Valuation of Serialized Items
Overview
This article explains how serialized item valuation works in iVendNext, covering stock transactions and available valuation methods.
You can select a valuation method based on which item's value will be calculated on the Stock Settings screen.
What is Valuation of Serialized Items?
The valuation of serialized items refers to the process of determining the cost of individual units of inventory that are tracked using serial numbers. Unlike non-serialized items, where valuation methods like FIFO (First In, First Out) or Moving Average are applied to the entire stock, serialized items are valued individually based on their specific purchase or production costs.
Key Points to Understand:
Individual Valuation: Each serialized item is valued separately based on its unique cost.
Impact of Transactions: The valuation rate of a serialized item is updated based on incoming stock transactions, such as Purchase Receipts or Stock Entries.
Valuation Methods: While iVendNext supports FIFO and Moving Average valuation methods for non-serialized items, these methods are ignored for serialized items. Instead, the valuation rate is determined by the first incoming stock entry rate.
Step 1: Understanding Valuation Methods
iVendNext supports two primary valuation methods for inventory:
FIFO (First In, First Out):
Assumes that the oldest inventory items are sold first.
The cost of goods sold (COGS) is based on the cost of the oldest items in stock.
Moving Average:
Calculates the average cost of inventory items based on all purchases.
The cost of goods sold (COGS) is based on the average cost of items in stock.
However, for serialized items, these methods are not applied. Instead, the valuation rate is determined by the first incoming stock entry rate.
Step 2: How Valuation Works for Serialized Items
The valuation rate of a serialized item is updated based on the following stock transactions:
Purchase Receipt:
When a serialized item is received through a Purchase Receipt, the valuation rate is updated based on the purchase cost.
Stock Entry of Type Material Receipt:
When a serialized item is received through a Stock Entry of type Material Receipt, the valuation rate is updated based on the cost specified in the entry.
Stock Reconciliation:
When a Stock Reconciliation is performed to update the opening balance of a serialized item, the valuation rate is updated based on the cost specified in the reconciliation.
Example:
A serialized item, "Macbook Air," is received through a Purchase Receipt with a cost of USD 199.99.
The valuation rate of the serialized item is set to USD 199.99.
Subsequent transactions, such as sales or transfers, will use this valuation rate to determine the cost of goods sold (COGS).
Step 3: Impact of Stock Transactions on Valuation
The valuation rate of a serialized item is not affected by outgoing stock transactions, such as Delivery Notes or Stock Entries of type Material Issue. Instead, the valuation rate remains constant until a new incoming stock transaction updates it.
Key Points:
Incoming Transactions: Update the valuation rate based on the cost specified in the transaction.
Outgoing Transactions: Use the existing valuation rate to determine the cost of goods sold (COGS).
Step 4: Best Practices for Valuing Serialized Items
Accurate Cost Entry:
Ensure that the cost of serialized items is accurately entered during incoming stock transactions, such as Purchase Receipts or Stock Entries.
Regularly Review Valuation Rates:
Periodically review the valuation rates of serialized items to ensure they reflect the true cost of inventory.
Use Stock Reconciliation for Opening Balances:
When setting up opening balances for serialized items, use the Stock Reconciliation tool to ensure accurate valuation rates.
Monitor Stock Transactions:
Regularly monitor incoming and outgoing stock transactions to ensure that the valuation rates are updated correctly.
Step 5: Reporting and Analysis
iVendNext provides several reports to help you track and analyze the valuation of serialized items:
5.1 Stock Valuation Report
Purpose: Provides a detailed view of the valuation of all items in stock, including serialized items.
How to Generate:
Navigate to Stock > Standard Reports > Stock Valuation Report.
The report will display the valuation rate, stock levels, and total value of each item.
5.2 Serial No Ledger
Purpose: Provides a complete history of all transactions related to a specific serial number, including valuation details.
How to Generate:
Navigate to Stock > Standard Reports > Serial No Ledger.
Select the serial number you want to track.
The report will display all transactions involving the selected serial number, including the valuation rate.
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