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Inventory adjustment and Costing

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Posted on by Ajit Vaghjiani

Hi, looking for some recommendations or best practise around writing off stock. Below is a scenario.

I have an item “A” with an average costing method, and the current unit cost is 210.66. The product is available in 2 locations. (Sales and Warranty).

A sales credit note is generated on 22/01/2025 at a unit cost of 167.88 to the warranty location with no previous ledger/value entry for this item in this location.
A negative item journal is posted on 21/11/2025 at a unit cost of 210.66 (current unit cost). We have an "adjust Cost - Item Entries" job running daily with a setup of “Item&Location&Variant” under the inventory setup.

When I run Inventory Valuation report, it indicates there is a value of -42.78 however there is no stock obviously due the difference in Unit cost in the value entry table. I have a couple questions.

How do I clear the remaining stock value on all items in this location where there is no physical inventory left.
What is the recommendation when it comes to this scenario so that we do not have a value left behind when there is no inventory.

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Dynamics 365 Business Central

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Valentin Castravet 32,157 Super User 2026 Season 1 on at

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Regarding your first question, you can use the Item Revaluation Journals to adjust the unit cost of either the credit memo or negative adjustment to zero out the inventory value balance.

Valentin Castravet
Work: Zander ERP Services
Blog: Dynamics 365 Business Central Insights
LinkedIn: www.linkedin.com/in/valentin-c-0500a247/

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Pallavi Phade 5,420 Super User 2026 Season 1 on at

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Namaste @Ajit Vaghjiani

There is no option for reversal . Yes we can revalue the cost using Item Revalution journal .

Tips

Adjust all the cost adjustments before running this revaluation journal

Steps

Go to Item revaluation journal .

Run the report - Calculate inventory Value . Specify the date . This option is to get valuation on that date . In your case its zero

You will get all items on that date .Add unit cost in revalued column which need to be revalued.

If you feel valuation is correct after preview posting , Proceed with posting.

It will add cost to your item line by line.

In value entry , with Entry type as Revaluation it will get posted

If you feel its helpful , please verify the answer

You can verify my old verified Post its similar .

https://community.dynamics.com/forums/thread/details/?threadid=59e19f71-648d-f011-b4cc-7ced8d1f67a7

Regards

Pallavi Phade

www.linkedin.com/in/pallaviphade131116

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YUN ZHU 99,084 Super User 2026 Season 1 on at

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Microsoft explained this issue in its official documentation.

Business Central Design Details: Known Item Application Issue (where the inventory level is zero although open item ledger entries exist)
More details: https://learn.microsoft.com/en-us/dynamics365/business-central/design-details-inventory-zero-level-open-item-ledger-entries?wt.mc_id=DX-MVP-5004336

Hope this helps.

Thanks.

ZHU

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Ajit Vaghjiani 24 on at

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Hi All, thanks for the responses.
I had tried Item revaluation before but does not work for me as I have no inventory left in that location. Running inventory valuation does not return any items to revalue. I could only use the below options.

Yun's provided link is more for a case for open ledger entries but no inventory. For my case, all the inventory is 0, however there is value left in it.

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Valentin Castravet 32,157 Super User 2026 Season 1 on at

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The Item Reval. Journal doesn't need you to have inventory in that location. Open the journal, add your item, then in the applies-to entry no. field select the credit memo entries.

Valentin Castravet
Work: Zander ERP Services
Blog: Dynamics 365 Business Central Insights
LinkedIn: www.linkedin.com/in/valentin-c-0500a247/

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Khushbu Rajvi. 22,128 Super User 2026 Season 1 on at

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Adding it: https://www.youtube.com/watch?v=Yjd33W04iZ0

https://learn.microsoft.com/en-us/dynamics365/business-central/inventory-how-adjust-item-costs

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