Reevaluate the inventory with the exchange rate difference.

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Dears,

If a foreign currency PO and its invoice were posted using the monthly exchange rate, but the actual rate that was used to get the foreign currency is way different how can that rate get changed?

As if it is not changed the inventory cost is considered in correct.

Thanks,

Sherine.

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Community Member on at

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Hi Sherine,

There is no functionality within Dynamics AX that lets you change the exchange rate of a posted purchase invoice which then flows through to posted inventory cost. Exchange rate adjustments are only supported for vendor ledger entries and do not flow through to inventory.

Depending on the inventory model of the item (item model group) and posted issue transactions you might be able to correct your inventory cost through revaluation, but this process can not be generalized and must be further examined on a case by case basis.

Regards

Uwe

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Ludwig Reinhard Microsoft Employee on at

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Hi Sherine,

Uwe is right. Your inventory is not affected by the foreign exchange effect. In addition to the inventory closing and adjustment form that you might use for correction, you can also post an accrual at the GL level only. This is probably faster and a bit easier but has the disadvantage that you can't see the posting in inventory.

Best regards

Ludwig

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lally 8 on at

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[quote user="Ludwig Reinhard"]ou can also post an accrual at the GL level only. This is probably faster and a bit easier[/quote]

What is the best way to post the accrual entries to GL for inventory.

Do you suggest to use direct inventory accounts or separate inventory accounts ?

If I post the entries to these accounts , then how to identify the accrual entries and easiest way to identify the accrual entries ?

Is it normal business practice or accounting rules to maintain accrual entries for inventory ?

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Ludwig Reinhard Microsoft Employee on at

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Hi lally,

If you want to adjust inventory values at the GL Level only never user the direct inventory accounts that are set up in the inventory posting matrix. Otherwise you will quickly run into reconciliation problems.

A lot of companies record those accruals at the GL level to track some value adjustments that are required by local accounting laws, so I would say that this is a normal business practice.

Best regards,

Ludwig

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lally 8 on at

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Thanks for the reply ,

Still I am not sure about the business requirement as we normally run foreign currency revaluation for customer,vendor,bank as these subledgers maintain in foreign currency,if those are not same as company currency.

But normally inentory balances always maintain in company currency....then why need to run/maintain inventory value in foreign currencies.

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Ludwig Reinhard Microsoft Employee on at

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Hi lally,

Some companies want to do that because the materials on stock are primarily traded in a currency that is different from the company's currency. An example would be oil that is typically traded in USD. Now, if you enter with your financial institution provider for a currency hedging deal there can be effects on your inventory that you want to record in your system. I do not know the exact background in Sherine's case. Probably we have to wait for an additional feedback here.

Best regards,

Ludwig

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lally 8 on at

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Thanks Ludwig for the reply . You are an expert in domain and AX .

[quote user="Ludwig Reinhard"]An example would be oil that is typically traded in USD. Now, if you enter with your financial institution provider for a currency hedging deal there can be effects on your inventory that you want to record in your system[/quote]

Normally Subledgers customer , vendor and Banks have the functionality to maintain the balances in the foreign currency and GL level can maintain in the Company currency. Using revaluation batch jobs subledger balances can be changed based on the exchange rate.

When it comes to inventory , how to change the inventory value as inventory always store in the company currency only . If user wants to show the inventory balance as per exchange rate , what is the best method you suggest as inventory subledger level cannot be maintained .

Any light on this ?

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Community Member on at

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Thank you Ludwig for your answers.

The case is that my customer wants the inventory amount in the functional currency by which all reports and financial statements are presented, to reflect the actual rate that the invoices are paid with, as the rate of the USD rate currently is fluctuating with a very material difference, otherwise the difference will be presented as an Exchange rate Gain/loss while settling the vendor invoice and not on the COGS!

I can totally understand his request and agree with him, but couldn't find any way to fulfill it.

Anyways, thank you for your support.

Thanks,

Sherine.

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