Conversion of FG into Scrap

Dear All,
Conversion of FG into Scrap.
one step process (mvt. type 309)
Accounting entry
scrap inventory a/c dr
gain /loss on scrapping a/c dr.
To, FG inventory a/c cr.
two step process
scrapping through 551 movt type -
gain/loss on scrapping a/c dr.
To, FG inventory a/c cr.
generating scrap 902 movt. type (customized) -
scrap inventory a/c dr
to gain/loss on scrapping cr.
my question is our client is following two step proces is it correct. moreover gl getting hit is price difference instead of loss on scrapping. what is the correct scenario and which movement type should be involved.
Regards,
Divraj

Hi Divraj,
We follow the first step and i personally feel that this is the best method of scrapping of Finish Good.
As the difference between the cost of FG and Scrap is going in Gain and Loss Account. IT IS NOT A PRICE DIFFERENCE.
Regards,
Shayam

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