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Negative adjustment with zero cost

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Posted on by Lissa

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Hello Experts,

One of my customer wanted to post negative adjustment with zero(0) value in Business central

Customer's Scenario- For the item adjustments, there must be a way to adjust negatively the stock quantity and values that are currently on hand, without posting a new item, for instance when stock in a warehouse gets damaged, and needs to be written down.

Could anyone please suggest how to do it in Business central.

Any help will be appreciated. Thanks in advance.

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CarmenNunes on at

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Hello Lissa,

Hope you are well.

Regarding your question I would suggest you to use the Revaluation Journals. Using this feature you will be able to update your Stock with the right value without performing any quantity adjustment.

Be aware that in case you perform a Negative adjustment with cost = zero, it will affect the costs of that Item and sales, this procedure isn't recommended.

Hope this explanation can help you.

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Lissa 120 on at

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Thanks Carmen for your suggestion. However below is my scenario:

We want to reduce quantity with zero cost and remaining quantity cost should be same as purchase cost and same to be as COGS as the time of Sales. What would be the best solution to handle this situation.

Thank you.

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CarmenNunes on at

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Hi Lissa,

Not sure if I fully understand what you want to perform and why, but what I can say is when doing Stock adjustments you always need to have in consideration the cost method you are using and how stands all Item entries. recall that in BC each entry we made with stocks there is an automatic impact in Item Costs and Sales profit.

So, is this quantity related with a Purchase Order? Is the PO already received and invoiced? What has happened with this specific quantity? It's one good that was damaged and you want to return to the supplier?

In case you have a Sandbox environment I would recommend you to perform the below scenarios and validate if the results are the one's you expect:

1. Create a negative adjustment with zero cost and do the apply to the Purchase Order from where that quantity was initially included.

2. In case you stand with a Stock Valuation with wrong costs, you can then perform a Revaluation for that Item and relate that Revaluation entry to the previous negative adjustment and/or purchase order.

Hope this can help you.

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Lissa 120 on at

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They produced 100 kg goods and 20 kg got damaged so customer don't want to show them in inventory.

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CarmenNunes on at

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Hi Lissa,

Have you already finished (posted to history) the Production Order? If the Production Order is still pending I would recommend you to end the Production process in order to get all the costs (consumptions and times costs spent on production Order) affected to that Production of 100kg, then you only need to perform a negative adjustment for that Manufactured Item and the system will bring by default the cost (you can also allocated that negative adjustment to the positive entry from Production Order) to have all entries linked.

Once done these procedures you will have your stock with 80 kg and with the right costs.

Hope this help you.

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Lissa 120 on at

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Thanks for your reply. However please find below the exact e.g of the problem:

They have purchased 100 kg goods with the cost of 1000USD. Now 20 KG goods got damaged so current inventory is 80 KG.

Now how can we adjust 20 kg goods with zero cost so that the purchase value remains same as 1000 USD and only quantity should change to 80 KG. So whenever at the time of sale, the Cost Of Goods should be 1000 USD for 80 KG goods.

Thanks much for your help.

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CarmenNunes on at

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Hi Lissa,

As mentioned before you are always able to post a negative adjustment with cost zero, however you have to take in account the Cost method that is set at your Item card, recall that each time we made a new entry for an Item system is automatically performing a cost adjustment.

I would recommend you to take a deep look at your Item setup and entries and check which is the actual Item cost in order to proceed with the negative stock adjustment. In case you post the negative adjustment with zero cost and your Item cost don't get with the correct cost as should be you always have the chance to perform a Item revaluation to turn Item cost in the value that you want to be.

Hope I was able to give you a clear understanding about this topic.

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