Valuation methods
Important
Refer to the Stock valuation documentation which describes the basic principles of stock valuation along with detailed information on price adjustments on receipt and issue. Click the link that applies to your Sage X3 solution:
- Stock valuation if you are using Sage Business Cloud.
- Stock valuation if you are using an on-premises instance of Sage X3.
Use this function to define rules for valuing your stock.
Accepted accounting principles for stock valuation can vary from country to country. You must validate your selected method of stock valuation with a certified accountant.
Prerequisites
Refer to documentation Implementation
Screen management
The Valuation methods function contains a header information section and two blocks for defining rules.
To define the rules for your primary and secondary stock valuation methods click the magnifying glass icon.
Entry screen
Presentation
You use the header information to define your valuation method codes. Valuation method codes are applied to product-site records. For each valuation method code you define which valuation methods are to apply, and how margins are to be calculated.
Method
You use this block to define the primary and secondary valuation methods to be used for the defined valuation code. You can define a single or a maximum of two valuation methods per valuation code. Both methods are maintained by the stock transactions, or movements.
You can also choose whether the value of your stock is to be updated by internal stock movements and whether average costs are to be recalculated.
Average costs are only recalculated using the primary valuation method.
Click the magnifying glass icon to define the rules for the defined primary and secondary stock valuation method.
Margin
You use this block to define which cost will be used for calculating margins on sales against the value of your stock.
Project management
Project budget lines can be initialized by using the detailed cost breakdown structure of manufactured products requested on project material tasks. You use this block to define the default product valuation method to be used by the Project management budget lines generation process (via the Generate budget lines action in the Project management function (GESPJM)).
You can define a single or a maximum of two valuation methods per valuation code. Both methods are maintained by the stock transactions, or movements.
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Fields
The following fields are present on this tab :
Block number 1
| Use this field to define a valuation method code. |
| Use this field to provide a description of this valuation method (maximum 30 characters). |
| Use this field to provide a short description of this valuation method (maximum 12 characters). |
Method
| Use this field to define the method to be used for valuing stock.
Standard cost Revised cost Last cost Cumulative AUC FIFO cost Lot AUC LIFO cost |
| Select this check box if an additional method of stock valuation is to be maintained for each stock movement associated with this valuation method code. |
| Use this field to define the additional method of stock valuation to be maintained for this valuation method code. Please refer to the Primary method field for an explanation of the different valuation methods available. |
| Use this field to define whether your stock is to be revaluated using the defined valuation method by internal stock movements. |
| Use this field to define whether average costs are to be recalculated by the Cost adjustment function (FUNSTKADJ) for the products associated with this valuation method.
|
Margin
| Use this field to define which cost is to be used for calculating margins on sales against the value of your stock. You can select from the costs listed for the field Method 1 in the Method block and the last purchase price paid. |
| Use this field to define an alternative cost to be used for calculating margins on sales where the initial cost selected is zero. |
Project management
| Select this check box if this valuation method can be utilized by the Generate budget lines action in the Project management function (GESPJM), otherwise leave clear. |
| Use this field to define the primary budgeting method to be used when generating project budget lines via the Generate budget lines action in the Project management function (GESPJM).
Standard cost Revised standard cost Budget cost Simulated cost
|
| Use this field to define the additional budgeting method to be used when generating project budget lines via the Generate budget lines action in the Project management function (GESPJM). This method will be used if the selected primary budgeting method returns no values. Refer to the Primary method field for an explanation of the different valuation methods available. |
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Valuation method detail
Presentation
Stock valuation methods
The supported methods of stock valuation are as follows:
- Standard cost - The stock value is based on a fixed cost by site. The standard cost is applicable for a complete fiscal year.
- Revised standard cost - The stock value is based on a revised standard cost, calculated by the actual cost of each stock movement. The revised standard cost is applicable for a specific range of dates.
- Last price - The stock value is based on the actual cost of the last stock transaction.
- Average cost - The stock value is based on the average value of received stock and the total value of stock in hand.
- Average lot price - The value of stock is based on the average value of each lot and sublot received.
- FIFO - The stock value is based on the first in, first out method of turnover using the unit cost of each stock movement.
- LIFO - The stock value is based on the last in, first out method of turnover using the unit cost of each stock movement.
The LIFO method of stock valuation may be unacceptable in certain countries.
In some cases, even within the same company, the valuation rule can vary. This can depend upon the combination of product and product-site. As a rule, however, the selected method of stock valuation is based upon consistency and tax rules.
Valuation
You use this block to define the standard rules for valuing stock movements.
- Valuation/Receipt source - Valuation rule applied.
- Valuation/Receipt alternative - Alternative valuation rule. Used to manage exceptional cases where the source calculation results in a null value.
When the valuation rule is for a standard cost valuation (or updated standard cost), if the system does not find a value for the current year it automatically searches previous years for a value (last existing cost ignoring the current year). The alternative value is only used if no cost is returned.
Counts
You use this block to define rules for valuing physical stock movements.
- Quantity variance - Valuation rule applied.
- Alternative - Alternative valuation rule. Used to manage exceptional cases where the source calculation results in a null value.
Standard rules
You use this block to define additional valuation rules.
- Receipt price adjustments - Used to adjust prices during the invoicing of a receipt or during the production cost price calculation for a work order. This adjustment can update the average price of the product if it is within the tolerances defined by the MAXABSCOD - Valuation variance absorption and MAXABSPER - Maximum percentage of over-absorption parameters (STO chapter, VAL group).
- Zero price authorized - Used to authorize a stock movement transaction that has a blank value.
Receipt valuation exceptions
You use this table to define exceptions to receipt values for the following stock movements:
- Miscellaneous receipts
- Supplier receipts
- Work order receipts
- Delivery returns
- Inter-site transfers
- Stock reintegrations
Stock movements will be valued as follows:
Receipts:
Movement type | Valuation method | Value |
Miscellaneous receipt | Standard cost | Standard cost |
| Revised standard cost | Revised standard cost |
| Last price | Price of the last receipt |
| Average cost | Average cost |
| Order cost | Price entered on the receipt line |
Supplier receipt | Standard cost | Standard cost |
| Revised standard cost | Revised standard cost |
| Last price | Price of the last receipt |
| Average cost | Average cost |
| Order cost | Price of the purchase order or price entered on the receipt (if direct receipt, for instance). |
Inter-site transfer receipt | Standard cost | Standard cost |
| Revised standard cost | Revised standard cost |
| Last price | Price of the last receipt |
| Average cost | Average cost |
| Order cost | Price of the issue movement at the source site. |
Work order receipt | Standard cost | Standard cost |
| Revised standard cost | Revised standard cost |
| Last price | Price of the last receipt |
| Average cost | Average cost |
| Order cost | Provisional cost calculated on work order creation (as defined by the CSTRCPORD - Provisional cost declaration parameter (GPA chapter, COS group)). |
Inter-site transfer receipt | Standard cost | Standard cost |
| Revised standard cost | Revised standard cost |
| Last price | Price of the last receipt |
| Average cost | Average cost |
| Order cost | Price of the issue movement at the source site. |
Inter-company transfer receipt | Standard cost | Standard cost |
| Revised standard cost | Revised standard cost |
| Last price | Price of the last receipt |
| Average cost | Average cost |
| Order cost | Price entered on the receipt |
Shipment return | Standard cost | Standard cost |
| Revised standard cost | Revised standard cost |
| Last price | Price of the last receipt |
| Average cost | Average cost |
| Order cost | Issue price |
Receipt on Assembly | Standard cost | Standard cost |
| Revised standard cost | Revised standard cost |
| Last price | Price of the last receipt |
| Average cost | Average cost |
| Order cost | Sum of the issue movements |
Receipt on disassembly | Standard cost | Standard cost |
| Revised standard cost | Revised standard cost |
| Last price | Price of the last receipt |
| Average cost | Average cost |
| Order cost | Price entered on the line (this is recovered automatically if it is an original assembly). |
Reintegration | Standard cost | Standard cost |
| Revised standard cost | Revised standard cost |
| Last price | Price of the last receipt |
| Average cost | Average cost |
| Order cost | Issue price |
The price of a delivery return (customer return) is the price of the original delivery. The price of a supplier return is the price of the original receipt (adjusted if it has been invoiced).
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Fields
The following fields are present on this tab :
Block number 1
Valuation
| Use this field to define the method to be used for valuing stock.
Standard cost Revised cost Last cost Cumulative AUC FIFO cost Lot AUC LIFO cost |
| Use this field to define an alternative stock valuation method to be used in exceptional cases where the source calculation results in a null value. Please refer to the Valuation source field for an explanation of the different valuation methods available.
|
| Use this field to define the receipt value of the movement.
Standard cost Revised standard Order cost |
| Use this field to define an alternative valuation method for a stock receipt movement to be used in exceptional cases where the source calculation results in a null value. Please refer to the Receipt source field for an explanation of the different valuation methods available. |
Counts
| Cost type to be used at the time of a negative variance on a stock count. |
| Cost type to be used at the time of a negative variance in the stock count if the type previously defined returns 0. |
| Cost type to be used at the time of a positive variance on a stock count. |
| Cost type to be used at the time of a positive variance in the stock count if the type previously defined returns 0. |
Standard rules
| Price adjustment The prices assigned by default to value the stock movements can be "adjusted" using the invoice price (purchased product). They can also be adjusted using the calculated production cost if this indicator is set to the value YES. |
| If this flag is set to yes, the system will accept stock movements without value. |
Grid Receipt valuation exceptions
| Movement type Select the receipt movement type for which an exception is to define to the valuation method. |
| A stock transaction code is used to specify rules within a similar transaction type.
The movement code is used to define specific stock receipt and issue rules for some transactions. For example, a dedicated transaction associated with experienced users can authorize the receipt to stock of goods in A status while the other users may be associated with a transaction authorizing the receipt to stock of goods in Q status. |
| Cost type to be used for the movement type selected. |
| Cost type to be used if the one previously defined has a zero value. |
| Specify if for the movement type chosen it is necessary to carry out a price adjustment (during invoicing or WO completion). |
| Specify for the selected movement type whether a zero price is authorized or not. |
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