Concept of valuation

Dear All,
Please throw some light on the concept of valuation and explain with simple example difference between lowest value principle, strict lowest value principle and other valuation method. I tried to find it on help.sap but I'm not able to comprehend it completely as I'm looking for its meaning in a business context.
Warm Regards
Mazdul

http://help.sap.com/saphelp_erp2005vp/helpdata/en/8f/d1de34e4cb2300e10000009b38f83b/frameset.htm
Valuation for material is required fo rcosting as well as accounting and it is always linked to inventory in form of stock or non stock
If there is no IM involved, is valuation of materials still required?
yes because without that how will you pay to your vendor and take the cost of material

Similar Messages

  • Valuated Sales order stock - Goods Receipt

    Greetings,
    I am trying to better understand the concept of 'Valuated Sales order stock" and I read in the SAP documentation that:
    "When you are using a valuated sales order stock, externally procured individual requirements materials are assigned to the sales order stock at the net order price at the time of the goods receipt"
    But I find that in our SAP system, this is not the case. Externally procured materials are valued at whatever price they are costed in the sales order they are used.
    I can have a PO whose net price is 5000 Euros for Material X but if that same Material X is costed at 8000 Euros in the Sales order to which is it used, the GR for Material X will be at 8000 Euros.
    (the PO for Material X is assigned against the sales order).
    Perhaps I am misunderstanding what is meant by "externally procured individual requirements materials"?
    In the example above, material X is not the Finished Goods sold to customer through the Sales order. It is a component that is involved in the production of the FG.
    It seems to me more logical that Material X value be based on the cost estimate computed in the sales order rather than on the PO Net price...
    Thanks in advance for your valuable feedbacks!
    Best regards,
    Sylvain

    Hello Nikolas,
    Thanks for your answer.
    Yes, we value our inventory at Std.
    (Is this why the GR is valued at Sales order cost estimate and not Net Price?. SAP does not mention this in its documentation)
    I understand your point but my argument is based on the fact that if a purchased material (Material X in my example) is received into stock at the Net Price value, then, there will be a mismatch between
    - the Cost Estimate of Material X in the Sales order (Material X will be valued at its Std there, based on our Costing variant)
    and
    - the value at which this Material X will be consumed in the Production process (since it will be at Net Price).
    This would cause a Production variance to be recognized since the actual costs to produce the Finished good would be different from the Cost estimate of the Finished Good in the Sales order (and the cost estimate in the sales order determine the COGS of the Finished Goods in accounting).
    The difference of 20 you mention is treated as a Purchase Price variance in our case. That PPV is assigned against the Sales order.
    Best regards,
    Sylvain

  • Regarding Down Payment against Asset purchase

    Hi SAP GURU
    i have one queries regarding down payment made against asset puchase order
    I created one asset code, create the PO with accoun assignment categories A, made a advance payment against reference to this PO no .
    Now the problem is , asset capitalised date is automaticaly come same as down payment date and it is reflecting in asset explorer , T code - AW01N.
    Can any body suggest what is the right way for the whole scenarion , or i am making some mistake .
    Is there any config setting i am missing.
    Please help me out , issue is very critical.
    Thanks in advance.
    Regards
    Anjan

    Hi Anjan,
    From your below query, I infer that you have created asset PO and made down payment against PO without goods and invoice receipt. Am I right?
    Are you following Valuated goods receipt or non valuated goods receipt concept?
    Valuated goods receipt: Asset will be debited at the time of goods receipt
    Non valuated good receipt: Asset will be debited at the time of invoice receipt
    If you follow valuated goods receipt concept, then at the time of making down payment, asset should not be debited (whatever the value date/ capitalization date be). Please refer SAP note number 310368 (valuated goods receipt paragraph) for reference. In that they have clearly mentioned the steps to make down payment against asset PO without debiting to asset and without any error message. You have to make F5 378 message number from error message to warning message and in posting key 29 and 39, you have to supress the asset related fields. If you have done the above settings, then system will not show any error message to update G/L account in AO90 transaction code for the Acquisition: down payments and Down payment clearing - 2nd and 4th field.
    Here we are following the valudated goods receipt and initially I faced the same issue and we sorted out  after following the steps mentioned in the above sap note number.
    Hope this helps. Assign points if useful.
    Regards
    Dwarak.

  • Down payments for Asset Under Construction

    Hi Experts,
    Urgent!
    My client paying advances to vendors, thru TC-F-48.
    Previously there is no PO requirement ,now asper client requirement I put  PO fild as requirement in posting key 29.
    1)There is no problem for payment to vendors -for Raw materials.
    2)while paying advance to vendors - for Asset Under Construction, system showing error.
    *Error is:
    Contact your system administrator (table error)
    Message no. AA866
    Diagnosis
    No account has been entered for posting down payments in area 01 under the account assignment key 4800 (chart of accounts FTL).
    Procedure
    Enter the account using the Customizing menu.
    Pls Reply frinds.
    Regards
    vinod

    Hi Vinod,
    I hope that you are following Valuated goods receipt concept.
    Valuated goods receipt: Asset will be debited at the time of goods receipt
    Non valuated good receipt: Asset will be debited at the time of invoice receipt
    If you follow valuated goods receipt concept, then at the time of making down payment, AUC should not be debited (whatever the value date/ capitalization date be). Please refer SAP note number 310368 (valuated goods receipt paragraph) for reference. In that they have clearly mentioned the steps to make down payment against asset under construction Purchase Order without debiting to AUC and without any error message. You have to make F5 378 message number from error message to warning message and in posting key 29 and 39, you have to supress the asset related fields. If you have done the above settings, then system will not show any error message to update G/L account in AO90 transaction code for the Acquisition: down payments and Down payment clearing - 2nd and 4th field or for AUC related fields.
    Hope this helps. Assign points if useful.
    Regards
    Dwarak.

  • Non valuated sales order stock-help reqd

    Dear Experts,
    My client is into Pipe coating business who receives the pipe from the customers, coats it as per there requirements and dispatches it thereon. There is no concept of FG here as its only the service he is doing on it and also when he receives the pipe there is no raw material cost on it. Raw materials for him would be chemicals etc which he uses to coat the pipe.
    This is the case of NON Valuated sales order stock.
    1) non valuated GR will be done for customer stock -Only QTY update
    2) sales order bom will be created with defined characteristic.
    3) Plan cost of sales order will be updated based on Costing ID setting
    4)Production order will be created based on Sales order.Good issue and Activity confirmation happen at Production order level but Good received only QTY but no value update.
    5)Production order will be settled on sales order.Settlement profile of production order type must contain COST ELEMENT tick under settlement.
    6)now my sales order contain actual cost of production.
    7)No accounting document will be generated at PGI.
    8)only accounting document will be generated at Billing.
    9)Only COPA Document will be generated at Sales order settlement. I am going to create PA transfer structure in order to post COGM cost component wise.
    Mi missing something?
    Question
    1) Whether all steps are correct
    2) There  will be no standard cost release and no variance calculation as well.
    3)How can i use RA under non valuated sales order stock?.
    4)HOw can i use customer stock under sales order bom with non valuated value?
    5)How i will do Production order GR Only qty update?
    regards
    RK

    Hi Raman
    All steps are correct.. You seem to be an expert now!
    THere wil be no Std cost release or variance calc
    You can set up RA based on costs or Revenue... 1st of all check with your  client whether they would like to have any WIP in this case
    you can receive the customer supplied pipe using 501E movement as Non val
    GR - Only Qty Update is controlled by Req Class... You need to leave Valuation field BLanlk in Req CLass and choose Acct Assn Catg E
    br, Ajay M

  • Business Partner - Valuation Data Ratings

    Hi
    On the Business Partner - > Valuation Data  -> Ratings screen, I need to suppress th change of the ratings without graying it out.
    Do you have an idea of what BAdi to use or approach to follow will be appreciate.
    Kind Regards,
    Nhlanhla Ndlovu

    Hi
    You can get this by using BDT concept...
    1. use BUPT area
    2. find the screen you want to play with bus5
    3. get the sections under this screen using bus4
    4. get the view from bus3
    5. under this view you have different modules (PBO/PAI), you can also copy and alter this modules.
    6. make use of further checks options to do validations.
    I have BDT manual with me, in case if you need please send me a test mail.
    Thanks
    Manohar

  • G/L account determination as per Valuation class in SD cycle

    Hi
    We know Valuation class is used in FI and MM integration. It determines the G/L accounts to be posted automatically (Ex Raw materail or Finised goods).
    The client requirement is that they want to post  diff G/L account per Valuation class in SD cycle .Second question if it is possible in SD then can we post it for a service material??
    If it is possible then how to configure it in VKOA.
    Regards
    Jyoti

    Hi
    ur concept is correct, means GL account is determine by valuation cless.
    bt this is nt the factor.
    Series is like that
    Material type-Ac category referance-Valuation class-Valuation category group-Transaction0Chart of accounts-Account modifer-value string-GL account.
    However simply u can create GL account By FS00.
    Bt Being a sd guy u hav to take a referance from MM or Fi guy and assign it to VKOA in real scenirio.
    thanks
    Mk

  • Valuation Type Error

    Dear Frndz,
    I have to create a PO for a material against a vendor. In my Material master I have given H (Orgin)  as my valuation category. I have assigned valuation types(which includes my vendor also) for this Valuation category. Now when I create a PR for this material  when I enter the valuation type assigned for this
    valuation category. System is showin an error 'valuation Data for material X,valuation type Y doesnt exist.'
    So please guide me abt how to maintain the same & further please provide me some details abt the split valuation concept as well as what are all the steps involved in configuring & testing the same.
    Thanks in advance!
    Rgds,
    SAP FC

    Hi,
    Check this Link for details:
    http://www.sap123.com/showthread.php?t=29
    Note:
    The Split Valuation settings are as follow:
    1.SPRO> MM>VALN AND ACC ASSIGNMENT> SPLIT VALUATION> Acitvate Split Valuation
    2.SPRO> MM>VALN AND ACC ASSIGNMENT> SPLIT VALUATION> Configure Split Valuation
    Click on Golbal type: create your own valuation types as Type 1, Type 2 etc
    Click on Global categories:create your own Valuation Category as Type(T) and
    Activate all valuation types(Type1, Type2 ) for your category(T)
    Goto MM01, enter materialu2026u2026u2026u20261st enter valuation category and save & again enter MM01 enter the Valuation type as Type 1 and maintain price for it and repeat the same for all the Types.
    When you create a PO for split valuated material it will ask for valuation type and you can enter your required valuation type and save.
    Regards,
    Biju K

  • Foreign Currency Revaluation concept

    HI experts,
    I am an MM Consultant, I would like to know the concept behind Foreign Currency Revaluation, I want to know the process in depth with concept wise and configuration wise.
    good reply will be rewarded.
    Thanks in advance.

    Hi,
    i am valuating my vendor open item balances. My scenario is like
    Balance of Acer Limited on 10 April 2014 amount USD 1000 @ Rs 65/- = Rs 65000/-
        On Month End (30 April 2014) one usd = INR 70 in that case below entry
         Unrealized Exchange Gain  Debit Rs 5000/- (USD 1000X5) (Expense A/C)
         Acer Limited Credit RS 5000                                                      (Vendor A/C0
    Is there any chance to post such type of entries using this functionality
    Regards
    vasu

  • Valuation Methods - foreign currency valuation

    Hello
    I am trying to understand the concept of different valuation methods. could you explain using examples please ?
    Say for instance, a goods receipt is raised in USD for 100USD on 2 Jan 2009 and local currency is EUR. Exchange rate is 1EUR : 1,5USD. On 4 Jan 2009 invoice received at rate of 1EUR : 1,6USD.
    What are the implications of the options lowest value principle, strict lowest value principle, always valuate and revalue for such a transaction?
    tks

    Those are different ways of valuating your Foreign Currency Operations depending or the country regulations:
    1- Lowest value principle means that the Valuation will be posted only if it is giving a negative result.
    2- Strict lowest value principle will be post valuation only if two conditions happened:
            A - The valuation is negative
            B - The new valuation has a greater devaluation and/or a greater revaluation for credit entries than the previous valuation
    3 - Always Valuate: No matter if it is possitive or negative, the valuation will be posted.
    4 - Revalue only: The opposite of the first one, valuation is only posted when possitve.
    5 -Reset Valuation Run: In this case open items are valuated at the acquisition price. This way the valuation difference is set to zero. This is useful to reset previous valuations
    Regards,
    Fede

  • By product concept

    Dear experts,
    We want to implement By product concept in our organization can any body suggest me step by step in detail to implement this By product concept?

    hi
    A by-product is a product that is produced in conjunction with other products. The system does not create a separate order item for each by-product. The material valuation of a by-product is always based on the price specified by price control in the material master.
    The SAP System allows you to post receipts of planned by-products and unplanned by-products directly from an order or a network.
    A by-product is a product that is created automatically during the production process of another item, the main product. For example, coke and tar are obtained as by-products in the production of gas.
    If the by-product has not been planned in the order, you must enter the goods receipt manually
    by-product can be planned in the order as a component with negative quantity. For this component, a reservation item is created automatically with movement type 531 (receipt of by-product). You can enter the goods receipt as follows:
    automatically during order completion confirmation
    manually with reference to the order or reservation
    -ashok

  • 2 Valuation Class - Same Material Type

    Hi ,
    I have 2 Valuation class 9001 & 9003 for ZPAC Materil Type .
    9001 - Packaging & 9003 Casing .
    Where i can find the difference between this Valuation class in Material Master.
    I have 2 Material with different Valuation class with same Material type.
    I Could nt able to find the difference in between this 2 material.
    Like Packaging & Casing where i can find this,
    Pl suggest.
    Thanks
    Ram

    Hi,
    Go to OMWC, there click on "Global Categories", here position cursor on the Valuation category (which is maintained for Material Master) and click on "Change" button, here check have you entered any Valuation type in field "Default: val.type ext.procure."
    This defaults the Valuation Type in Purchasing Documents.
    In MIGO, if you don't want to enter valuation types manually then use concept of Batch Determination if your materials are batch managed.
    Procedure for Batch Determination: -
    1. Go to OMCG and here put Batch Search Strategy "ME0001" against Movement Types 541 and 543 O
    2. Now in MBC1 - Maintain condition record for Strategy Type "ME02" and here keep Selection Type as "O"
    After doing the above settings, system will not determine the batch and valuation type during Subcontracting PO, but at the time of Transfer Posting (MB1B) and Consumption of Components (MIGO), system will determine batches and corresponding valuation type
    If materials are not batch managed then go for "Stock Determination Procedure"
    1. OSPX - Define Strategies for Stock Determination
    Here take a copy of Stock Determination group "0001" and create a new and assign to your plant.
    After maintaining Stock Determination group and rule go to "Stock Determination Item Table", here enter stock type as "F", Storage Location (if required, otherwise keep it blank), enter priority as 1, 2, 3 and valuation types against that in which sequence you want these to be determined.
    Now in SPRO > MM > Inventory Management and Physical Inventory > Stock Determination > Assign Stock Determination Rule in the Applications >  Inventory Management > Here assign Stock Determination Rule to 541 and 543
    Now assign Stock determ. group in MM02, under "Plant data / stor.2" view of material master
    Now in MIGO - Click on "Stock Determination" button to get the valuation types automatically.

  • Nonleading ledgers and foreign currency valuation

    HI all,
    we are in ecc 6.0 and using new gl.
    Do you need to carry our foreign currency valuation in no leading ledgers as well
    if you have any .and this non leading ledger is used as there is a company code in foreign
    country.???
    any inputs are welcome please.
    Thanks,
    Sai.

    What is the need for parallel ledger in the new GL concept?
    There are up to 4currencies available within the Leading Ledger:
    Transaction currency
    Company code/local currency
    Up to two parallel reporting currencies as assigned in FI
    The strategy with regard to the technical mapping of parallel financial reporting (parallel ledgers in general ledger, account solution, company code solution)  is that the your requirements determine whether parallel general ledgers or the account solution is more appropriate with only one leading general ledger.  There could significant disadvantages caused by the high proportion of manual postings.

  • Valuate Foreign Currency in the Period End

    Hi Friends,
    Which method is used to Valuate Foreign Currency in the Period End? (We used Average Rate method at the time of transaction posting) I have a doubt whether we have to use same average rate method at the period end or not.
    Thanks
    Chandra

    My Dear Friend,
    OB08 is a master data screen..rates are entered there by the user against the particular echange rate type for different currencies..So whatever you enter there, you will see that..highere or lower depends on what rates are given by the bank.. if it is higher you will maintain and see higher and if it is lower you will maintain and see lower..
    Secondly, if you want to use the concept of revaluation at the bank buying rate and the bank selling rate, then you will first have to define two exchange rate type for that and also maintain that in the config for valuate - Foreign Exchange.. and against these exchange rate types, you have to maintain the bank buying rate and bank selling rate in OB08.
    Regards,
    SAPFICO

  • Raw materials on MAP with split valuation used in standard cost estimate

    We have a few raw materials which are purchased from different vendors and of different brands. We have opened split valuations for these raw materials. These raw materials are later used in manufacture of different finished goods. We use MAP for raw materials and Std. for finished goods. What configuration and processing steps will be required to run standards cost estimate and what will be standard price for a finished good considering the following example:
    Material X is finished good
    Raw Material A with split valuation @ USD 5 (brand aplha)   &   USD  10 (brand beta)
    Raw Material B without split valuation @ USD 1
    It is expected that we used brand aplha 60% of the time and brand beta 40% of the time and production batch size is usually 100 Kg.
    Please reply
    Edited by: Chris SAP on Sep 29, 2011 7:56 AM

    hi chris
    Hope you have configured the material A for split valuation. while calculating standard cost estimate for the material C. through ck11n, the system will pick up the header price from material master.
    But here you are saying that you have chances of using the material A, 60% of brand alpha and 40% brand beta
    Instead of using split valuation use mixed costing concept. create the material A with separate Ids and create two boms one with alpha and the other with beta.
    create procurement alternative in CK91N and mixed ratio with Ck94 and release the mixed cost estimate
    please go through this thread also
    Re: Difference between Split Valuation and Mixed Costing
    Krishna

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