
8
130
140
2
+
+
+

Stock
Value
MAP
100
200
80
80
120
250
100
108
1,20
1,25
1,25
1,35
150 150 +
At goods receipt, $130 are posted to the GR/IR clearing account and to the stock account, based
on the net order price. Thus, the stock, the value, and the moving average price in the material
master record change.
When goods are withdrawn, the moving average price is used to determine the value of the
goods withdrawn. Consequently, only the stock quantity and the value change.
Since the invoice price differs from the net order price, a balance exists between the GR/IR
valuated with a moving average price, this difference is posted to the stock account. Since 100
pieces have been invoiced, but there are only 80 pieces in stock, only the price difference
($0.10/piece) for 80 pieces ($8) can be debited from the stock account. Thus, the value and the
moving average price in the material master record change when the invoice receipt is entered.

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If a transaction has already been invoiced and additional costs are invoiced later, a subsequent
debit is necessary. In this case, you can debit the stock account with the additional costs.
It is also possible to credit the material if costs already posted are reduced at a later date.
Material with MAP $1.20/pc

Stock
: 100 pcs
Order
: 100 pcs at $1.20/pc
Goods receipt for purchase order
: 100 pcs
Invoice
: 100 pcs at $1.20/pc = $120
Invoice for unplanned storage costs
for this delivery: $20
Goods
receipt
Stock account
GR / IR account
Vendor account
120 +
120 -
1.
Invoice
120 +
120 -
2.
Invoice
20
20
Material master
Materialstammsatz
Stock
Value
MA
price
100
200
200
200
120
240
240
260
1.20
1.20
1.20
1.30
When entering a subsequent debit/credit, you must specify the quantity for which
the costs are to be posted. If stock coverage does not exist for this quantity, only
the portion for the available stock is posted to the stock account. The rest is
posted to a price difference account.
When a material is valuated at a standard price, the subsequent debit/credit is
posted to a price difference account. This way, the posting does not cause a
change in value in the material master record.
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In the SAP R/3 System, a credit memo is the reversal of an invoice. Just as the system expects a
goods receipt to precede or follow an invoice, it expects a credit memo when a goods receipt is
canceled. For this reason, the credit memo is settled on the GR/IR clearing account.
An invoice cancellation is a special type of credit memo. The system determines the credit memo
amount and quantity from the invoice to avoid variances between the invoice and credit memo.
When you cancel an invoice, the account movements follow the same rules as credit memo
postings. This means that an invoice cancellation does not necessarily reverse the postings
made when the invoice was posted.
6HHDOVR
Credit Memos: Account Movements [Page 61]
Credit Memos: Example [Page 62]

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The account movement which take place when you post a credit memo depends on the goods
receipts and invoices that have already been posted. The following rules apply:
The account movement is determined by the following:
Credit memo amount
Total amount posted to the GR/IR clearing account at invoice receipt (FOHDULQJ
YDOXH)
Total amount posted to the GR/IR clearing account at goods receipt (*5YDOXH)
Credit memo quantity
Total invoiced quantity (,5TXDQWLW\)
Total delivered quantity (*5TXDQWLW\)
If the IR quantity is larger than the GR quantity, the credit memo quantity is divided
into the quantity covered by the invoice surplus and the remaining credit memo
quantity.
The following value is calculated for the quantity covered by the invoice surplus:
4XDQWLW\ FOHDULQJYDOXH*5YDOXH,5TXDQWLW\*5TXDQWLW\
The following value is calculated for the remaining credit memo quantity:
4XDQWLW\ *5YDOXH*5TXDQWLW\
The sum of these two values is posted to the GR/IR clearing account.
If the IR quantity is not larger than the GR quantity, the following value is calculated
for the credit memo quantity:
4XDQWLW\ *5YDOXH*5TXDQWLW\
This value is posted to the GR/IR clearing account.
The credit memo amount is posted to the vendor account.
If the credit memo amount varies from the GR/IR posting, the difference is posted to
the stock account or a price difference account, depending on the price control
defined for the material.
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The following example illustrates the account movements when a credit memo is posted after
several goods receipts and invoice receipts are posted for a material subject to moving average
price control.
Order: 100 pieces at $11

Invoice: 60 pieces at $12/piece
Invoice: 40 pieces at $13.70/piece
Credit memo $720 for 60 pieces
Goods
receipt
Invoice
Invoice
Goods
receipt
Postings
Vendor account
GR/IR account
Stock account
880 880 +
720 660 +
60 +
548 494 +
54 +
137 137 +
Credit
memo
Posting
Vendor account
GR/IR account
Stock account
720 +
702 18 -
10 *
1154 - 1017
100 - 90
= 137
50 *
1017
90
= 565
702
A balance of $880 was posted to the GR/IR clearing account when the first goods receipt was
posted. The amount for 60 pieces ($720) is cleared with the first invoice. When you receive the
second invoice, $220 for 20 is still open on the GR/IR clearing account and the remaining 20
pieces are posted at the invoice price (20 x 13.70 = $274). The second goods receipt is also
valuated at the invoice price of $13.70/piece.
Thus, there is an invoice surplus of 10 pieces after posting the credit memo. This is multiplied by
the difference between the clearing value (660 + 494 = 1154) and GR value (880 + 137 = 1017)
and divided by the difference between the quantity invoiced (100) and quantity received (90). The
remaining credit memo quantity of 50 pieces is multiplied by the GR value and divided by the GR
quantity. The resulting amount is posted to the GR/IR clearing account when the credit memo is
posted.
After posting the credit memo, the GR/IR clearing account has a balance of $565. This means
that a goods receipt of 50 pieces is still to be invoiced; when this invoice is posted the balance
will then be cleared.

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In the SAP R/3 System, delivery costs can either be:
Planned
Unplanned
3ODQQHG'HOLYHU\&RVWV
Planned delivery costs are entered in the purchase order. At goods receipt, a provision is posted
to a freight, or customs clearing account. This account is cleared when the invoice is posted.
If no price differences occur between the delivery costs planned in the purchase order and the
delivery costs specified in the invoice, the material master record does not change when the
invoice is posted.
If price differences do occur, these are dealt with in exactly the same manner as price variances
for ordered materials.
8QSODQQHG'HOLYHU\&RVWV
Unplanned delivery costs are delivery costs that were not specified in the purchase order and are
only entered with the invoice. They are posted in exactly the same manner as subsequent
debits/credits.
For material with moving average price control, the unplanned delivery costs are posted to the
stock account, provided that sufficient stock coverage exists. For a material with standard price
control, the unplanned delivery costs are posted to a price difference account.
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If a quantity variance occurs between the goods receipt and the invoice for a purchase order, this
results in a balance on the GR/IR clearing account. The system expects an additional goods
receipt or an additional invoice to clear this balance. If neither occurs, the GR/IR clearing account
must be cleared manually. A function exists in Invoice Verification for manually maintaining the
GR/IR clearing account.
For material with moving average price control, the offsetting entry for clearing the GR/IR clearing
account is posted to the stock account (on the condition that sufficient stock coverage exists for
the quantity difference):
Delivery surplus
If there is a delivery surplus on the GR/IR clearing account, the material was debited
with too high a value when the goods receipt was posted. When the GR/IR clearing
account is cleared, the material is credited accordingly.
Invoice surplus
If there is an invoice surplus on the GR/IR clearing account, the material was debited
with too small a value when the goods receipt was posted. When the GR/IR clearing
account is cleared, the material is debited accordingly.

Stock
: 100 pcs
Order
: 100 pcs at $1.20/pc
Invoice
: 90 pcs at $1.20/pc
Goods
receipt
Stock account
GR / IR account
Vendor account
120 +
120 -
Invoice
108 +
108 -
: 100 pcs
= $108
GR/IR
clearing
12 12 +
Material master
Materialstammsatz
Stock
100
200
200
200
Value
MA
price
120
240
240
228
1.20
1.20
1.20
1.14
If sufficient stock coverage does not exist for the quantity difference, only the
portion corresponding to the available stock is posted to the stock account. The
rest is posted to a price difference account.
For material with standard price control, the offsetting entry to clear the GR/IR
clearing account is made to a price difference account. Thus, no value changes
occur in the material master record.

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When creating a purchase order, the buyer can enter cash discount terms that have been agreed
with the vendor. These cash discount terms appear as default values in Invoice Verification and
they can be changed if the terms have changed.
Post cash discount amounts using:
Gross value
When the cash discount is posted gross, the cash discount amount is not taken into
account at goods receipt or invoice receipt. The cash discount amount is not posted
until the payment program is run, and then it is posted to a non-operating income
account instead of to the stock account.
Net value
When the cash discount is posted net, the cash discount amount is credited directly to
the stock account. However, this procedure affects the stock account only if the
material is valuated at a moving average price. If the material is valuated at a
standard price, the cash discount is posted as a type of price variance.
Cash discounts can be posted net at goods receipt and in Invoice Verification. If you
post the goods receipt net, it is best to post the invoice net; otherwise, the net posting
at goods receipt would be canceled.
The document type determines which procedure is to be used:

Goods Receipt
For goods receipt, the document type is determined in Customizing. As a result, either
all goods receipts are posted gross or all goods receipts are posted net.
Invoice Verification
In Invoice Verification, you can decide for each document whether you want to post
the invoice gross or net. Note, however, that this choice only makes sense if the
goods receipt was posted gross.
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Three examples follow:
Gross Goods Receipt - Gross Invoice Receipt [Page 68]
Gross Goods Receipt - Net Invoice Receipt [Page 69]
Net Goods Receipt - Net Invoice Receipt [Page 70]
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If you post a goods receipt or an invoice receipt gross, cash discounts are ignored.
Stock
: 100 pcs
Order
: 100 pcs at 1.20/pc with 5% cash discount
: 100 pcs
Invoice
: 100 pcs at $1.20/pc
= $120
minus 5% discount
Goods
receipt
Stock account
GR / IR account
Vendor account
Non-op. results
Bank
120 +
120 -
Invoice
120 +
120 -
FI
payment
Material master
Materialstammsatz
120 +
6 114 -
Stock
100
200
200
Value
MA
price
120
240
240
1.20
1.20
1.20
Since both the goods receipt and the invoice receipt are posted gross, cash discounts are not
taken into account in Materials Management. For this reason, the moving average price of the
material does not change.
The cash discount amount is not posted until the payment run, and then it is posted to a nonoperating income account.

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Stock
: 100 pcs
Order
: 100 pcs at $1.20/pc with 5% cash discount
: 100 pcs
Invoice
: 100 pcs at $1.20/pc
= $120
minus 5% discount
Goods
receipt
Stock account
GR / IR account
Vendor account
Cash disc. account
Bank
120 +
120 -
Invoice
6
120
120
6
+
+
FI
payment
Material master
Materialstammsatz
120 +
6 114 -
Stock
100
200
200
Value
MA
price
120
240
234
1.20
1.20
1.17
The cash discount amount is taken into account when the invoice is posted. Since the goods
receipt was posted gross, net posting of the invoice receipt leads to a correction of the stock
value and, therefore, of the moving average price. The offsetting entry is made to a cash discount
clearing account, which is cleared at payment.
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Stock
: 100 pcs
Order
: 100 pcs at $1.20/pc with 5% cash discount
: 100 pcs
Invoice
: 100 pcs at $1.20/pc
= $120
minus 5% discount
Goods
receipt
Stock account
GR / IR account
Vendor account
Cash disc. account
Bank
114 +
114 -
Invoice
114 +
120 6+
FI
payment
Material master
Materialstammsatz
120 +
6 114 -
Stock
100
200
200
Value
MA
price
120
234
234
1.20
1.17
1.17
The cash discount amount is taken into account during goods receipt. The amount posted is the
value of goods delivered reduced by 5% (that is, by $6).
Posting of the invoice does not lead to a change in value in the material master record.
If the invoice were posted gross, the $6 would be posted to the stock account
instead of the cash discount clearing account, thereby canceling the effect of the
net posting at goods receipt.

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For certain materials, it is necessary to valuate the various stocks in a particular valuation area
separately. There can be various reasons for this:
The material has different origins
The material has various levels of quality
The material has different status
A distinction is made between materials produced in-house and those procured

externally
A distinction is made between different deliveries
If a material is subject to split valuation, the material is managed in different sub-stocks, and each
sub-stock is valuated separately.
Every transaction that is relevant for valuation, whether it be goods receipt, goods issue, invoice
receipt, or physical inventory, is carried out at sub-stock level. When processing any of these
transactions, you must always specify which sub-stock should be used. This way, the change in
value is restricted to the specified sub-stock; all other sub-stocks remain unchanged.
Not only the sub-stocks, but also the total stock is updated. The value of the total stock is
calculated as the sum of the stock values and stock quantities of each of the sub-stocks.

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These fields in the accounting data of the material master record determine whether a material is
to be subject to split valuation:
9DOXDWLRQFDWHJRU\
Specifies which criterion should be used as the basis for differentiating between one
sub-stock and another
9DOXDWLRQW\SH
Specifies the individual characteristic of a sub-stock
6HHDOVR
Valuation Category [Page 74]
Valuation Type [Page 75]
Creating Material Subject to Split Valuation [Page 77]
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The9DOXDWLRQFDWHJRU\ specifies which criterion should be used as the basis for differentiating
between one sub-stock and another.
The standard system contains several default valuation categories, for example:
%Procurement type
The stock is divided according to whether the material is manufactured in-house or
procured externally.
+Origin
The stock is divided according to where it was supplied.
The system administrator can set up additional valuation categories in the Customizing system.
Valuation areas must be specified for every valuation category.
Every material subject to split valuation is assigned to a valuation category in the material master
record. The material can then be managed using the valuation types defined for the valuation
category.
The valuation category X is a special case: no valuation types are predefined for this category. At
goods receipt, a batch is created for the material entered. This also serves as its valuation type.
This way, it is possible to valuate every goods receipt separately, for example, by using the order
number as a valuation type.
For partial deliveries for a purchase order, each partial delivery can only be valuated separately if
goods-receipt based invoice verification has been defined in the purchase order (the*5EDVHG
,9 field must be selected on the order item screen). If goods-receipt based invoice verification
has not been defined, the valuation type you enter for the first partial delivery is binding for the
following partial deliveries.

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For every valuation category, the valuation types specify which individual characteristics exist for
that valuation category. If you give the valuation types meaningful keys, each valuation type in
some way represents the name of a sub-stock.
Fixed valuation types are defined in the system for every valuation category except valuation
category X.
The system administrator can define as many valuation types as desired in the Customizing
system. Every valuation type must be assigned to a valuation category.
The following graphic shows three examples of split valuation.
Split valuation
Via
procurement type
Via
country of origin
Via
quality
Val. category
Valuation type
Internal
External
Italy
France
Example1
You procure a material both from in-house production and from external vendors.
You want to valuate the stocks from each source separately. In this case, you
select 3URFXUHPHQWW\SH as a valuation category (%) and ,QWHUQDO and([WHUQDO
as valuation types.
Example 2
You procure a material from different countries. You want to valuate the stocks
from each country separately. In this case, you select 2ULJLQ as a valuation
category (+). As valuation types, you define the relevant countries, for example,
,WDO\ and$XVWULD.
Example 3
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You procure a material in different grades. You want to valuate the stocks of each
class separately. In this case, you select 4XDOLW\ as a valuation category (4). As
valuation types, you define $,%,&, and', for example.

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If you want to create a material subject to split valuation:
1. Create a YDOXDWLRQKHDGHUUHFRUG for this material. This is where the individual
stocks of a material are managed cumulatively.
To do this fill in the 9DOXDWLRQFDWHJRU\ field on the accounting screen when you
create the material master record; leave the 9DOXDWLRQW\SH field empty. In the3ULFH
FRQWURO field, enter 9 (moving average price), since a moving average price is
constructed in the valuation header record from the values and quantities of the
individual stocks. When you save, the valuation header record is created.
2. Create the material for a valuation type.
To do this, call up the material in creation mode again. Since a valuation header
record exists, the system requires you to enter a valuation type for the valuation
category.
3. Repeat Step 2 for every valuation type planned.
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The stocks of a material subject to split valuation are managed separately for every valuation
type. They are cumulated in the valuation header record. This is where the sum totals of the
separate stock quantities and stock values are managed. A moving average price is calculated
from the values from the various valuation types and the stock quantities.
The following graphic shows an example of split valuation
Valuation
Plant
0001
Plant
Material
MTE AG
Stor. location
Stor. loc.0001
Quantity 30
Stor. loc.0002
Quantity 70
0001
Valuation area
1
Material
Valuation category H
Quantity
100
Mov. av. price
5,20
Valuation type
Italy
Valuation type
Austria
Quantity 40
Mov. av.
4,00
price
Quantity 60
S-price 6,00
Valuation
type
Italy
Quantity 10
Austria
Quantity 20
Italy
Quantity 30
Austria
Quantity 40
Material 1 is managed separately according to origin (valuation category +). The valuation types
,WDO\ and$XVWULD have stocks. The fact that these stocks are in different storage locations is not
important for valuation.
In the valuation header record, the separate stocks are cumulated:
Total stock in the plant is 100.
The moving average price is calculated from valuation of the individual stocks:
DYHUDJHSULFH WRWDOYDOXHWRWDOTXDQWLW\
Value,WDO\:
40 x 4
= 160
Value$XVWULD:
60 x 6
= 360
Total value:
Average price:

= 520
520 / 100
= 5.20
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A change of price is possible for every material, independent of the price control defined for the
material.
Standard price control

In the case of a material with standard price control, the material is always valuated at
the same price. The fluctuations of the delivered prices are updated automatically for
statistical purposes, but they are not used for valuation. Thus, it can occasionally be
necessary to adjust the standard price manually.
Moving average price control

In the case of a material with moving average, the price changes with every goods
receipt and invoice receipt if the purchase order price or the invoice price differs from
the current price. Consequently, the price is automatically adjusted to the delivered
price. The price might need to be changed manually if there have been no
movements of the material for a long period of time and the price should be updated.
You can make a price change by:
Entering a Change with Effect from a Future Date [Page 81]
Entering a Change with Immediate Effect [Page 84]
When you enter a price change with immediate effect, you can post the price change to the
previous period or the previous year. Price changes can be easily monitored at any time.
6HHDOVR
Posting a Price Change to the Previous Period or Previous Year [Page 89]
Displaying a Price Change [Page 92]

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When you want to change the price of a material with effect from a future date, you can branch
from valuation directly to the accounting screen in the material master record. On the accounting
screen, you enter a future price, as well as the date on which the price should become valid.
Note, however, that the system does not check every day whether a new price is valid. The new
prices must therefore be activated, which is done when a batch input session is run.
To avoid errors when dealing with future prices, SAP recommends that you
change the prices with effect from fixed dates (for example, at the beginning of
the month), and that you activate them on those dates.
6HHDOVR
Entering a Future Price [Page 82]
Activating a Future Price [Page 83]
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To enter a future price:
1. From the valuation screen, choose3ULFHGHWHUPLQDWLRQ)XWXUHSULFH (QWHU.
The initial screen for changing the material appears.
2. Enter the material number, then choose (17(5.
A window appears in which you select the view $FFRXQWLQJ
3. Then choose (17(5.
A window appears in which you enter the valuation level and, if necessary, the
valuation type.
4. Then choose (17(5.
The accounting screen appears.
5. Enter values in the fields )XWXUHSULFH and9DOLGIURP.
6. Save your entries by choosing0DWHULDO 6DYH.
The initial screen reappears, on which you can enter the next material.
7. When you have processed all of the desired materials, you can return to the valuation
screen by choosing0DWHULDO ([LW.

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When you activate a price, the system checks whether a future price has been entered for
specific materials. All of the materials with a future price whose validity date is before or on the
date of activation are listed and entered in a session. When the session is run, the system places
the future price into the6WDQGDUGSULFH or0RYLQJDYHUDJHSULFH field, depending on the type of
price control. The )XWXUHSULFH and9DOLGIURP fields are also reset.
To activate future prices:
1. From the valuation screen, choose3ULFHGHWHUPLQDWLRQ )XWXUHSULFH $FWLYDWH.
A screen appears on which you can enter the range of materials.
2. Enter a material number or a range of material numbers, as well as a valuation area
or a range of valuation areas.
3. Choose 3URJUDP ([HFXWH.
A list of the materials whose prices are to be changed appears.
4. Choose 6\VWHP 6HUYLFHV %DWFKLQSXW (GLW to process a session.
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How you go about changing a price with immediate effect depends on whether you want to
process materials individually or collectively.
6HHDOVR

Price Change: Individual Processing [Page 85]
Price Change: Collective Processing [Page 86]
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To change an individual price:
1. From thevaluation screen, choose3ULFHGHWHUPLQDWLRQ &KDQJHSULFH.
The initial screen for making price changes is displayed.
2. Fill out the initial screen. In the area (QWULHVIRUILUVWLWHP, enter the material number of
the material whose price you want to change. If valuation is at plant level, enter the
plant number, too. If the material is subject to split valuation, you must specify the
valuation type for which the price is to be changed.
3. Once you have entered the data, choose (17(5.
The item screen appears.
4. Fill out the item screen. Data in the top half of the screen is for information only; you
cannot make any changes in that area.
5. In the1HZSULFH area, enter the new price for the material displayed and if necessary
the new price unit.
6. You only need to enter data in the(QWULHVIRUDQRWKHULWHP area if you want to process
several price changes in a single document.
7. Save your entries by choosing3ULFHFKDQJH 3RVW.
The initial screen reappears, and the system displays a message confirming that a
document was posted.
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You can process several price changes in one operation using:
Step-By-Step Entry [Page 87]
Collective Entry [Page 88]
Collective entry has the advantage that you can enter the prices for several materials on a single
screen. The disadvantage, however, is that you cannot see the existing data for the materials,
since the individual item screens are not displayed.

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Step-by-step processing is identical to individual processing, except that you enter the next
material on the item screen.
To process prices step-by-step:
1. From the valuation screen, choose3ULFHGHWHUPLQDWLRQ &KDQJHSULFH.
The initial screen for making price changes appears.
2. Fill out the initial screen (see Individual Processing), then choose (QWHU to reach the
item screen.
3. Fill out the item screen. In the(QWULHVIRUDQRWKHULWHP area, enter the material
number of the next material and, if necessary, the plant and the valuation type.
4. Choose (QWHU.
The system displays the item screen for the material.
5. Repeat Step 3 until you have processed all materials.
6. When you have processed the last material, post the price changes by choosing 3ULFH
FKDQJH3RVW.
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To make a number of price changes, you enter the materials to be given new prices on one
screen:
1. From the valuation screen, choose3ULFHGHWHUPLQDWLRQ &KDQJHSULFH.
The initial screen for making price changes is displayed.
2. Choose (GLW &ROOHFWLYHHQWU\.
A list is displayed.
3. On this list, enter the materials, and, if necessary, the plant and valuation type. Also
specify the new price.
4. If you do not enter a new price unit in the column 1HZSUXQ, the old price unit is
used.
5. To post the changes, choose3ULFHFKDQJH 3RVW.
'RFXPHQW2YHUYLHZ
It is often helpful to review the processed items, especially when processing several price
changes:
1. Choose the function *RWR 'RFXPHQWRYHUYLHZ from the menu. The document
overview is GLVSOD\HG.
2. The document overview lists the processed items. For every material, the new price,
the old price, and the price units are displayed. From the document overview, you can
do any of the following:
3. Post the document.
To do this, choose 3ULFHFKDQJH 3RVW from the menu.
4. Continue the step-by-step entry.
To do this, choose (GLW 1HZLWHP.
5. Continue with collective entry.
To do this, choose (GLW &ROOHFWLYHHQWU\.
6. Correct an item. To do this, position the cursor on the line item number and choose
(GLW ,WHP.
The item screen appears, on which you can correct the new price.

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3UHYLRXV<HDU
Your system administrator can set up the Customizing system of Invoice Verification for posting
price changes in these ways:
Price changes only apply to the previous period or to the previous year
If this setting is chosen, the system only changes the price in the previous period or in
the previous year. Account movements in the previous period or previous year are
reversed in the current period.
6HHDOVR Price Change in the Previous Period Only [Page 90]
Price changes not only apply to the previous period or to the previous year but also to
the current period
If this setting is chosen, the system changes the price not only in the previous period
or previous year, but in the current period too. If the quantities and previous prices are
the same in the previous period/year, account movements only occur in the previous
period. If this is not the case, account movements also occur in the current period,
which reverse the postings in the previous period and result in the current price
change.
6HHDOVR Price Change in the Previous and Current Period [Page 91]
You post a price change to the previous period or previous year by entering a posting date from
the previous period / year on the initial screen for making price changes.
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3ULFH&KDQJHLQWKH3UHYLRXV3HULRG2QO\
0DWHULDO0DVWHU5HFRUG
3UHYLRXVSHULRG
&XUUHQWSHULRG
Quantity
150
200
Price
10
11
Value
1500
2200
3ULFHFKDQJHYDOLGLQSUHYLRXVSHULRGRQO\
New price: 12
$FFRXQWPRYHPHQWV
3UHYLRXVSHULRG
&XUUHQWSHULRG
Stock account
300 +
300 -
Expenditure/income
300 -
300 +
0DWHULDOPDVWHUUHFRUGDIWHUSULFHFKDQJH

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&XUUHQWSHULRG
Quantity
150
200
Price
12
11
Value
1800
2200
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3ULFH&KDQJHLQWKH3UHYLRXVDQG&XUUHQW3HULRG
0DWHULDOPDVWHUUHFRUG
3UHYLRXVSHULRG
&XUUHQWSHULRG
Quantity
150
200
Price
10
11
Value
1500
2200
3ULFHFKDQJHLQWKHSUHYLRXVSHULRGDQGLQWKHFXUUHQWSHULRG
New price: 12
$FFRXQWPRYHPHQWV
3UHYLRXVSHULRG
&XUUHQWSHULRG
Stock account
300 +
100 -
Expenditure/income
300 -
100 +
0DWHULDOPDVWHUUHFRUGDIWHUSULFHFKDQJH
3UHYLRXVSHULRG
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Quantity
150
200
Price
12
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Value
1800
2400
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When a price change is saved, the system automatically updates:
The material master record
The accounts in Financial Accounting

It also generates an accounting document to record this posting.
Therefore, you can display the price change from the material master record or from the
accounting view.
0DWHULDO0DVWHU5HFRUG
When you change a price, the previous price and the date of last change are recorded in the
material master record. By choosing (QYLURQPHQW 'LVSOD\FKDQJHV, you can display all of
the changes to this material, when they were carried out and by whom.

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How you go about debiting or crediting a material depends on whether you want to process the
materials individually or collectively:
Price Change: Individual Processing [Page 85]
Price Change: Collective Processing [Page 86]
Material debits/credits can be easily monitored at any time.

6HHDOVR
Displaying Posted Debits and Credits [Page 96]
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To process individual material debits/credits:
1. From the valuation screen, choose3ULFHGHWHUPLQDWLRQ 'HELWFUHGPDWHULDO.
The initial screen for a material debit or credit appears.
2. Fill out the initial screen. In the (QWULHVIRUILUVWLWHP area, enter the material number of
the material you want to debit or credit. If valuation is at plant level, enter the plant
number, too. If split valuation has been defined for the material, you must specify a
valuation type.
3. Once you have entered the data, choose (QWHU.
4. Fill out the item screen. Data in the top half of the screen is for information only; you
cannot make any changes in that area. In the3RVWLQJ area, enter the amount and the
quantity to be debited or credited.
5. In addition, you must select whether you want to create a debit or credit posting. To
enter a material:
Debit, select the'HELWSRVWLQJ field
Credit, select the&UHGLWSRVWLQJ field
You only need to enter data in the(QWULHVIRUDQRWKHULWHP area if you want to process
several material debits or credits in a single document.
6. Save your entries by choosing'HELWFUHGLW 6DYH.
The initial screen reappears, and the system displays a message confirming that a
document was posted.

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0DWHULDO'HELWV&UHGLWV&ROOHFWLYH3URFHVVLQJ
You begin processing several material debits or credits in one operation as you would in
individual processing. The difference is that you specify the next material on the item screen. To
process collectively:
1. From the valuation screen, choose3ULFHGHWHUPLQDWLRQ 'HELWFUHGLWPDWHULDO.
2. Fill out the initial screen (see Individual Processing), then choose (QWHU.
3. Fill out the item screen. In the(QWULHVIRUDQRWKHULWHP area, enter the material
number of the next material and, if necessary, the plant and the valuation type.
4. Choose (QWHU.
The system displays the item screen for the specified material.
5. Repeat Steps 3 and 4 until you have processed all materials.
6. When you have processed the last material, post the material debits and credits by
choosing 'HELW/FUHGLW 6DYH.
'RFXPHQW2YHUYLHZ
When processing several material debits or credits, it is often helpful to review the processed
items. To do so, choose *RWR 'RFXPHQWRYHUYLHZ. The document overview appears.
The document overview lists the processed items. For every material, the quantity and the
amount of the debit or credit are displayed. From the document overview, you can do any of the
following:
Post the document by choosing'HELWFUHGLW 6DYH.
Continue the step-by-step entry by choosing (GLW 1HZLWHP.
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To display posted debits and credits:
1. From the valuation screen, choose3ULFHGHWHUPLQDWLRQ 'HELWFUHGPDWHULDO
2. Choose'HELWFUHGLW 'LVSOD\ to display the initial screen of the original document.
3. On the initial screen, enter the document number, the company code, and the fiscal
year, then choose (QWHU.
The document overview appears.
4. Choose ([WUDV$FFRXQWLQJYLHZ to display the accounting document.
The account activities are displayed here; the same accounts are posted as for a
price change.

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When a material is revaluated, this leads to account movements.
6HHDOVR
Account Movements: Price Change [Page 98]
Account Movements: Material Debits/Credits [Page 99]
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When a price is changed, the value of the stock is changed, since the value is calculated from
the price:
7RWDOYDOXH WRWDOTXDQWLW\[SULFH
Consequently, a price change creates a posting to the stock account that amounts to total
quantity x price difference. The offsetting entry is made to an income or expense account.

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Debiting or crediting a material account has the following effects:
The stock of the material remains unchanged.
The value of the material is increased or reduced.
As a result, a change of price occurs, but only for a material with moving average price control.
Consequently, the account movements for a material debit or credit differ depending on the type
of price control.
0DWHULDOZLWK6WDQGDUG3ULFH&RQWURO
For a material with standard price control, the material debit or credit is posted to a price
difference account. The offsetting entry is made to an income or expense account. Consequently,
a material debit or credit for a material with standard price control does not lead to a revaluation.
0DWHULDOZLWK0RYLQJ$YHUDJH3ULFH&RQWURO
For a material with moving average price control, a material debit or credit results in a posting to
the stock account. The system checks whether stock coverage exists for the quantity to be
debited or credited, then acts accordingly:
If the quantity to be debited or credited is equal to or smaller than the total stock,
the amount to be debited or credited is posted to the stock account. The offsetting
entry is made to an income or expense account.
If the quantity to be debited or credited is larger than the total stock,

the amount to be debited or credited is divided proportionally. Only a portion of the
amount to be debited or credited is posted to the stock account, namely
Total stock
Amount to be debited*
-------------------------Quantity to be debited
or
Total stock
Amount to be credited *
--------------------------Amount to be credited
The rest is posted to a price difference account. The offsetting entry is made to an
income or expense account.
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At the end of every period, the system administrator runs a program that moves the data from the
current period to the previous period and the data from the previous period into the period before
that, and so on. This program is called the SHULRGHQGFORVLQJSURJUDP. It affects:
Stock quantities and values
Prices and price units
The final data of the previous period is taken over as the starting data for the new period.
If, after the period-end closing program has been run, you need to enter transactions with a
posting date in the previous period, data is updated in both the current period and the previous
period.
Posting goods movements to a previous period is only possible if you are posting to the period
immediately before the current one. Invoice verification transactions can be posted to the
previous period or to the previous year (to be more precise: to the last period of the previous
year).
It is essential that the valid posting periods for the accounts to be posted are correctly defined in
Financial Accounting.
You post to a previous period by entering a date from the previous period in the 3RVWLQJGDWH field
when you enter the transaction in the system.
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In the SAP R/3 System, you can post goods movements to the previous period. As a result, the
stock quantity and the stock value change in both the previous period and the current period.
The following graphic shows a goods receipt posting to a previous period for a material with
moving average price control.
Material master rec.

Materialstammsatz
Stock
quantity
Stock
value
MA
price
Previous period
400
4000
10
Current period
800
9600
12

200 pcs at $10.00/pc
posted to previous period
Material master rec.

Materialstammsatz
Stock
quantity
Previous period
Current period
Stock
value
MA
price
600
6000
10
1000
11600
11
The data from before the goods were received shows that goods receipts (400 pieces with a
value of $5,600) have already been posted in the current period.
The goods receipt posting to a previous period leads to a change in stock quantity and stock
value in both the previous period and the current period. Since the purchase order price for the
goods receipt does not differ from the moving average price of the previous period in this
example, the moving average price (MAP) in the previous period does not change. In the current
period however, the moving average price changes.

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In the SAP R/3 System, you can post invoices to the previous period or to the previous year.
Changes in stock value only result if price variances occur for a material with moving average
price control. In this case, the stock value changes in both the previous period and the current
period.
3RVWLQJWRWKH3UHYLRXV3HULRG
The following graphic shows an invoice posting to the previous period for a material with moving
average price control.
Material master
Materialstammsatz
Stock
quantity
Previous period
Current period
Stock
value
MA
price
600
6000
10
1000
11600
11
Invoice
receipt
Invoice receipt for purchase order

Ordered: 200 pcs at $10
Delivered in previous period: 200 pcs
Invoice for 200 pcs at $13/pc = $2600
Invoice is posted to previous period
Material master
Materialstammsatz
Stock
quantity
Previous period
Current period
Stock
value
MA
price
600
6600
11
1000
12200
12
Since the invoice price exceeds the purchase order price by $3, the stock is debited with the
price variance (200 * $3). Thus, the stock value is increased in both the previous period and the
current period by $600. As a result, the moving average price changes in each case.
3RVWLQJWRWKH3UHYLRXV<HDU
You can post an invoice to the last period of the previous year. The procedure is the same as for
posting to the previous period.
If you post an invoice receipt before the goods receipt to the previous year, a
balance results on the GR/IR clearing account. Since you cannot post a goods
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receipt to the previous year, this item cannot be cleared in the previous year. The
open item is carried over into the current fiscal year as a balance carried forward;
it can then be cleared by the goods receipt posting.

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A goods receipt or an invoice receipt posting to a previous period has the same effects as a
posting to the current period: For a goods receipt, the stock account and the GR/IR clearing
account are posted. For an invoice receipt, the GR/IR clearing account is cleared as a result of
the posting to the vendor account.
$XWRPDWLF&RUUHFWLRQV
In these cases it is necessary to make adjustment postings for postings to the previous period:
Posting to a Previous Period after a Price Change - Standard Price Control [Page
106]
Posting to a Previous Period Due to a Current Stock Shortage - MAP [Page 107]
The system automatically carries out these adjustment postings when you post to a previous
period. In these cases, therefore, two documents are created when the goods receipt or invoice
receipt is posted to the previous period.
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6WDQGDUG3ULFH&RQWURO
For a material with standard price control, the stock account can only be debited with the value
resulting from JRRGVUHFHLYHG[VWDQGDUGSULFH. When posting to a previous period, the
standard price of the previous period is used. If the standard price was changed in the current
period, the posting to the stock account must be corrected; to a certain extent, the price is later
changed for the quantity received.
The following graphic shows a material whose standard price was changed at the beginning of
the current period.
Material
Materialstammsat
Stock
quantity
Stock
value
Standard
price
Previous
400
4000
10
Current
400
4800
12
Goods receipt for purchase

200 pcs at
posted to previous
$
GR document
in prev. period
Stock account
GR/IR clearing
Price difference
Expense/income
revaluation
Revalution
document in
current
400 +
2000 +
2100 100 +
400 -
Material
Materialstammsat
Stock
quantity
Stock
value
Standard
price
Previous
600
6000
10
Current
600
7200
12
At the beginning of the current period, the standard price was increased by $2/piece. Posting the
goods receipt to a previous period causes the stock quantity and the stock value to change in
both the previous period and the current period by 200 pieces and $2,000. To enable the
standard price to remain unchanged in the current period, the system automatically makes a
revaluation posting. Thus the price change at the beginning of the current period is taken into
account: the stock value of the current period is increased by 200 pieces x $2/piece = $400

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6KRUWDJH0$3
If price variances occur for an invoice for amaterial with moving average price control, the
resulting value is debited from the stock account, provided there is sufficient stock coverage for
the quantity invoiced. If there is stock coverage for the quantity invoiced in the previous period,
but not in the current period, the entire invoice quantity can be posted to a previous period.
However, an adjustment posting must be made for the current period.
The following graphic shows an invoice for a material with moving average price control for which
stock coverage exists in the previous period, but not in the current period.
Material
record
Material master
master record
Stock
quantity
Stock
value
Mov. av.
price
Previous period
500
5000
10.00
Current period
100
1 100
11.00
Invoice
receipt
Invoice receipt for an order

Ordered: 300 pieces at $10/piece
Delivered in previous period: 300 pieces
Invoice for 300 pieces at $12/piece = $3600
Invoice is posted to previous period
IR document
in previous period
Stock account
GR/IR Clearing account
Vendor account
Expenses/income
from revaluation
600 +
3000 +
3600 -
Revaluation
document in
current period
400 -
400 +

Stock
quantity
Stock
value
Mov.av.
price
Previous period
500
5600
11.20
Current period
100
1300
13.00
When posted to the previous period, the value resulting from the price variance (300 pieces x
$2/p-iece) is debited from the stock account first. The stock value in the previous period changes
accordingly. In the current period, only 100 pieces are in stock, so the stock account can only be
debited $200 (100 pieces x $2/piece). The $400 difference is automatically posted to a
revaluation account. Thus, the stock value in the current period increases by only $200.
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The lowest value principle is a method of valuating material stocks for balance sheet purposes.
The aim of this method is to valuate stocks as accurately as possible according to the
recognition-of-loss principle. It is based on the following:
Profits that exist solely on the books as a result of changes in market prices are to be
avoided. If, for example, a material is procured at a price of $ 10 and the current
market price is $ 15, a profit of $ 5 would therefore be expected for every unit of
measure. This profit should not, however, be included in the balance sheet until it has
actually been made. The material continues to be valuated at a price of $ 10.
Expected losses are included in the balance sheet. If, for example, a material is
procured at a price of $ 10 and the current market price is $ 7, the material is only
valuated at $ 7.
Material stocks that are no longer required lose their value. Therefore, you should
check a materials movement rate or range of coverage. A slow movement rate or
large range of coverage usually means that a material may no longer be required in
the future. Instead of waiting to post the loss when you eventually scrap the material,
you devaluate the material price when the material displays slow movement or a large
range of coverage.
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In valuating a material for balance sheet purposes using the lowest value principle, a tax or
commercial price is created. This price is used to calculate the value for balance sheet valuation.
In the SAP System there are various methods of determining tax or commercial prices:
lowest value determination based on current market prices
lowest value determination based on rate of movement
lowest value determination based on range of coverage
You can also use theses methods in combination: You can, for example, determine the lowest
value using market prices and then devaluate the market price based on a lowest value
determination by rate of movement.
Before you valuate materials according to the lowest value principle, you must consider the
following questions:
How does your company use the price fields "Tax price" and "Commercial price" in
the material master record?
Do you want to determine the lowest market prices?
Do you want to determine the lowest value based on rate of movement?
Do you want to determine the lowest value based on range of coverage?
Do you want to combine the methods and, if so, how?
Over which period do you want documents to be analyzed?
How do you want different prices to be compared?
Do you want the materials to be revaluated in Accounting based on the lowest value
determination?
See also:
Period Under Review [Page 111]
Lowest Value Determination: Price Fields in the Material Master [Page 112]
Lowest Value Determination: Devaluation [Page 113]
Valuation Level [Page 114]

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The period under review determines which documents are used in determining the lowest value.
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You usually run lowest value determination near the end or at the end of the reporting year. The
data accessed by the system should be from this reporting year. The system therefore suggests
the following periods when you run lowest value determination:
If you carry out lowest value determination in the first half of the current fiscal year,
the system considers the previous year as the reporting year.
If you carry out lowest value determination in the second half of the current fiscal
year, the system considers the current year as the reporting year.
You can change the period under review as required.
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The following fields in the material master record are of relevance for balance sheet valuation:
0DWHULDOPDVWHUUHFRUGDFFRXQWLQJYLHZ
Tax price 1 ___
Commercial price 1 ___
Tax price 2 ___
Tax price 3 ___
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Each time you determine the lowest value, you define which price fields are to be filled by the
system. You can also have the system delete the contents of other fields, if, for example, existing
data is no longer up-to-date.
You can compare the different price fields with each other and include them in balance sheet
valuation.
Before you run lowest value determination, you should determine which price field you want to
use for which update.

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You can use the results of lowest value determination in two ways:
Revaluation in accounting
You adjust the accounting value of the stock. To revaluate, you carry out a price
change when you carry out lowest value determination. The current valuation price is
then replaced by the new tax or commercial price. The offsetting entry to the stock
posting is made to an expense account.
Balance sheet valuation

You generate a list of possible devaluations based on the results of lowest value
determination. You use this list to decide which stock values to enter on the balance
sheet. You make the posting manually to the balance sheet account. The offsetting
entry is made to an expense account.
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Each time you determine the lowest value, you can decide which valuation level you want to
consider. You have two options:
Lowest value determination on valuation area level

In this case, the system only accesses data from the valuation area. Lowest market
prices, range of coverage, or movement rates for the material in other valuation areas
are not considered.
Lowest value determination on company code level

In this case, the system accesses information from the entire company code. The
lowest market price is calculated based on the prices in all the valuation areas in the
company code. The movement rate is calculated based on aggregated
receipts/issues and stocks in all the valuation areas.
To be able to determine the lowest value based on current market prices on

company code level, all the materials in the valuation areas in this company code
must be valuated in the same way. For example, if you valuate one material in
one valuation area according to valuation category H and the same material in
another valuation area without split valuation, you cannot determine the lowest
market price.
Lowest value determination on company code level usually produces different results than lowest
value determination on valuation area level (see Valuation Level: Example [Page 115])

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Company code
Valuation area 1
MTE AG
Valuation area 2
MTE AG
Plant 1
MTE AG
Plant 2
Material A
Stock 250
Plant 3
Material A
Stock 50
Material A
Stock 200
14.00
13.50
Lowest market price
45
15
Units of measure: receipts/issues
Determining lowest value on valuation area level

Valuation area 1
Valuation area 2
14.00
45
= 15%
300
13.50
15
= 7.5%
200
Lowest market price

Movement rate
Determining lowest value on company code level

Company code
Lowest market price
Movement rate
45 + 15
300 + 200
13.50
60
= 12%
=
500
If you set the limit between movement and non-movement at 10 % and determine the lowest
value on multiple levels, this would lead to the results contained in the following table (with 20 %
percentage devaluation and provided that the market price determined is lower than the current
valuation price).
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Tax price 1
13.50
14.00
13.50
Tax price 2
13.50
14.00
10.80
Stock
500
300
200
Balance sheet value
6750
4200
2160
The total balance sheet value for the individual valuation areas is not necessarily smaller than the
balance sheet value on company code level. For example, if the difference between moving and
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non-moving is 13%, a material would be classified as slow/non-moving on company code level.
The tax price 2 is then reduced and the balance sheet value would also decrease.

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In determining the lowest value based on market prices, the system searches for the lowest price
(or alternatively the last price) from among the various prices stored for each material. It is
advisable to limit the period during which the system retrieves data to a particular period, such as
the last three months, so the prices are most up-to-date.
See also:
Lowest Values Determination Based on Market Prices: Price Sources [Page 118]
Lowest Values Determination Based on Market Prices: Results [Page 120]
Lowest Values Determination Based on Market Prices: Base Price [Page 121]
Running Lowest Values Determination Based on Market Prices [Page 122]
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In determining market prices, the system can retrieve the following data:
Receipts for purchase orders

All order transactions meeting the following criteria are included in the calculation for
every material:
-
At least one goods receipt has been posted for a purchase order.
The quantity received is equal to the quantity invoiced.
The purchase order, goods receipt, and invoice receipt lie within the specified
period.
All costs incurred are reflected in the receipt price, including delivery costs and
subsequent debits / credits: the price is calculated from the total value invoiced
divided by the total quantity delivered.
You use a parameter to determine which strategy is used in including the prices
determined for a material. Two strategies are currently available: either all prices are
included or the latest price.
Purchase orders
For each material, the system compares the order prices in all purchase orders
whose order date is in the specified period. This is irrespective of
whether a goods receipt has taken place for the purchase order
whether an invoice which varies from the order price has been posted
You use a parameter to determine which strategy is used in including the prices
determined for a material. Two strategies are currently available: either all prices are
included or the latest price.
Contracts/scheduling agreements
For each material the system compares all prices in contracts and scheduling
agreements whose validity period ends after the starting date of the period under
review or begins before the end of the period. This is irrespective of whether
purchase orders exist for the contract or schedules exist for the scheduling
agreements.
Purchasing information records

For each material, the system compares the prices in all the purchasing info records
in which the price has last changed in the specified period. Materials with split
valuation are not taken into account. You cannot create an individual purchasing info
record for each valuation type; the price in the purchasing info record does not
depend on the valuation type. Since lowest value determination based on market
prices is carried out separately for each valuation type, it does not make sense to use
the price in the purchasing info record.
If info records are used as a source for determining the lowest value, you must make
sure that they are properly maintained.
For each of the price sources, you can define whether the system should compare the price of

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transactions in foreign currencies with the exchange rate on the balance sheet key date. If you
use this option, the system translates the currency using the exchange rate resulting in the
lowest price.
In addition to the price sources listed, you can include the standard price in determining the
lowest value. This option should only be used if you can justify interpreting the standard price in
this way.
In determining the market price, the system compares the prices from the selected sources in a
pre-defined sequence. You use sequence indicators to define whether, for example, a certain
price source should be used if available or whether the system should use the lowest price from
all the sources as the market price.
When materials are subject to split-valuation, the system determines the lowest value for each
individual valuation type. An average price is calculated from the various prices and material
stocks for the totals record.
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The system generates a list of materials with their lowest price. If the system cannot determine a
current market price, it enters the base price in the list:
You can also have the system update the results of lowest value determination in the material
master record. This can be either:
in one (or more) price fields in the material master record or
as a planning price used for lowest value determination in standard cost estimates
If you want to update the prices, you can also have the system compare the price determined
with the base price (see Lowest Values Determination Based on Market Prices: Base Price [Page
121]) and copy the lower of the two prices to the price field specified.
You can also generate a batch input session, which, when run, changes the current valuation
prices to the lowest prices determined.

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In lowest determination based on market prices, the base price fulfills two functions:
If the system cannot find a lowest price, it uses the base price as the lowest price.
If the system finds a lowest price, it compares this with the base price. If the price is to
be updated with the lowest value, the system updates the lower of the lowest price
determined and the base price.
Alternatively, you can determine the lowest market price independently of the base price and
update it by indicating during processing that you do not want the base price considered.
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The following prices can be used as the base price:
the current material price
the material price from the previous month or year
the current standard price
the standard price from the previous month or year
the current moving average price
the moving average price of the previous month or year
tax price 1,2, or 3
commercial price 1,2, or 3
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In view of the large volume of data, you should carry out lowest value
determination in batch.
3URFHGXUH
1. From the valuation menu, choose %DOVKHHWYDOXDWLRQ 'HWHUPORZHVWYDOXH
0DUNHWSULFHV.
a) The selection screen appears.
2. Enter the materials for which you want to determine the lowest value. You can narrow
down your selection using material numbers, valuation areas, valuation types,
material types and material groups.
3. Choose 3ULFHVRXUFHV
A window appears in which the price sources are displayed (see Lowest Values
Determination Based on Market Prices: Price Sources [Page 118]).
Select the price sources to be used for lowest value determination.
For each price source you select, check the period under review, the priority and
the exchange rate comparison indicator (which controls how the price sources are
translated from foreign currency) and make any necessary changes. If you use
5HFHLSWSULFHV or 2UGHUSULFHV, the strategy you select determines whether the
lowest or the last prices are determined.
To proceed to the selection screen, press ENTER.

4. Choose %DVHSULFH
A window appears in which you enter the base price.
In the standard configuration, the current material price is used as the base price. You
can, however, change this. You can also choose 1REDVHSULFH.
5. If you want to update the results of lowest value determination in the material master
record, select the 'DWDEDVHXSGDWH field and choose 8SGDWHSULFHV.
A window appears in which you define the price fields in which the results are
updated.
Select the desired price fields. To proceed to the selection screen, press ENTER.
You may also want to delete entries in other price fields when you run lowest value
determination. You would do this because the prices are no longer valid or originate
from other periods and should not be compared with the current results. If you want to
do this, choose ,QLWLDOL]HSULFHV.
A window appears in which you define which price fields are to be initialized.

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6. If you want to change the price of material based on the results of lowest value
determination, select *HQHUDWHEDWFKLQSXW and enter the posting date on which the
changes should be made.
When the session is run, the valuation price for each material is replaced by the
lowest (or last) market price.
(You should only make automatic price changes if you do not want to continue to run
lowest value determination with price changes.)
7. In the /RJ screen box, determine whether:
you only want materials for which stock exists to be included in the list of results
you want the list of results to be optically archived
8. Choose 3URJUDP ([HFXWH. A list of materials with their lowest market prices is
generated.
5HVXOWV
The list contains all the materials analyzed. For each material the lowest price for each price
source is listed as well as the document from which the system retrieved the price information.
The lowest market price is also displayed for each material. If this is larger or equal to the base
price or if the lowest market price could not be determined, the system enters the base price in
the /RZHVWSULFH column. If this is the case, there is no document displayed next to the lowest
price.
If you set the automatic price change, the name of the session appears at the end of the list.
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When determining the lowest value based on range of coverage, the system checks whether the
price for a material should be devaluated because it has a high range of coverage.
See also:
Lowest Values Determination Based on Range of Coverage: Calculating the Range of Coverage
[Page 125]
Lowest Values Determination Based on Range of Coverage: Devaluations [Page 126]
Lowest Values Determination Based on Range of Coverage: Results [Page 128]
Lowest Values Determination Based on Range of Coverage: Base Price [Page 127]
Running Lowest Value Determination Based on Range of Coverage [Page 129]

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A materials range of coverage is calculated as follows:
Range of coverage = average stock : average consumption
Average stock and average consumption are calculated as follows:
The average stock is a weighted average of

-
stock from two years previous
stock from previous year
stock from two periods previous
stock from previous period
stock from current period
(your entries minus reservations and plus order stocks)
You can calculate average consumption in two ways:

-
weighted average based on past consumption
weighted average of forecast values determined in the last forecast
Weighting of stocks and consumption is maintained in Customizing for

Valuation/Account Assignment.
When calculating average consumption, please note the following:
In determining consumption using historical values, you can enter a period under
review. Only the past months within the period are taken into account for the
calculation.
In determining consumption using forecast values, you can enter a period under
review. Only the past months within the period are taken into account for the
calculation.
If there is no recorded consumption, the range of coverage is set to
maximum, if stock exists
zero, if no stock exists
If there is no forecast data available for a material, the system sets the range of
coverage to zero. The devaluation percentage is also set to zero.
In the case of materials with split valuation, the lowest value based on range of coverage is
determined at valuation header record level, rather than separately for each valuation type.
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A devaluation percentage for devaluating materials can be set in Customizing for
Valuation/Account Assignment according to range of coverage, company code, and material
type. The following table illustrates some possible settings.
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0001
5%
0001
10 %
0001
15 %
0001
10
20 %
0001
RAW
3%
0001
RAW
5%
0001
RAW
7%
0001
RAW
10 %
0001
RAW
15 %
0001
RAW
12
25 %
For example, if a range of coverage of 4 months is determined for a raw material,

the devaluation percentage is 7%. If no range of coverage is set, the system
searches for the next lower. Therefore, for a raw material with a range of
coverage of 11 months, the devaluation percentage for the 8-month range of
coverage is used, (15%). The entries without any material type apply to material
types for which no devaluations are defined.

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In determining the lowest value based on range of coverage, the base price is the price from
which the devaluation calculated is deducted.
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tax price 1, 2, or 3
commercial price 1, 2, or 3
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In determining the lowest value based on the range of coverage, you enter the base price(see
Lowest Values Determination Based on Range of Coverage: Base Price [Page 127]).
The lowest price is calculated as follows:
Lowest price = valuation price - devaluation
The system generates a list of materials with their devaluation percentages and lowest prices.
You can also have the system update the results of lowest value determination in one or more
price fields in the material master record.

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The selection screen appears.
down your selection by material numbers, valuation areas, valuation types, material
types, material groups, and date of first creation. Date of first creation may be
necessary since there are usually not so many movements for new materials, which
would lead to a high range of coverage and nonsensical devaluation.
3. Determine the following:
whether the system should include reservations and open order stock in
determining the stock level
whether consumption should be determined from statistics or from forecast data
the period during which consumption is to be determined
4. Choose %DVHSULFH
can, however, change this. To proceed to the selection screen, press ENTER.
5. To check or change devaluation percentages, choose 'HYDOSHUFHQWDJHV
Customizing appears.
Save any changes you make. To proceed to the selection screen, press %DFN.
updated.
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7. If you want to change the price of the above materials based on the results of lowest
value determination, select *HQHUDWHEDWFKLQSXW and enter the posting date on which
the changes should be made.
When the session is run, the valuation price for each material analyzed is replaced by
the lowest price based on range of coverage.
you only want materials which were devaluated to be included in the list of results
9. Choose 3URJUDP ([HFXWH. The system generates a list of the materials with their
devaluations and lowest prices.
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The list header contains information on when the lowest value was determined and how the
parameters were set on the selection screen.
All the materials are then displayed with the results.

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When determining the lowest value based on movement rate, the system checks whether a
materials price should be devaluated on the basis of slow/non-movement.
See also:
Calculating the Movement Rate [Page 132]
Lowest Values Determination Based on Movement Rate: Devaluations [Page 133]
Lowest Values Determination Based on Movement Rate: Results [Page 135]
Running Lowest Value Determination Based on Movement Rate [Page 136]
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A materials movement rate is based on receipts and issues for the material and the current stock
of the material:
Movement rate = Total quantity of receipts/issues : Material stock x 100
The movement rate for a material is the percentage of how many units of measure have been
received or issued in relation to material stock.
This percentage is compared with a set percentage: if the percentage of receipts/issues is
smaller than this percentage, the material is slow or non-moving; if it is larger, the material is fastmoving.
Movement rates can be determined in two ways:
using material documents

In this case the movement rate for receipts and issues is examined. If you want to
consider both receipts and issues, you obtain a movement rate for receipts and a
movement rate for issues. In this case, a material is classified as slow or non-moving
if both values are smaller than the set percentage.
using material master records

In this case, the system only considers the issues. This method takes considerably
less time than determining the movement rate using material documents.
When the system determines movement rates, it only uses material movements in the period
under review. To make sure that slow/non-movements from the distant past are not included in
the devaluation, a devaluation indicator is used:
If a material is classified as slow/non-moving in the current period under review, its

devaluation indicator is increased by 1.
If a material is classified as fast-moving in the current period under review, its

devaluation indicator is set to zero.
If you run lowest value determination annually, the devaluation indicator is the equivalent of the
number of years the material has been slow-moving.
Lowest value determination based on movement rate differs for materials with split valuation:

A movement rate is determined separately for each valuation type when you
determine rates from material documents. In the case of the valuation header record,
an average price is calculated from the lowest prices and stocks for the individual
valuation types.
When determining rates using material master data, the movement rate is determined
on the valuation header record level and the lowest price is calculated on this level.
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In Customizing for Valuation/Account Assignment you can maintain a devaluation percentage for
each devaluation indicator according to company code and material type.
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15 %
0001
20 %
0001
30 %
0001
40 %
0001
60 %
0001
RAW
20 %
0001
RAW
30 %
0001
RAW
40 %
0001
RAW
50 %
For example, if a raw material has a devaluation indicator of 2, the devaluation is

30 %. The entries without any material type apply to material types for which no
devaluations are defined.
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In determining the lowest value based on rate of movement, the base price is the price from
which the devaluation calculated is deducted.
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tax price 1, 2, or 3
commercial price 1, 2, or 3
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In determining the lowest value based on movement rate, you enter the base price (see Lowest
Values Determination Based on Movement Rate: Base Price [Page 134]).
The lowest price is calculated as follows:
Lowest price = valuation price - devaluation
The system generates a list of materials with their devaluation percentages and lowest prices.
You can also have the system update the results of lowest value determination in one or more
price fields in the material master record.
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down your selection by material numbers, valuation areas, valuation types, material
types, material groups, and date of first creation. Date of first creation may be
necessary since there are usually not so many movements for new materials, which
would lead to a high range of coverage and nonsensical devaluation.
3. Decide how you want the rate of movement to de determined. You have two options:
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In this case, you must select at least one of the 5HFHLSWV and &RQVXPSWLRQfields.
Please note this method can be very time-consuming.
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In this case, the consumption data recorded in the material master record is used.
In the 7KUHVKROGYDOXHV fields, enter the 3HUFHQWDJH below which materials are
considered as non-moving for receipts and consumption. If the movement rate is
smaller than this percentage, the devaluation indicator is increased.
Enter the 3HULRGXQGHUUHYLHZ.
4. Select which stock is used for the calculation. You can choose between the closing
stock of the previous year, of the previous month and the current stock.
5. Choose %DVHSULFH
can, however, change this. To proceed to the selection screen, press ENTER.
6. To check or change devaluation percentages, choose 'HYDOSHUFHQWDJHV
Customizing appears.
Save any changes you make. To proceed to the selection screen, press %DFN.
updated.

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If you also want the devaluation indicator updated in the material master record,
select the 'HYDOXDWLRQLQGLFDWRU field.
8. If you want to change the price of the above materials based on the results of lowest
value determination, select *HQHUDWHEDWFKLQSXW and enter the posting date on which
the changes should be made.
When the session is run, the valuation price for each material involved is replaced by
the lowest price based on rate of movement.
you only want materials which were devaluated to be included in the list of results
10. Choose 3URJUDP ([HFXWH. The system generates a list of the materials with their
devaluations and lowest prices.
5HVXOWV
The list header contains information on when the lowest value was determined and how the
parameters were set on the selection screen.
All the materials are then displayed with the results.
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When you run lowest value determination, you often have to compare the prices determined
using the various methods to examine the differences.
)HDWXUHV
The system determines the difference between the base price you enter and a price for
comparison purposes and generates a list. You can narrow down the list based on material
numbers, valuation areas, valuation types, material types and material groups.
The EDVHSULFHcan be one of the following prices:
tax price 1,2, or 3
commercial price 1,2, or 3
The SULFHXVHGIRUFRPSDULVRQSXUSRVHV can be one of the following prices:
one price field in the material master record
the lowest of several price fields in the material master record
See also:
Lowest Valuation Determination: Listing Price Variances [Page 139]

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1. From the valuation menu, choose %DOVKHHWYDOXDWLRQ (YDOXDWLRQV 3ULFH
YDULDQFHV.
2. Specify which materials should be included in the list. You can narrow down your
selection using material numbers, valuation areas, valuation types, material types and
material groups.
3. Choose %DVHSULFH
can, however, change this.
4. Choose &RPSDULVSULFH
A window appears in which you enter the comparison price.
Select one or more of the tax and commercial prices suggested. If you select several
prices, the system compares the base price with the lowest of these prices.
You can enter a text for the list header to be displayed in a text field.
5. Enter a minimum variance, so that the system only lists variances that are greater
than this.
6. Choose 3URJUDP ([HFXWH. A list of the price variances is displayed.
5HVXOWV
The list of results shows the base price for every material, the comparison price (or the lowest of
the comparison prices) and the percentage variance.
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The results of lowest value determination are not automatically included in balance sheet
valuation. This enables you first to list the results of the lowest value determination and then
decide which stock accounts should be used for devaluation. You carry out the corresponding
balance sheet posting manually.
)HDWXUHV
To determine the value of the stock using the lowest value method, you can have the system list
the values resulting from the tax and commercial prices previously updated in the material master
records. You can group together a number of prices on the one price level. The system
automatically calculates the value of a price level from the lowest of the prices assigned to it (see
Price Levels: Example [Page 141]). The system generates a list displaying the values resulting
from the pre-defined price levels and also the actual stock value (that is, the current stock value
or that of the previous month or year). The total stock values per stock account are also
displayed.
This list allows you to decide which stock accounts should be considered for devaluation. The list
specifies which values are to be reposted.
See also:
Balance Sheet Values per Account: Generating a List [Page 142]

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You determined the lowest value based on market prices, range of coverage and rate of
movement. For some materials, you also entered market prices from data not available in the
SAP system.
You also carried out LIFO valuation and inventory costing in the SAP system and updated the
results in the material master record.
Tax price 1
Lowest value determination based on market prices
Tax price 2
Lowest value determination based on range of coverage
Tax price 3
Lowest value determination based on movement rate
Commercial price 1
Externally determined market prices
Commercial price 2
LIFO valuation
Commercial price 3
Inventory costing
To display the list of values from lowest market determination based on market price, assign the
tax price 1, commercial price 1 and commercial price 3 the price level 1.
You assign the results from lowest value determination based on range of coverage and rate of
movement price level 2.
Level 3 is based on the results of LIFO valuation.
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3URFHGXUH
1. From the valuation menu, choose Bal. sheet valuation Evaluations Bal.sht val.
per acct
2. Specify which materials should be included in the list. You can narrow down your
selection using material numbers, valuation areas, valuation types, material types and
material groups.
3. Select whether the current stock value, that of the previous month or that of the
previous year should be displayed in the list.
4. Choose 3ULFHVOHYHOV
A window appears in which you define the following:
which price fields in the material master are to be taken into account
the level to which the price fields are to be grouped together (see Price Levels:
Example [Page 141])
what the levels in the list are called
you only want materials with variances to be included in the list of results
6. Choose 3URJUDP ([HFXWH. A list is displayed with the stock values for the materials
entered.
5HVXOWV
The individual columns of the list contain the stock value and the values on the individual levels
for each material.
The values in the columns are added together per valuation level and per stock account. The
difference between the sum of the values and the individual price levels is contained in the
'LIIHUHQFH line.

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LIFO valuation is a valuation method that allows you to valuate the increase in stock of a material
for various accounting periods separately (fiscal year or months). You can valuate the increase in
stock for each accounting period using different methods, for example based on the average
delivered prices.
8VH
LIFO (last-in-first-out) is based on the assumption that the last stocks of a material to be received
are the first to be consumed. Thus, no value change occurs for older stock when new stock is
received or consumed. This ensures that increasing prices do not lead to an overvaluation of
older stocks, thus preventing the buildup of fictitious profits.
If an increase in stock is recorded for a material in an accounting period, a layer is created for
this material for the period in which the stock increases. If the stock of a material decreases, the
layer of the previous period is reduced. If that layer is not sufficient, layers from preceding
periods are reduced (see LIFO Valuation: Example [Page 145]).

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The following graphic is an example of annual LIFO valuation:
Material master
Materialstammsatz
Quantity
Value
MA price
100
100
1.00
Year
1989
Closing balance
1990
+ 100 pcs at $1.10/pc

- 80 pcs at $1.05/pc
+ 30 pcs at $1.20/pc
200
120
150
210
126
162
1.05
1.05
1.08
1991
+ 50 pcs at $1.24/pc
- 100 pcs at $1.12/pc
+ 20 pcs at $1.30/pc
200
100
120
224
112
138
1.12
1.12
1.15
LIFO valuation
1990
Layer 1989
100 pcs
$100
Layer 1990
$56.15
Total
50 pcs
150 pcs
$156.15
LIFO valuation
1991
Layer 1989
100 pcs
$100
Layer 1990
$22.46
Total
20 pcs
120 pcs
(*)
(*)
$122.46
LIFO price: 1.04
(*)
LIFO price: 1.02
(*) The value of a layer can be calculated in various ways. These are described in the
section on the determination of the layer value. In the example, the values for the
1990 layer are calculated using the average price of goods receipts:
layer quantity x total value of goods received / total quantity of goods received
For the year 1990, the year-end stock balance exceeds the years initial stock balance by 50
pieces. Thus, when LIFO valuation is carried out at the end of the year 1990, a layer is created
for 1990 with a quantity of 50 pieces. In this example, the value of the layer is calculated using
the average price of goods receipts:
Total receipts quantities for 1990
100 pieces + 30 pieces = 130 pieces
Total receipt values 1990
100 pieces x $ 1.10/piece + 30 pieces x $ 1.20/piece = $ 146
Layer value
50 pieces x $ 146/130 pieces = $ 56.15
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No new layer is created when LIFO valuation is carried out at end of the year 1991, since there
were more goods issues. Instead, the 1990 layer is reduced by 30 pieces to 20 pieces, and the
value is reduced proportionally:
20 pieces/50 pieces x $ 56.15 = $ 22.46
The above graphic shows that if you carry out LIFO valuation when prices are increasing, this
leads to a lower value than if you valuate stocks using the moving average price.

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LIFO valuation is based on a set of parameters which are described as the valuation method.
The method is a six-character alphanumeric field that can be defined in Customizing or from any
initial screen in the application. Some attributes of a method can be freely combined, while others
may only be used in certain combinations referred to as PRGHOV.
A model answers the following questions:
What is the sequence of consumption?
To which period does an individual layer refer?
Are the valuated materials grouped together (see LIFO Valuation at Pool Level [Page
160])?
Do you valuate referring to stock quantities (The Quantity LIFO Method [Page 148]) or
price indices (The Index LIFO Method [Page 151])?
The following models are allowed:
02 - LIFO, annual layer, single materials
03 - LIFO, monthly layer, single materials
04 - LIFO, annual layer, pools on quantity basis
05 - LIFO, monthly layer, pools on quantity basis
06 - LIFO, annual layer, pools with value index
The part of a method which you can freely define comprises the following aspects:
Is the value determined for receipts aggregated on a monthly basis or for single
receipts?
The differences are explained in an example (see Index LIFO Method: Example
[Page 152]). If determining values based on single receipts, a document extract has
to be generated prior to LIFO valuation. (See Including Data Posted in the Fiscal Year
in LIFO Valuation [Page 158]).
In LIFO valuation you define two points in time between which you compare the stock
situation or the stock value (index LIFO method). What are these time points? The
first time point is the date of the newest layer existing in the system. If, for example,
this is an annual layer for the previous year, this would mean that the situation at the
end of previous year would be taken into account in the calculation. The second time
point is determined by the method. You have the following options:
GJE - end of the last fiscal year
VVM - end of the posting period before last
VOM - end of the last posting period
CUR - present
Example: If the newest layer existing in the system is an annual layer referring to the
fiscal year before last and if you set GJE, the system compares the stock or value
situation between the end of the fiscal year before last and the end of the last fiscal
year.
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When the quantity LIFO method is used, all the stock changes of a material or pool in every
accounting period (fiscal year or month) are considered separately. The quantity at the end of the
accounting period for a particular material or pool is compared with the sum of the quantities
contained in the existing layers. If the stock is greater at the end of the period, a new layer is
created for that period illustrating the increase in quantity and value of the material or pool in the
period. If the stock is smaller at the end of the period, the preceding layers are reduced, starting
with the most recent layer.
'HWHUPLQLQJWKH/D\HU9DOXH
There are various ways of valuating a layer. In the SAP System, four valuation bases are
available:
Average delivered prices of accounting period
Prices for a partial year (this only makes sense if the accounting period is the fiscal
year)
Price, on a progressive quantity fill-up basis
Material master price
Determining the Value of a Layer: Example [Page 149]

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The following graphic shows the quantity and value of goods received for each period of a fiscal
year.
1990 Balance 500
1991
of LIFO
relevant quantities
and values
per je
1991 Total
Summe
der LIFO-relevanten
Menge
und Werte
Period
Periode
Receipt
quantity
Zugangsmenge
Receipt
value
Zugangswert
01
01
02
02
03
03
04
04
05
05
06
06
07
07
08
08
09
09
10
10
11
11
12
12
100
100
200
200
50
50
150
150
100
100
250
250
300
300
200
200
150
150
200
200
400
400
300
300
1000
1000
2100
2100
600
600
1600
1600
1050
1050
2600
2600
3200
3200
2250
2250
1650
1650
2350
2350
4500
4500
3500
3500
Total
Summe
2400
2400
26,400
26400
Issues
Abgnge
1400
1400
1991 Balance 1500
When stock are valuated at the end of the fiscal year 1991, a layer is created with 1000 pieces.
Its value depends on the valuation base:
Price for total year

An average price is calculated from the LIFO receipts of the fiscal year; this price is
then used as the basis for valuation. Thus the value of the layer is calculated as
layer quantity x total value of goods received / total quantity of goods received
In the example, the resulting value for the 1991 layer is: 1000 * 26400/2400 = 11000
Price for partial year

An average price is calculated from the goods received during a part of the fiscal
year; this price is used as the basis for valuation. The partial year must start at the
beginning of the fiscal year. Thus the value of the layer is calculated as
layer quantity x total value of goods received in the partial year / total quantity of
goods received in the partial year
In the example, the value of the layer depends on the settings for the partial year. For
example, if the partial year consists of the first four periods, the resulting value for the
layer 1991 is:
1000 x 5300/500 =10600
Price, on a progressive quantity fill-up basis
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The values of goods received in individual periods are used, starting at the beginning
of the year and added up until the layer stock is reached.
In the example, the valuation for quantity replenishing would look like this:
3HULRG
4XDQWLW\
9DOXH
5HPDLQLQJTQW\
01
100
1000
900
02
200
2100
700
03
50
600
650
04
150
1600
500
05
100
1050
400
06
250
2600
150
07
150
1600
7RWDO

In period 07, only a part of the quantity is included in the value; the value is calculated
in proportion to the quantity.
(Instead of using receipt values for a period, you can calculate the value based on
single receipts. This can be configured in the method (see LIFO Valuation in the SAP
System [Page 147]), provided you created a Including Data Posted in the Fiscal Year
in LIFO Valuation [Page 158].)

An average price is calculated from the closing balance and the corresponding value;
this price is then used as the basis for valuation. With individual LIFO valuation, this
price corresponds exactly to the moving average price.
Layer value = layer quantity x value of the closing balance / closing stock quantity

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Some countries only allow layers in pool LIFO valuation to be managed on a value basis. This
allows you to combine materials in a pool without having to first convert the materials to a single
unit of measure. This is especially advantageous for the formation of very large pools. The index
LIFO procedure is used for valuation of layers managed by value only.
The Index LIFO method is not generally allowed for valuation purposes in
Germany.
With the index LIFO method, the value of a pool is taken separately for every fiscal year. The
value of the pool is converted at the end of the fiscal year to the price level of the base year using
a price index and compared to the base value of the current layer. If the converted value is
greater than the base value for the current layer, a layer is created for this accounting period. If
the converted value is smaller than the base value, the preceding layers are reduced, starting
with the most recent (see example).
In the SAP System, there are two ways to determine the price index:
Manually
Before carrying out pool valuation, you must enter a price index for each pool in the
year data for the layer.
Automatically
When carrying out pool valuation, the system calculates the price index automatically.
For each material in the pool, the price at the end of the fiscal year is divided by the
price at the end of the previous year. An average price indices is formed per pool
from these material-specific price indexes. It is used for valuating the pool.
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The following graphic shows the movements for one pool in three fiscal years and the index LIFO
valuation at the end of each fiscal year.
Pool 1234
Year
End value
1988
1989
1990
1991
7000
10300
15015
10400
Price index
per year
Accumulated
price index
1.03
1.0815
1.1248
3%
5%
4%
Valuation 1989
Layer 1988
7000
Layer 1989
3090
Layer 1989
3090
Layer 1989
2313.47
Total 10090
Valuation 1990
Layer 1988
7000
Layer 1990
4200
Total 14290
Valuation 1991
Layer 1988
7000
Total 9313.81
The layer values are calculated as follows:
Base year is 1988; the base layer has a value of 7000.
Valuation 1989
Value at the end of the year

Conversion using price index (1.03) to 1988 value
10000
Less base value of layer 1988
7000
Base value of new layer

Layer for 1989 with price index (1.03)

Valuation 1990

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13883,50
3000
7000
Base value of new layer


Valuation 1991

9246.09
3883.50
3000
7000

Reduction layer 1990 (base value)
3883.50
Still to be reduced

Reduction layer 1989 (base value)
3000
Remaining layer 1989 (base value)


When a layer is calculated, the system always converts the value back to that of the base year, in
this case to that of 1988.
In the 1989 valuation, the value at the end of the fiscal year was converted to the 1988 price
using the price index: 10300 : 1.03 = 10000. This value is reduced by the base value of the
existing layer: 10000 - 7000 = 3000; or an increase of 3000. This value is extrapolated for 1989
using the price index. 3000 x 1.03 = 3090. Thus, a layer with a value of 3090 is created for 1990.
In the 1990 valuation, the value was converted as follows 15015 : 1.0815 = 13883.50. This value
is reduced by the base value of the existing layer. The difference is 13883.50 - 10000 = 3883.50.
After the price index is taken into account, a layer has to be created for 1990 of 3883.50 x 1.0815
= 4000
In the 1991 valuation, the value is calculated as follows for 1988: 10400 1.1248 = 9246.09. This
value is reduced by the base value of the existing layer; the difference is 9246.09 - 13883.5 = 4637.41. The value has therefore been reduced. Due to this value reduction, the 1990 layer has
to be reduced; since the base value of this layer only has a value of 3883.5, 753.91 still has to be
deducted. The 1989 layer is therefore reduced by this amount, resulting in a base value of 3000 753.91 = 2246.09. Based on the price index, the 1989 layer has a value of 2246.09 x 1.03 =
2313.47.
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If in one year more goods issues than goods receipts are posted for a material with LIFO
valuation, the previous periods layer is reduced. In order for this to take place, you must create
base layers for the previous year when you introduce LIFO valuation. A distinction is made
between the following:
If you have previously carried out LIFO valuation in a third-party system, your system
administrators can copy the layers from the other system to your SAP System.
See also: Adopting External Data [Page 155].
If you use LIFO valuation for the first time when you implement R/3, you must create
the base layer detailing the closing stock and value before LIFO is introduced.
See also: Creating Base Layers [Page 156].

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When large volumes of data are involved, you should update LIFO data only
using background processing.
3URFHGXUH
To adopt existing layers from a third-party system, proceed as follows:
1. From the Valuation menu, choose %DOVKHHWYDOXDWLRQ /,)2YDOXDWLRQ
3UHSDUH $GRSWH[WHUQDOGDWD The selection screen appears.
2. Enter the input file name.
3. Define whether in the SAP system
only new layers are to be created
new layers are to be created and existing ones overwritten
4. Choose 3URJUDP([HFXWH A list of the layers created is displayed.
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To create base layers, proceed as follows:
3UHSDUH &UHDWHEDVHOD\HU The selection screen appears.
2. On the selection screen, enter the criteria determining for which materials a base
layer should be created.
Enter the LIFO method you wish to use.
If you work with various versions, enter the version number.
3. Select the values from which the layer is to be determined. You can choose between
the previous month, the previous year and the year before last.
4. If you want to update the results, select &UHDWHEDVHOD\HU.
5. If you want to archive the list for the base layer, select 2SWLFDODUFKLYLQJ.
6. Choose 3URJUDP([HFXWH A list is displayed of the materials or pools with their
quantities and values.

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Layers are created on the basis of receipts and issues of the material. For valuation purposes,
however, this is not sufficient. If, for example, in the case of a goods receipt for a purchase order,
the invoice that follows has a different price, this difference is debited to the material.
Consequently, the price variance must be taken into account during valuation. However, there is
no point in including all the goods receipts for a particular material in the calculation. A goods
issue to a cost center, for example, does not lead to a change in value and therefore should not
be selected as relevant for LIFO valuation.
This is why your system administrator has to select all goods movement types which should be
included in LIFO valuation in Customizing system for Material Valuation.
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Usually, the receipt data relevant for LIFO valuation (that is, quantities and vales from goods
receipts and value differences from invoices) is updated by the applications. In the process, the
system creates a data record for every valuation level, material and posting period. This process
allows you to subsequently include documents posted in R/3 in the receipt data relevant for LIFO
valuation. Single receipts or receipts in aggregated form for the posting period can be created.
You do not have to create LIFO-relevant receipt data if new layers are always valuated at the
price in the material master.
You have to create LIFO-relevant receipt data for posted data in the following cases:
If you want to introduce LIFO valuation in the middle of an accounting period.

In this case no LIFO receipt data exists.
If you want to run LIFO based on single receipt data.

LIFO data records that are automatically updated when LIFO valuation is active are
aggregated on a posting period basis. If you valuate based on single receipts, you
must create new LIFO data records (the differences between receipts on a posting
period basis and single receipts are illustrated in an example (see Periodic Receipts Single Receipts: Example [Page 159]).
$FWLYLWLHV
After you have created a base layer (see Creating Base Layers [Page 156]) or have transferred
old layers to the system, you must then copy over the receipts relevant for LIFO valuation posted
since the start of the accounting period. Only by doing so can you ensure that all relevant
receipts are included in the next valuation run.
To copy over the posted data. proceed as follows:
3UHSDUH &UHDWHGRFH[WUDFW The selection screen appears.
2. On the selection screen, enter the materials for which the goods movements for the
LIFO-relevant materials should be transferred.
3. If you want the data to be updated, in the 8SGDWH screen box, select 5HFHLSWGDWD.
4. Choose 3URJUDP ([HFXWH. A list of the relevant documents is generated.

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You want to run LIFO valuation for Material A. The following data exists for the material in a
period:
Quantity
Starting stock
Price
Stock posting
0 piece
Purchase order
100 pieces
10.00
1st goods receipt for purchase order
20 pieces
200.00
2nd goods receipt for purchase order
80 pieces
800.00
Invoice
50 pieces
Goods issue
70 pieces
Closing stock
30 pieces
12.00
100.00
/,)29DOXDWLRQ%DVHGRQ3HULRG5HFHLSWV
When period receipts are used as a basis, the value of the receipts for the period is 1100.00 for a
quantity of 100.
A layer is created for 30 pieces. If the value is determined on a progressive quantity fill-up basis,
the value of the layer is:
30 x 1100.00/100 pieces = 330.00
6LQJOH5HFHLSWV
When single receipts are used as a basis, the system splits up the values from invoices among
the goods receipts in chronological order on a progressive quantity fill-up basis.
Quantity
Value
LIFO receipt value
1st Goods receipt
20 pieces
200.00
240.00
2nd goods receipt
80 pieces
800.00
860.00
The LIFO value of the two goods receipts is calculated as follows:

200.00 + (20 pieces x 100.00 / 50 pieces) = 240.00 or
800.00 + (30 pieces x 100.00 / 50 pieces) = 860.00.
A layer is created for 30 pieces. If the value is determined on a progressive quantity fill-up basis,
the value of the layer is:
240.00 + 10 x 860.00/80 pieces = 347.50
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Similar materials or materials with the same function are grouped together into pools and are
valuated together.
Pool LIFO valuation has certain advantages over single LIFO valuation, since stock fluctuations
of some materials can be balanced out by other materials and therefore longer-term pools can be
formed. On the other hand, it can be difficult to set up useful pools that fulfill the requirements of
local tax authorities.

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Before you can carry out LIFO valuation, you have to make various settings in the system:
Determination of the Valuation Level [Page 162]
Determination of Pool Settings [Page 163] (if you want to valuate at pool level)
Material Master Record Maintenance [Page 165]
Creation of Base Layers [Page 154]
Selecting Movements Relevant to LIFO [Page 157]
Including Data Posted in the Fiscal Year in LIFO Valuation [Page 158]
Determination of Basis for Comparison [Page 172]
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You can carry out LIFO valuation at different levels:
Company code level

You valuate all the stocks of a particular material in all of the valuation areas of the
company code together (joint valuation).
Valuation area level

You valuate all the stocks of a particular material separately in the individual valuation
areas within the company code.
The level on which valuation takes place in your company is defined by the system administrator
in Customizing for Valuation.

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'HWHUPLQDWLRQRI3RRO6HWWLQJV
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Before different materials can be valuated together in pools, the following settings must be
entered in Customizing:
Every pool must be given an alphanumeric key, and, for the quantity LIFO method,
the unit of measure in which the pool is managed must be entered.
You can also define a guideline price and tolerances for the possible variances from
this guideline price. Using these settings, you can list the pools in which the price
range of the individual materials is too high.
For pools to be created automatically, you first have to specify the criteria according
to which pools should be created. You can create an automatic assignment based on
the valuation level, material type and unit of measure.
You can change pool assignments after you have run valuation. The system changes existing
pool layers and, if necessary, creates new one (see Changing Pool Structures [Page 169]).
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If you work with pool LIFO valuation, you may occasionally need to display a list of materials
assigned to pools. To display which materials belong to which pool, proceed as follows:
3RROIRUPDWLRQ 'LVSOD\ The selection screen appears.
2. Enter the valuation area and the pool number(s).
In the 6HWWLQJV screen box, you can determine whether you want to display materials
per pool with the values from the previous years, previous month or the current
values.
3. Select 3URJUDP ([HFXWH from the menu. The system displays a list of the pools in
question, along with the materials they contain.
Statistics are displayed for each pool allowing you to check whether you want to
change the composition of the pools.

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The materials that you want to make subject to LIFO valuation must be flagged as being LIFOrelevant in the accounting screen of the material master record.
There are two ways to select a material for LIFO valuation:
Maintaining Single Records [Page 166]
Maintaining Several Records [Page 167] (automatic pool assignment)
The system offers the following functions as a means of control:
Displaying Assignments [Page 164]
Checking Material Master Records [Page 168]
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When you create a material master record, you can select the /,)2LQGLFDWRU on the accounting
screen. If you want to assign the material to a pool, enter the pool number in the /,)2SRROfield.
The system then checks if the LIFO pool has been defined.
You can change the material master record for an existing material and enter the LIFO data on
the accounting screen.

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0DLQWDLQLQJ6HYHUDO5HFRUGV
You can group together several materials for joint LIFO valuation and assign them to pools.
3URFHGXUH
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To select materials as being relevant for LIFO or to deselect existing indicators, proceed as
follows:
1. From the valuation menu. choose %DOVKHHWYDOXDWLRQ/,)2YDOXDWLRQ
3UHSDUH 6HOHFWPDWHULDOV
2. Enter the materials. You can narrow down the materials selected to particular
company codes, valuation areas, material numbers, material types, material groups
and creation dates.
Select or deselect the indicators.
3. If you want to update, select 8SGDWHPDWHULDOPDVWHU.
A log is displayed of all the materials concerned.
6HOHFWLQJ0DWHULDOVIRU3RRO9DOXDWLRQ
3RROIRUPDWLRQ ([HFXWH The selection screen appears.
and creation dates.
3. You can select the following fields:
-
6HW/,)2),)2LQGLFDWRU, if you want the LIFO indicator to be set for the materials.
6HWSRROQXPEHU if you want the pool number for the materials to be set as per the
Customizing assignment in the material master record.
2YHUZULWHSRROQXPEHU if you want the existing pool number to be overwritten for

the materials.
(If you do not select 6HWSRROQXPEHU but select 2YHUZULWHSRROQXPEHU, the
system resets all pool numbers for the materials.)

A log is displayed of all the materials concerned and the pool numbers assigned.
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&KHFNLQJ0DWHULDO0DVWHU5HFRUGV
To check whether there are still material master records to be maintained for LIFO valuation, you
can generate the following lists:
Materials not flagged as LIFO-relevant
Materials without pool allocation
Proceed as follows:
3RROIRUPDWLRQ &KHFN The selection screen appears.
2. Fill in the selection screen.
3. Choose 3URJUDP ([HFXWH to display a list of the materials.

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&KDQJLQJ3RRO6WUXFWXUHV
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If you have run LIFO valuation and discover that the pool assignment could be better, you can
change the assignment (and thus the value of the pool).
)HDWXUHV
You have the following options:
Splitting
With this option, you remove a material from a pool and assign it to another pool (or
valuate it singly). You can use various methods for determining the value:
Proportional allocation
In this case the current stock quantity of the material is allocated among the layer
of the old pool proportionally. The layer of the existing pool is reduced by the
quantities determined (and the values). The layer of the new pool is increased by
the same quantity and value.
Dissolve layer structure

In this case the layers in the old pool are dissolved. A layer if created for the last
existing accounting period from the total layers dissolved. The material is
removed from the new layer. The old pool therefore has a layer with a quantity
which is the same as the old layer quantity minus the quantity of the material
removed and a value which is the same as the old layer value minus the value of
the material removed.
The quantity and value of the material removed is included in the last existing
layer of the new pool.
Dissolve as per LIFO

In this case, the layers of the old pool are reduced, beginning with the most
recent, until the stock quantity of the material removed is reached. The layers of
the new pool are increased by the quantities and values removed.
See also: Changing Assignments [Page 170]
Merging
With this option, you group together several pools in a new pool. The quantities and
values of the individual layers in the pools are added up.
See also: Grouping Together Pools [Page 171]
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&KDQJLQJ$VVLJQPHQWV
3URFHGXUH
3RROIRUPDWLRQ &KDQJH The selection screen appears.
2. Choose 6SOLWWLQJFULWHULD
A window appears in which you can enter the material and the new pool.
Enter the new assignments. Save your changes.
To return to the selection screen, choose %DFN.
3. The splitting method is configured in the 2SWLRQV screen box: Select one of the
following:
Proportional allocation
Dissolve layer structure
Dissolve as per LIFO
4. If you want to update the changes, in the 8SGDWH UHVXOWV screen box select /D\HUDQG
PDWHULDOPDVWHr.
question, along with the old and new values.

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*URXSLQJ7RJHWKHU3RROV
3URFHGXUH
3RROIRUPDWLRQ &KDQJH The selection screen appears.
2. Choose 0HUJLQJFULWHULD
A window appears in which you can enter the old pools and the new pool.
Enter the summary information. Save your changes.
To return to the selection screen, choose %DFN.
3. If you want to update the changes, in the 8SGDWH UHVXOWV screen box select /D\HUDQG
PDWHULDOPDVWHr.
question, along with the old and new values.
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When you use the LIFO valuation method, you compare the stocks at a particular point with the
total of the layer quantities. You can define the following periods under review in the system:
The stock at the end of the previous fiscal year is compared with the total quantities in
the existing layers *-( This is the usual option chosen for LIFO valuation based on
annual layers.
The stock at the end of the previous period is compared with the total quantities in the
existing layers 920This is the usual option chosen for LIFO valuation based on
monthly layers, but it can be used in combination with annual layers, such as for
internal stocktaking purposes (see Versions [Page 173]).
The stock at the end of the period before last is compared with the total quantities in
the existing layers 990 This option can be used for LIFO valuation based on
monthly layers, if valuation can only be run for certain reasons with some delay after a
posting period has ended. The same applies to annual layers as in VOM.
The current stock is compared with the total quantities in the existing layers &85
This option can be used if LIFO valuation is not linked to specific posting periods or if
it is run shortly before the end of a posting period.
If you selected a suitable basis for comparison for your application, you can assign this to the
LIFO method in Customizing or on the selection screen before your run LIFO valuation (see LIFO
Valuation in the SAP System [Page 147]). All you have to do in the following steps involving
LIFO is enter the LIFO method.

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In Material Valuation it often makes sense to run LIFO valuation for test purposes or for internal
stocktaking without reducing existing layers or creating new layers for balance sheet valuation.
For this reason, the SAP System allows you to set up versions for LIFO valuation.
3UHUHTXLVLWHV
If layers already exist in the system, you should first of all copy every version from an existing
version (see Copying Versions [Page 176]).
After that, you can valuate the version.
([DPSOHV
Versions: Example of Value Comparison [Page 174]
Versions: Example of Intermediate Results [Page 175]
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You run LIFO valuation using version E once a year for balance sheet valuation purposes.
To compare the different approaches you can take in LIFO valuation, you copy the existing
version to the following versions:
9HUVLRQ
9DOXDWLRQEDVH
Price for total year
Price, on a quantity fill-up basis
Partial year upper limit 1st period
...
...
Partial year upper limit 9th period
You then run LIFO valuation for the individual versions.

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9HUVLRQV([DPSOHRI,QWHUPHGLDWH5HVXOWV
You run LIFO valuation using version ( once a year for balance sheet valuation purposes.
To create quarterly results, you create the following versions by copying version (:
9HUVLRQ
1
1st quarter
2nd quarter
3rd quarter
You then run LIFO valuation for the individual versions at the end of each quarter.
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To copy existing versions, proceed as follows:
7RROV&UHDWHYHUVLRQ The selection screen appears.
2. On the selection screen, enter the materials and pools for which a new version is to
be created.
Enter the reference and the ID of the new version.
3. Select which data is to be copied. Depending on the reference, the following is
possible:
Material annual layer
Pool annual layer
Material monthly layer
Pool monthly layer
4. If you want to update the changes, select &UHDWHOD\HUIRUQHZYHUVLRQ

5. Choose 3URJUDP([HFXWH A list of data is displayed for which the new version
was created.

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/D\HU0DLQWHQDQFH
/D\HU0DLQWHQDQFH
You can process every layer manually. The following functions are available for this:
Displaying Layers [Page 178]
Changing Layers [Page 179]
Deleting Layers [Page 180]
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To display a layer, proceed as follows:
/D\HU 'LVSOD\ The initial screen appears.
2. Enter the /D\HUYHUVLRQand 0HWKRG.
Enter the valuation area to which the layer belongs.
3. If you want to display a material layer, select 0DWHULDOQXPEHU and enter the number.
a) If you want to display a pool layer, select 3RROQXPEHU and enter the number.
4. To display the layer data, choose /D\HURYHUYLHZ.
The data screen for the layers appears. The layer quantity, the net value and the
gross value are displayed.
5. To display the receipts, choose 5HFHLSWRYHUYLHZ.
The list of receipt data appears. The system displays a list of the receipt quantities
and values.

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&KDQJLQJ/D\HUV
&KDQJLQJ/D\HUV
To change a layer, proceed as follows:
/D\HU &KDQJH The initial screen appears.
2. Enter the /D\HUYHUVLRQand 0HWKRG.
Enter the valuation area to which the layer belongs.
3. Ifyou want to change a material layer, select 0DWHULDOQXPEHU and enter the number.
If you want to change a pool layer, select 3RROQXPEHU and enter the number.
4. To change the layer data, choose /D\HURYHUYLHZ.
The data screen for the layers appears. You can change the layer quantity, the net
value and the gross value. Save your changes.
5. To change the receipts for test purposes, choose 5HFHLSWRYHUYLHZ.
The list of receipt data appears. You can change the receipt quantities and values.
Save your changes.
'LVSOD\LQJ&KDQJH'RFXPHQWV
A document is created for every layer change. To display all the changes for a layer, choose from
the menu %DOVKHHWYDOXDWLRQ/,)2YDOXDWLRQ/D\HU'LVSOD\FKDQJHGRFV
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In a test installation, it is frequently necessary to delete layers created for testing purposes. It is
possible to delete several layers in a single step.
3URFHGXUH
7RROV'HOHWHOD\HU The selection screen appears.
2. On the selection screen, specify the criteria for deletion: You can enter intervals for
the layer versions, the company code, valuation area, material, pool, fiscal year, and
period.
3. Select which data should be deleted. You have the following options:
Monthly receipts
Single receipts
Material annual layers
Pool annual layers
Material monthly layers
Pool monthly layers
4. Select 'HOHWHGDWD if you want to delete the data.

5. Select 3URJUDP ([HFXWH from the menu. A warning message appears, as follows:
Caution: Records will be physically deleted!
If you press ENTER, you then obtain a list of the deleted data.

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6$3$*
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3URFHGXUH
([HFXWH
..
2QLQGLYLGXDOOHYHO, if you want to carry out individual LIFO valuation
2QSRROOHYHO, if you want to carry out pool LIFO valuation
2. Enter the 9HUVLRQand 0HWKRG. On the selection screen, enter the criteria for materials
or pools to be valuated.
3. Select how the values are to be determined.
Total accounting period
Partial year
Price by quantity
4. If you want to update LIFO valuation, in the 8SGDWHUHVXOWV screen box select /D\HU
The following data can happen:
New layers are created.
Current layers are changed (for comparison type VOM or VVM).
Old layers are reduced or dissolved.
5. To go to the valuation screen, choose 3URJUDP([HFXWH The system displays a

message displaying how many records were created or updated.
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Lowest value comparison is the link between LIFO valuation and lowest value determination. The
system compares the gross value of the layer with the value based on the prices resulting from
lowest value determination. The lower of these two values can be stored in the layer as the net
value.
8VH
What happens during lowest value comparison depends on whether you valuate on single or
pool level.
See also:
Lowest Value Comparison: Single LIFO Valuation [Page 183]
Lowest Value Comparison: Pool LIFO Valuation [Page 184]
Running Lowest Value Comparison [Page 186]

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In comparing the lowest values, the net value for each layer is calculated. The system calculates
the lowest price from various prices. The net value of the current layer is this lowest price
multiplied by the quantity in the layer.
The lowest price and the layer quantity are also multiplied for every older layer. If the value is
smaller than the existing net value, it is entered as the new net value.
)HDWXUHV
To compare the lowest values, you can use the following prices:
Material master prices
Tax price 1, 2, or 3
Commercial price 1, 2, or 3
Layer prices
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Price 1, 2, or 3

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In comparing the lowest values, the net value for each layer is calculated.
)HDWXUHV
In the SAP System, there are two ways to compare the lowest values in pool LIFO valuation:
Using material deductions
Using pool deductions
In lowest value determination you must decide which of these two methods you want to use.
8VLQJ0DWHULDO'HGXFWLRQV
When comparing the lowest values, the system calculates average prices from the tax and
commercial prices and uses the lowest average price to calculate the net value; the lowest
average price multiplied by the quantity for the current layer forms the net value.
The lowest average price and the layer quantity are also multiplied for every older layer. If the
value is smaller than the existing net value, it is entered as the new net value in the layer (see
Lowest Value Comparison at Pool Level: Example [Page 185]).
8VLQJ3RRO'HGXFWLRQV
In the annual data for a pool layer you can enter three deductions: When comparing the lowest
values, the system adds these together. The difference between the gross value and total
deduction is then the net value.
Comparing the lowest values with pool deductions does not affect data in previous years layers.

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The following graphic shows how the lowest values are compared for Pool A using material
deductions. The tax and commercial prices from price level 2 are used as sources.
Pool A
Layer
1990
1991
1992
Quantity
Net value
700
140
80
20
100

Quantity
Price level 2
Tax price
Material A1
Material A2
50
150
6
8
5
9
7.50
8.00
50 * 6 + 150*
50 + 150
Net value of layer for 1992:

-XQH
Commercial price
750
140
600
8 50 * 5 + 150*
50 + 150
(= 100 * 7.50)
(= 80
7.50)

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6$3$*
3URFHGXUH
([HFXWH&RPSORZHVWYDOXHV. The selection screen appears.
2. Enter the 9HUVLRQand 0HWKRG. Determine for which materials or pools you want to
compare lowest values.
3. Specify which prices are to be considered.
4. If you want to update the net values determined in the layers, in the 8SGDWHUHVXOWV
screen box select /D\HU
5. If you want to archive the results, select 2SWLFDODUFKLYLQJ.
If you are comparing the lowest values for pools, a window appears in which you
select whether you want to work with material or pool deductions. Select the
devaluation method for pools and press ENTER.
5HVXOWV
A list is displayed of the results of lowest value comparison.

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3URFHGXUH
If you want to display the LIFO valuation for certain materials or pools, proceed as follows:
'LVSOD\
..
2QLQGLYLGXDOOHYHO, if you have carried out individual LIFO valuation
2QSRROOHYHO, if you have carried out pool LIFO valuation
2. Enter the 9HUVLRQand 0HWKRG. Enter the materials or pools you want to display.
3. Select 1HWYDOXHV if you want the net values displayed.
If you only want the materials or pools listed for which there are differences between
the book balance and the LIFO valuation of the stock, select 2QO\TXDQWLW\FRQWUROOLVW.
4. If you are displaying at single level, you can have the system update the values for
LIFO valuation in the material master. To do so, in the Update results screen box,
select 0DWHULDOPDVWHU and 1HWYDOXHV. Choose 8SGDWHSULFHV A window is displayed
in which you can select the price field in which the LIFO value is to be updated. To
return to the selection screen, choose (QWHU If you want to delete prices in other price
fields while you update, choose ,QLWLDOL]HSULFHV. A window appears in which you
define which price fields are to be initialized. To return to the selection screen,
choose (QWHU
5. If you want to archive the results, select 2SWLFDODUFKLYLQJ.
6. Choose 3URJUDP ([HFXWH. The display screen appears.
5HVXOWV
The display screen shows the material valuation values according to Accounting and those
based on the LIFO method.
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FIFO valuation is a method which allows you to valuate the stocks of a material as realistically as
possible. FIFO (first in, first out) is based on the assumption that the first stocks of a material to
be received are the first to be consumed. The value of the stock is therefore calculated based on
the last stocks received.
8VH
FIFO valuation has a number of uses:
Listing the FIFO values of certain materials

During a FIFO valuation run, the system calculates the FIFO values of the materials
concerned. The results are displayed in the form of a list which contains the following
information:
The closing stock quantity and closing stock value of the material for the period in
question as well as the FIFO value and the difference between that and the stock
value
The net value based on lowest value determination (if you carry out FIFO
valuation with a lowest value comparison)
The totals for each valuation area or company code per material stock account
The totals for each valuation area or company code
Lowest value comparison of the FIFO value after determining the lowest price
In carrying out FIFO valuation, you determine whether the system should also make a
lowest value comparison.
Updating the FIFO price (possibly after making a lowest value comparison) in the
material master record
In carrying out FIFO valuation, you determine whether the FIFO price should be
updated in the material master record. Tax price fields and commercial price fields are
available for this.
Re-valuating the material, i.e. replacing the current value of the material by the FIFO
value
In carrying out FIFO valuation, you can generate a batch input session to effect price
changes. Here you have to enter a date on which the changes should take effect.
When the session is run, the prices are changed.
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The FIFO value is determined from all FIFO-relevant goods receipts.
Beginning with the last period of the fiscal year entered, the system adds up all the quantities of
goods received per period until the closing stock is reached. Then the system adds up the value
of the goods received. The last value to be added is determined in relation to the last quantity
added.
The sum of the values of the goods received is the FIFO value.
At the end of the fiscal year there are 1,500 pieces of a material in stock. In the
individual periods of the fiscal year the following FIFO-relevant goods receipts
were posted:
3HULRG
4XDQWLW\RIJRRGVUHFHLYHG
9DOXHRIJRRGVUHFHLYHG
3ULFHRIJRRGV
UHFHLYHG
01
100
1000
10,00
02
200
2050
10,25
03
50
525
10,50
04
150
1525
10,17
05
100
1050
10,50
06
250
2600
10,40
07
300
3300
11,00
08
200
2250
11,25
09
150
1650
11,00
10
200
2350
11,75
11
400
4600
11,50
12
300
3500
11,67
7RWDO

The following table shows how the FIFO value is calculated:

3HULRG
4XDQWLW\
9DOXH
7RWDOHGTXDQWLW\
12
300
3500
300
11
400
4600
700
10
200
2350
900
150
1650
1050
200
2250
1250
250
2750
1500
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The price of the material in according with FIFO valuation is therefore 17100 : 1500 = $ 11.40.
As a comparison: if the closing stock of the previous year was zero and no goods issues were
posted for the material in the current fiscal year, the moving average price of the material at the
end of the year would be 26400: 2400 = $ 11.00.
Alternatively, you can determine the FIFO value of stock based on single receipts (see Method
Determination [Page 196]).
([FHSWLRQV
Due to non-FIFO-relevant goods receipts, the closing stock of a material can in certain
exceptional circumstances be greater than the sum of the goods received. When this occurs, the
system proceeds as follows:
If no FIFO-relevant goods have been posted in the current fiscal year:

-
If you are carrying out FIFO valuation for the first time, the system takes the
current value of the closing stock as the FIFO value. This value is displayed as
the 3ULFHIURPWKH0DWHULDO0DVWHU in the list of results.
If you already carried out FIFO valuation the previous year, the system valuates
the closing stock at the FIFO price of the previous year, if this exists. This value is
displayed as the ),)2SULFHIURPWKHSUHYLRXV\HDU in the list of results.
If no FIFO price from the previous year exists, the system displays the material at
the end of the list of results in the area 0DWHULDOVZLWKQRDYDLODEOHYDOXH
If no FIFO-relevant receipts have been posted in the fiscal year:

The system displays the material at the end of the list of results in the field 0DWHULDOV
ZLWKQRDYDLODEOHYDOXH
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In running FIFO valuation, you determine whether the results are to be saved on the data base.
The results of FIFO valuation can be saved in two objects:
In the FIFO price table

This contains the following information:
Material
Valuation date
Valuated stock
Gross FIFO value
Net FIFO value, if you carry out FIFO valuation with lowest value comparison.
In the material master record

In the material master record, you can have the system update the results in the price
fields &RPPHUFLDOSULFH1, 2 or 3 or 7D[SULFHRU.

If you carry out FIFO valuation with lowest value comparison, the system enters
the net FIFO price in the field you selected.
If you carry out FIFO valuation without lowest value comparison, the system
enters the gross FIFO price in the field you selected.
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Before you carry out FIFO valuation, you have to establish certain parameters in the system:
Valuation Level Determination [Page 194]
Base Year Determination [Page 195]
Method Determination [Page 196]
Selection of Movements Relevant to FIFO [Page 197] (X)
Selection of Materials Relevant to FIFO [Page 198] (X)
Adopting Data Posted in a Posting Period [Page 199] (X)
The steps marked with an X are identical for those carried out for LIFO valuation.
If you already work with LIFO valuation, you do not have to change any settings.
The only thing you may need to do is define other materials as being subject to
FIFO valuation.
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The level on which FIFO valuation is to be carried out is defined in Customizing for Material
Valuation.
If you carry out Material Valuation in your company at plant level (valuation area = plant), you
have a choice:
FIFO valuation at company code level

You valuate all the stocks of a particular material in all of the valuation areas of the
company code together (joint valuation). This means that there is only one FIFO price
for a material in all of the valuation areas.
FIFO valuation at valuation area level

You valuate all the stocks of a particular material separately in the individual valuation
areas within the company code. This means that there can be different FIFO prices
for a material in the individual valuation areas of the same company code.
If you carry out Material Valuation in your company at company code level (valuation area =
company code), FIFO valuation is also carried out at company code level.

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The base year determines how far back the system can go to retrieve goods receipts in
calculating the FIFO value. Goods receipts which are older than the base year are not included in
the FIFO calculation.
Your system administrator has to enter the base year in Customizing for Material Valuation.
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FIFO valuation is based on a set of parameters which are described as the valuation method.
The method is a six-character alphanumeric field that can be defined in Customizing or from any
initial screen in the application. Some attributes of a method can be freely combined, while others
may only be used in certain combinations referred to as PRGHOV (model 01 is currently the only
model defined for FIFO valuation)
The part of a method which you can freely define comprises the following aspects:
Is the value determined for receipts aggregated on a monthly basis or for single
receipts?
The differences are explained in an example (See Periodic Receipts - Single
Receipts: Example [Page 200]). If determining values based on single receipts, a
document extract has to be generated prior to LIFO valuation.

Which stock is to be valuated using FIFO? You have the following options:
GJE - end of the last fiscal year
VVM - end of the posting period before last
VOM - end of the last posting period
CUR - present
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Movements relevant to FIFO are those goods movements which are taken into account in FIFO
valuation.
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The system calculates the FIFO value using the quantities and values of goods receipts. It does
not, however, make sense to take all receipts into account for FIFO. For example, a transfer
posting from one material to another is not necessarily valuated at market prices and should
therefore not be included in the FIFO calculation.
This is why your system administrator has to select all goods movement types which should be
included in FIFO valuation in Customizing for Material Valuation.
,QWHJUDWLRQ
This setting is valid for both FIFO and LIFO valuation.
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/,)2),)2UHOHYDQW must be selected in the accounting view screen of the material master for the
materials that are relevant to FIFO valuation.
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When you create a material master record, you can select the field /,)2),)2UHOHYDQW on the
accounting view screen.
You can change the material master record for an existing material and select the indicator on
the accounting screen.
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You can group together several materials for joint FIFO valuation or delete existing indicators.
When large volumes of data are involved, you should update FIFO data only
To collectively maintain data, proceed as follows:
1. From the valuation menu. choose %DOVKHHWYDOXDWLRQ),)2YDOXDWLRQ
3UHSDUH 6HOHFWPDWHULDOV The selection screen appears.
and creation dates.
Select or deselect the indicators.
4. Choose Program Execute.
A log is displayed of all the materials concerned.

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Usually, the receipt data relevant for FIFO valuation (that is, quantities and vales from goods
receipts and value differences from invoices) is updated by the applications. In the process, the
system creates a data record for every valuation level, material and posting period. This process
allows you to subsequently include documents posted in R/3 in the receipt data relevant for FIFO
valuation. Single receipts or receipts in aggregated form for the posting period can be created.
You have to adopt posted data in the following cases:
If you want to introduce FIFO valuation in the middle of an accounting period.

In this case no FIFO receipt data exists.
If you want to run FIFO based on single receipt data.

FIFO data records that are automatically updated when FIFO valuation is active are
aggregated on a posting period basis. You have to crate new FIFO data records if
you valuate on the basis of single receipts (the differences between receipts per
posting period and single receipts are explained in an example - see Periodic
Receipts - Single Receipts: Example [Page 200]).
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To subsequently create FIFO data, proceed as follows:
1. From the Valuation menu, choose %DOVKHHWYDOXDWLRQ ),)2YDOXDWLRQ
3UHSDUH &UHDWHGRFH[WUDFW The selection screen appears.
2. On the selection screen, enter for which materials the FIFO-relevant movements
should be adopted.
Determine whether the data should be retrieved from a particular posting period or
dynamically. In this case, the system only takes those receipts in the past into
account that lead to the valuated stock.
3. If you want the data to be updated, in the 8SGDWH screen box, select 5HFHLSWGDWD.
4. Choose 3URJUDP ([HFXWH. A list of the relevant documents is generated.
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You want to run FIFO valuation for Material A. The following data exists for the material in a
period:
Quantity
Price
Purchase order
100 pieces
10.00
1st Goods receipt for purchase order
20 pieces
200.00
2nd goods receipt for purchase order
80 pieces
800.00
Invoice
50 pieces
Goods issue
70 pieces
Closing stock
30 pieces
12.00
Stock posting
100.00
/,)29DOXDWLRQ%DVHGRQ3HULRG5HFHLSWV
When period receipts are used as a basis, the value of the receipts for the period is 1100.00 for a
quantity of 100.
The FIFO value of the closing stock is 30 pieces x 1100.00 / 100 pieces = 330.00.
6LQJOHUHFHLSWV
When single receipts are used as a basis, the system splits up the values from invoices among
the goods receipts in chronological order on a progressive quantity fill-up basis.
Quantity
Value
FIFO receipt value
1st goods receipt
20 pieces
200.00
240.00
2nd goods receipt
80 pieces
800.00
860.00
The FIFO value of the two goods receipts is calculated as follows:

200.00 + (20 pieces x 100.00 / 50 pieces) = 240.00 and
800.00 + (30 pieces x 100.00 / 50 pieces) = 860.00
The FIFO value of the closing stock is 30 pieces x 860.00 / 80 pieces = 322.50.

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1. In the Material Valuation menu screen, choose %DOVKHHWYDOXDWLRQ ),)2YDOXDWLRQ
([HFXWH. The selection screen appears.
2. On the selection screen, enter the method for which materials you want to run FIFO
valuation.
If you want the FIFO value to be compared with the lowest value, select the ([HFXWH
ZLWK field and select the price fields to be included in the lowest value comparison.
3. In the 8SGDWH UHVXOWV screen box,select:
8SGDWH),)2SULFHWDEOH, if you want to update the FIFO price table
8SGDWHPDWHULDOPDVWHU if you want to update price fields in the material master.

Choose 8SGDWHSULFHV A window is displayed in which you can select the price
field in which the FIFO value is to be updated. To return to the selection screen,
choose (QWHU If you want to delete prices in other price fields while you update,
choose ,QLWLDOL]HSULFHV. A window appears in which you define which price fields
are to be initialized. To return to the selection screen, choose (QWHU
4. If you want the system to automatically revaluate the materials based on the FIFO
values, select *HQHUDWHEDWFKLQSXW and enter the date on which the price changes
are to become valid.
5. In the /RJ screen box, define the information to be listed.
6. Choose 3URJUDP ([HFXWH to obtain a list of results
If you carry out FIFO valuation with price changes, you have to make sure that
the batch input session you generated is actually run on or after the date on
which the price changes are to take effect.
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),)29DOXDWLRQ5HVXOWV/LVW
When you carry out FIFO valuation you receive a list of results which contains the following
information per material:
closing stock
value of the closing stock
gross FIFO value (without lowest value comparison)
the difference between the values - both absolute difference and percentage
difference
gross FIFO price (without a lowest value comparison)
how far back the system had to go in terms of periods and material documents to
determine the FIFO value
If you have carried out FIFO valuation with a lowest value comparison, you will also receive the
following information:
the net FIFO value based on the lowest value comparison
the difference between the values - both absolute difference and percentage
difference
the net FIFO price
How the materials are arranged in the list depends on whether FIFO valuation is carried out:
Valuation at Valuation Area Level [Page 203]
Valuation at Company Code Level [Page 204]
At the bottom of the list you will find those materials for which no FIFO value could be
determined. A reason is given for why the FIFO value could not be determined for each material
(compare ([FHSWLRQV in the section Determining the FIFO Value [Page 190]).

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When you carry out FIFO valuation at valuation area level, the list of results is arranged in the
following way:
9DOXDWLRQDUHD
*/DFFRXQW
0DWHULDO
5HVXOWV
0001
300000
...
...
...
...
...
6XPRI*/DFFRXQW
300100
...
...
...
...
6XPRI*/DFFRXQW
...
...
...
6XPRIYDOXDWLRQDUHD
0002
300000
...
...
...
...
...
6XPRIYDOXDWLRQDUHD
...
...
...
...
6XPRIDOOYDOXDWLRQDUHDV
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When you carry out FIFO valuation at company code level, the list of results is arranged in the
following way:
&RPSDQ\FRGH
*/DFFRXQW
0DWHULDO
5HVXOWV
0001
300000
...
...
...
...
...
6XPRI*/DFFRXQW
300100
...
...
...
...
6XPRI*/DFFRXQW
...
...
...
6XPRIFRPSDQ\FRGH

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To display FIFO valuation data for a material, proceed as follows:
1. Choose %DOVKHHWYDOXDWLRQFIFO YDOXDWLRQ 9DOXDWLRQGDWD'LVSOD\.
The initial screen appears.
2. Enter the method, the material and the valuation level.
3. To display the FIFO data for a material, choose 5HVXOWVRYHUYLHZ.
The FIFO data screen appears. The valuated quantity, the net value and the gross
value are displayed.
4. To display the receipts, choose 5HFHLSWRYHUYLHZ.
The list of receipt data appears. The system displays a list of the receipt quantities
and values.
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You may want to change the FIFO valuation data of a material for test purposes. Proceed as
follows:
1. Choose %DOVKHHWYDOXDWLRQFIFO YDOXDWLRQ 9DOXDWLRQGDWD&KDQJH.
2. Enter the method, the material and the valuation level.
3. To change the FIFO data for a material, choose 5HVXOWVRYHUYLHZ.
The FIFO data screen appears. Enter and save your changes.
4. To change the receipts, choose 5HFHLSWRYHUYLHZ.
The list of receipt data appears. Enter and save your changes.
&KDQJH'RFXPHQWV
For every change made to the FIFO valuation data a change document is created. To obtain a
list of the changes, proceed as follows:
1. Choose %DOVKHHWYDOXDWLRQFIFO YDOXDWLRQ 9DOXDWLRQGDWD'LVSOD\
FKDQJHGRFV
2. Enter the material, the valuation level and the fiscal year for which you wish to list the
changes. Select whether you want to see the changes to the FIFO results or the
changes to the receipt data.
3. When you press ENTER, the system displays the list of change documents. The
system displays when each change was made and by whom.
4. To see which fields were changed, position the cursor on the desired line and choose
(GLW 'LVSOD\GHWDLOV.
A window appears with the changed fields. The system displays the entry in each
changed field before and after the change was made.

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To delete FIFO valuation data, proceed as follows:
1. Choose %DOVKHHWYDOXDWLRQFIFO YDOXDWLRQ 7RROV'HOHWHYDOGDWD
2. Enter the valuation level, the materials and the fiscal years and periods for which you
want to delete the valuation data.
3. Select which data should be deleted. You can make the following selection:
Monthly receipts
Single receipts (if available)
FIFO results
4. Select 'HOHWHGDWD if you want to delete the data.

The system will then issue a warning:
&DXWLRQ5HFRUGVZLOOEHSK\VLFDOO\GHOHWHG
If you acknowledge the message by pressing ENTER, a list appears of all the
materials for which the FIFO valuation data has been deleted.
-XQH

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Adjusting material prices to market prices

Taking physical inventories

Valuating stocks for balance sheet purposes

Material master records

The level at which materials are valuated

The types of goods movements relevant for valuation

The accounts posted during a transaction

Whether a particular material should be valuated

Whether different sub-stocks of a material should be valuated differently

Whether the stock of a material should be valuated at a constant price (standard

In which G/L account the stock value of a material should be managed

Automatic Changes [Page 14]

Manual Changes [Page 17]

Deliveries free of charge

Posting credit memos

Posting subsequent debits/credits

Revaluating a material through a price change or a material debit or credit

Material debit or credit

Posting of physical inventory differences

The following table contains examples of possible valuation classes

Is the material managed by quantity?

Is the material managed by value?

Which price control type may be used for the material?

To which valuation class can the material be assigned?

Does the material movement cause the quantity to be updated?

Does the material movement cause the value to be updated?

Does the material movement lead to postings in accounting?

Is the material movement relevant for LIFO /FIFO valuation?

Moving average price

Moving average price

All inventory postings are carried out at the standard price

Variances are posted to price difference accounts

Variances are updated

Price changes can be monitored

Price Material master

Price unitMaterial master

Price Material master

Material master record

Goods receipts are posted at the goods receipts value

The price in the material master is adjusted to the delivered price

Price differences occur only in exceptional circumstances

Price unit Inward

Balance sheet acct.

Material master record

From standard price to moving average price

From moving average price to standard price

Balance sheet acct.

Goods receipt before invoice receipt

Invoice receipt before goods receipt

Two examples of value calculation are shown here:

Goods receipt before invoice receipt

Invoice receipt before goods receipt

Goods Receipt with No Price Variance [Page 38]

Delivery of over 400 pcs

= $5000 + 400 pcs *

Material master record

Delivery of over 400 pcs for

Material master record

= $5000 + 400 pcs * $5.70/pc

Additional types of delivery costs can be defined in the Customizing system.

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