IVA - Partial Value Write-downs

Reference process for inventory valuation, partial value write-downs, and revaluation in BE-terna Fashion.

Meta process

graph LR;

%% Nodes
A(IVA<br>Partial Value Write-downs)
B(IVA-0010<br>Prepare inventory valuation)
C(IVA-0020<br>Determine inventory value)
D(IVA-0030<br>Calculate write-down)
E(IVA-0040<br>Check write-down)
F(IVA-0050<br>Complete inventory valuation)
G(IVA-0060<br>Create revaluation)
H(IVA-0070<br>Post revaluation)

%% Flow
A -.- B
linkStyle 0 stroke:#ffffff
B ==> C
C ==> D
D ==> E
E ==> F
F ==> G
G ==> H

%% Classes
class A btProcessTitle
class B,C,D,E,F,G,H btProcessActive

This process describes the valuation of merchandise inventory and the determination of so-called partial value write-downs. The write-down can be made on the basis of different criteria such as the age of the goods, season, or market observation. On the basis of inventory valuation levels, write-downs can be defined in BE-Fashion as percentages. When an inventory valuation level is reached, a proposed write-down percentage results. Depending on the chosen age determination, the inventory valuation level results either from the difference between two seasons or from the difference between the first/last goods receipt date and the currently considered cutoff date. The valuation is carried out on the corresponding level of cost price management (item or item-variant-warehouse location). When determining the write-down, acquisition costs represent the upper limit. The valuation of the goods is carried out according to the lower-of-cost-or-market principle.

In addition to the inventory valuation levels, individual levels can also be defined. These can apply, for example, to an entire department, major merchandise group, item, or even item color. These individual levels can be used to map the so-called “fashion risk”. This enables a more specific consideration of the write-down, for example on the basis of market observations.

IVA-0010 - Prepare inventory valuation

After a new inventory valuation document has been created, the age determination and the cutoff date of the valuation are defined. In the case of age determination by season, a reference season must be specified. In the further course, the age is determined from the difference between the aging indicator of the reference season and the indicator of the season of the item / item color. If the age determination refers to the goods receipt date, the number of months between the first/last goods receipt date and the cutoff date is formed from the difference. To limit the valuation, various filters (including warehouse location groups, items, and inventory posting groups) can be set.

In the case of later integrative revaluation of the goods in merchandise management, a business posting group for the corresponding posting of the inventory correction and a posting date as reference must be specified.

IVA-0020 - Determine inventory value

Using the function “Calculate inventory valuation”, the positions for inventory valuation are determined according to the filters that have been set. The current inventory value and quantity under consideration are displayed. Depending on the definition of “Avg. Cost Calc. Type” in “Inventory Setup”, the positions are created either at item level or at item-variant-warehouse location level.

IVA-0030 - Calculate write-down

Using the function “Calculate write-down %”, the system calculates the age of the items under consideration and, based on this, a write-down rate. The result is the system’s write-down proposal.

Write-downs can be carried out in a restricted manner if the following conditions are met:

  • positive inventory available
  • no negative open entry available
  • invoiced cost value available

The expected write-down amount is displayed at position level and also totaled on the document.

IVA-0040 - Check write-down

The document shows the write-down across all levels. The calculated write-downs are checked and adjusted manually if necessary. Unlike the write-down proposed by the system, a manual write-down percentage can be entered. Overall, a write-down can be simulated using various settings.

IVA-0050 - Complete inventory valuation

After checking, the valuation is completed and the document is released. A printout of the inventory valuation can be made for documentation and archiving purposes. Depending on the company’s decision, the posting of the inventory value change is carried out separately manually in financial accounting or integrated via a revaluation.

IVA-0060 - Create revaluation

When the inventory write-down is carried out integratively, a so-called revaluation journal is created via the function “Create journal”. For this, the inventory valuation document must have the status Released and the necessary setup (business posting group, posting date) for revaluation must be stored. When created, the same levels are created in the journal as in the inventory valuation document, with the restriction that only the positions to be written down are transferred. The corresponding write-down amount is transferred. After creation, the journal can be opened for viewing. Posting is carried out later via the inventory valuation document.

IVA-0070 - Post revaluation

After checking the revaluation values, posting is carried out via the function “Post revaluation” in the inventory valuation document. This creates new value entries that write down the merchandise management value accordingly. Subsequent inventory adjustment of invoiced cost prices and posting of inventory adjustment based on the posting groups transfers the amount to the respective inventory correction account in financial accounting.

Instances

IVA-MAN- Manual partial value write-downs

graph LR;

%% Nodes
A(IVA-MAN<br>Manual Partial Value Write-downs)
B(IVA-MAN-0010<br>Prepare inventory valuation)
C(IVA-MAN-0020<br>Determine inventory value)
D(IVA-MAN-0030<br>Calculate write-down)
E(IVA-MAN-0040<br>Check write-down)
F(IVA-MAN-0050<br>Complete inventory valuation)
G(IVA-MAN-0060<br>Create revaluation)
H(IVA-MAN-0070<br>Post revaluation)

%% Flow
A -.- B
linkStyle 0 stroke:#ffffff
B ==> C
C ==> D
D ==> E
E ==> F
F ==> G
G ==> H

%% Classes
class A btProcessTitle
class B,C,D,E,F btProcessActive
class G,H btProcessInactive

This process describes the valuation of merchandise inventory and determination of partial value write-downs without the further integrative posting of the write-down in merchandise management and financial accounting. The write-down is transferred manually to financial accounting as a total.

IVA-MAN-0010 - Prepare inventory valuation

After a new inventory valuation document has been created, the age determination and the cutoff date of the valuation are defined. In the case of age determination by season, a reference season must be specified. In the further course, the age is determined from the difference between the aging indicator of the reference season and the indicator of the season of the item / item color. If the age determination refers to the goods receipt date, the number of months between the first/last goods receipt date and the cutoff date is formed from the difference. To limit the valuation, various filters (including warehouse location groups, items, and inventory posting groups) can be set.

IVA-MAN-0020 - Determine inventory value

Using the function “Calculate inventory valuation”, the positions for inventory valuation are determined according to the filters that have been set. The current inventory value and quantity under consideration are displayed. Depending on the definition of “Avg. Cost Calc. Type” in “Inventory Setup”, the positions are created either at item level or at item-variant-warehouse location level.

IVA-MAN-0030 - Calculate write-down

Using the function “Calculate write-down %”, the system calculates the age of the items under consideration and, based on this, a write-down rate. The result is the system’s write-down proposal.

Write-downs can be carried out in a restricted manner if the following conditions are met:

  • positive inventory available
  • no negative open entry available
  • invoiced cost value available

The expected write-down amount is displayed at position level and also totaled on the document.

IVA-MAN-0040 - Check write-down

The document shows the write-down across all levels. The calculated write-downs are checked and adjusted manually if necessary. Unlike the write-down proposed by the system, a manual write-down percentage can be entered. Overall, a write-down can be simulated using various settings.

IVA-MAN-0050 - Complete inventory valuation

After checking, the valuation is completed and the document is released. A printout of the inventory valuation can be made for documentation and archiving purposes. The write-down is posted manually in financial accounting.

IVA-REV - Partial value write-downs with revaluation

graph LR;

%% Nodes
A(IVA-REV<br>Partial Value Write-downs with Revaluation)
B(IVA-REV-0010<br>Prepare inventory valuation)
C(IVA-REV-0020<br>Determine inventory value)
D(IVA-REV-0030<br>Calculate write-down)
E(IVA-REV-0040<br>Check write-down)
F(IVA-REV-0050<br>Complete inventory valuation)
G(IVA-REV-0060<br>Create revaluation)
H(IVA-REV-0070<br>Post revaluation)

%% Flow
A -.- B
linkStyle 0 stroke:#ffffff
B ==> C
C ==> D
D ==> E
E ==> F
F ==> G
G ==> H

%% Classes
class A btProcessTitle
class B,C,D,E,F,G,H btProcessActive

This process describes the valuation of merchandise inventory and determination of partial value write-downs including the integrative posting of the write-down in merchandise management and financial accounting.

IVA-REV-0010 - Prepare inventory valuation

After a new inventory valuation document has been created, the age determination and the cutoff date of the valuation are defined. In the case of age determination by season, a reference season must be specified. In the further course, the age is determined from the difference between the aging indicator of the reference season and the indicator of the season of the item / item color. If the age determination refers to the goods receipt date, the number of months between the first/last goods receipt date and the cutoff date is formed from the difference. To limit the valuation, various filters (including warehouse location groups, items, and inventory posting groups) can be set. To prepare the revaluation, a business posting group for the corresponding posting of the inventory correction and a posting date as reference must be specified.

IVA-REV-0020 - Determine inventory value

Using the function “Calculate inventory valuation”, the positions for inventory valuation are determined according to the filters that have been set. The current inventory value and quantity under consideration are displayed. Depending on the definition of “Avg. Cost Calc. Type” in “Inventory Setup”, the positions are created either at item level or at item-variant-warehouse location level.

IVA-REV-0030 - Calculate write-down

Using the function “Calculate write-down %”, the system calculates the age of the items under consideration and, based on the configured inventory valuation levels, a write-down rate. The result is the system’s write-down proposal.

Write-downs can be carried out in a restricted manner if the following conditions are met:

  • positive inventory available
  • no negative open entry available
  • invoiced cost value available

The expected write-down amount is displayed at position level and also totaled on the document.

IVA-REV-0040 - Check write-down

The document shows the write-down across all levels. The calculated write-downs are checked and adjusted manually if necessary. Unlike the write-down proposed by the system, a manual write-down percentage can be entered. Overall, a write-down can be simulated using various settings.

IVA-REV-0050 - Complete inventory valuation

After checking, the valuation is completed and the document is released. A printout of the inventory valuation can be made for documentation and archiving purposes. The posting of the inventory value change is carried out integratively via a revaluation.

IVA-REV-0060 - Create revaluation

Using the function “Create journal”, a so-called revaluation journal is created. For this, the inventory valuation document must have the status Released and the necessary setup (business posting group, posting date) for revaluation must be stored. When created, the same levels are created in the journal as in the inventory valuation document, with the restriction that only the positions to be written down are transferred. The corresponding write-down amount is transferred. After creation, the journal can be opened for viewing. Posting is carried out later via the inventory valuation document.

IVA-REV-0070 - Post revaluation

After checking the revaluation values, posting is carried out via the function “Post revaluation” in the inventory valuation document. This creates new value entries that write down the merchandise management value accordingly. Subsequent inventory adjustment of invoiced cost prices and posting of inventory adjustment based on the posting groups transfers the amount to the respective inventory correction account in financial accounting.