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<ManualTopic ID="/baanerp/wh/onlinemanual/000004" xml:lang="en">
   <Header>
      <Title>Inventory valuation</Title>
      <Keyword type="header" order="d1e2966614">
         <Level1>valuation</Level1>
         <Level2>inventory</Level2>
      </Keyword>
      <Keyword type="header" order="d1e2966619">
         <Level1>valuation</Level1>
         <Level2>methods</Level2>
      </Keyword>
      <Keyword type="header" order="d1e2966624">
         <Level1>inventory</Level1>
         <Level2>valuation</Level2>
      </Keyword>
   </Header>
   <GeneralSection>
      <List>
         <ListIntro>Inventory can be valued using several valuation
		  methods:</ListIntro>
         <ListItem> 
            <Link href="/baanerp/wh/glossary/glossary#000319" role="glossary">Fixed Transfer Price (FTP)</Link>
         </ListItem>
         <ListItem> 
            <Link href="/baanerp/wh/glossary/glossary#000351" role="glossary">Mov. Aver. Unit Cost (MAUC)</Link>
         </ListItem>
         <ListItem> 
            <Link href="/baanerp/wh/glossary/glossary#000340" role="glossary">First In First Out (FIFO)</Link>
         </ListItem>
         <ListItem> 
            <Link href="/baanerp/wh/glossary/glossary#000341" role="glossary">Last In First Out (LIFO)</Link>
         </ListItem>
         <ListItem> 
            <Link href="/baanerp/wh/glossary/glossary#000402" role="glossary">Lot Price (Lot)</Link>
         </ListItem>
      </List>
      <Paragraph>Valuation methods result in a particular inventory value in the
		ledger. However, the market value of the inventory can sometimes be lower than
		the inventory value in the ledger, for example, when item prices decrease, or
		when the items are almost at the end of their life cycle. Consequently, the
		value in the ledger does not always represent the real value of the inventory
		anymore.</Paragraph>
      <Paragraph>The International Financial Reporting Standards (IFRS) require
		in some cases reporting the <Emphasis>market</Emphasis> value of the
		inventory.instead of an inventory value determined by the original purchase
		prices. The market value can provide you with a better insight into the real
		value of the inventory. Reporting inventory value based on market prices
		instead of (higher) purchase prices is also referred to as <Link href="/baanerp/wh/glossary/glossary#000436" role="glossary">lower cost or market value (LCMV)</Link>.</Paragraph>
      <Paragraph>You can choose whether or not to <Emphasis>revaluate</Emphasis> the inventory value to the market value. Therefore, the following options are
		available:</Paragraph>
      <List>
         <ListItemHead>Reporting inventory value <Emphasis>without</Emphasis> revaluation</ListItemHead>
         <ListItem>The inventory value is determined using market prices. However,
		  this inventory market valuation is only temporary. At the start of the next
		  financial period, the original inventory value (based on purchase prices) is
		  used.</ListItem>
         <ListItemHead>Reporting inventory value <Emphasis>with</Emphasis> revaluation</ListItemHead>
         <ListItem>The inventory value is determined using market prices. After
		  that, the inventory is revalued with the market value. So, at the start of the
		  next financial period, the market value is used as the new inventory
		  value.</ListItem>
      </List>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Market prices in Warehousing</SectionTitle>
      <Paragraph>In ERP Enterprise, you can use market prices to valuate inventory for purchased
		items as well as for manufactured items. Market prices can be entered in the <GUIRef href="/baanerp/wh/ina/whina1118m000" role="session">Market Prices (whina1118m000)</GUIRef> session.</Paragraph>
      <List>
         <ListIntro>Market prices, which are either approved purchase prices or
		  manually entered prices, are used in the following sessions:</ListIntro>
         <ListItemHead>
            <GUIRef href="/baanerp/wh/ina/whina1210m000" role="session">Perform Inventory Valuation (whina1210m000)</GUIRef>
         </ListItemHead>
         <ListItem>If, on the <GUIRef href="/baanerp/wh/ina/whina1210m000#whinas1210.12" role="groupbox">Difference</GUIRef> tab, under <GUIRef href="/baanerp/wh/ina/whina1210m000#comp.inv.val.with" role="groupbox">Compare Inventory Value With</GUIRef>, either of the following
		  options is selected: <List>
               <ListItem>
                  <GUIRef href="/baanerp/wh/domains/ina.valb#market.incl.sur" role="option">Market Price (including surcharges)</GUIRef>
               </ListItem>
               <ListItem>
                  <GUIRef href="/baanerp/wh/domains/ina.valb#market.excl.sur" role="option">Market Price (excluding surcharges)</GUIRef>
               </ListItem>
            </List>
         </ListItem>
         <ListItemHead>
            <GUIRef href="/baanerp/wh/ina/whina1232m000" role="session">Change Valuation Method (whina1232m000)</GUIRef>
         </ListItemHead>
         <ListItem>If, after changing the valuation method, the inventory value
		  must be equal to the market price.</ListItem>
         <ListItemHead>
            <GUIRef href="/baanerp/wh/ina/whina1230m000" role="session">Actual Costs Correction (whina1230m000)</GUIRef>
         </ListItemHead>
         <ListItem>If the valuation method is <GUIRef href="/baanerp/wh/domains/ina.valm#fifo" role="option">First In First Out (FIFO)</GUIRef>, <GUIRef href="/baanerp/wh/domains/ina.valm#lifo" role="option">Last In First Out (LIFO)</GUIRef>, <GUIRef href="/baanerp/wh/domains/ina.valm#lot" role="option">Lot Price (Lot)</GUIRef>, <GUIRef href="/baanerp/wh/glossary/glossary#000461" role="manual">Serial Price (Serial)</GUIRef>, or <GUIRef href="/baanerp/wh/domains/ina.valm#mauc" role="option">Moving Average Unit Cost (MAUC)</GUIRef>, and the inventory value must be equal to the lowest of
		  the current inventory value and the market price.</ListItem>
         <ListItemHead>
            <GUIRef href="/baanerp/ti/cpr/ticpr2210m000" role="session">Calculate Cost and Valuation Prices (ticpr2210m000)</GUIRef>
         </ListItemHead>
         <ListItem>If the valuation method is <GUIRef href="/baanerp/wh/domains/ina.valm#ftp" role="option">Fixed Transfer Price (FTP)</GUIRef>, and the new FTP (and inventory value) must be equal to
		  the lowest of the current FTP and the market price.</ListItem>
      </List>
      <Paragraph>If an item's market price that is entered in the <GUIRef href="/baanerp/wh/ina/whina1118m000" role="session">Market Prices (whina1118m000)</GUIRef> session is lower than the item's original purchase
		price, the market price is used to calculate the valuation price.</Paragraph>
   </GeneralSection>
   <ExampleSection>
      <SectionTitle>Example FTP valuation method</SectionTitle>
      <Paragraph>The value of the inventory is obtained by multiplying the
		inventory by the cost price of the items. Each workday the inventory will be
		changed by transactions, and the cost price is valid for a specific period. To
		calculate the value of the inventory from a particular date in the past,
		multiply the inventory and the cost price on that date.</Paragraph>
   </ExampleSection>
   <Note>
      <SectionTitle>Note</SectionTitle>
      <Paragraph>Use the <GUIRef href="/baanerp/wh/ina/whina1210m000" role="session">Perform Inventory Valuation (whina1210m000)</GUIRef> session to perform the calculations in one
		run. The calculations are performed based on the used valuation methods.</Paragraph>
   </Note>
   <RelatedTopics>
      <SectionTitle>Related topics</SectionTitle>
      <RelTopic>
         <Link href="/baanerp/wh/onlinemanual/000001" role="manual">Inventory Analysis</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>