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Inventory valuation residual value

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Posted on by Esteban Navarro

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Hello everyone,

I have an issue regarding the inventory's residual value. I uploaded inventory using a journal, but a couple of days later, we realized that the amounts and values were incorrect. We reversed the document, but for a few items, we used the new values. This has resulted in negative or positive values in the inventory that we've been carrying since then, and some of the items now have zero units.

For example,

Item I-09 had two units in Location W-03 with a value of 860. We reversed the two units, but with a value of -112.49, and this left us with a value of 747.51 that we can't get rid of.

The item is not being used and has 0 units.

Entry Type	Document No.	Item No.	Location Code	Quantity	Cost Amount (Actual)
Negative Adjmt.	REVERSAL	I-09	W-03	-2.	-112.49
Positive Adjmt.	ORIGINAL	I-09	W-03	2.	860.00
				0	747.51

I've tried reversing the documents and leaving the inventories at zero, but these actions affect the average cost, we use the average costing method, and in some cases, they result in negative inventories, which we don't allow. I also attempted to use the revaluation journal, but this action impacts the average cost because I don't have the items. If I make a positive adjustment followed by a negative one, it negatively impacts the average cost.

Thanks for the help.

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Dynamics 365 Business Central

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Shauna Langley 893 Moderator on at

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Hi,

I have had to do this on a few occasions and it will involve using the application worksheet. The first thing to do is post a positive adjustment for qty 2 and cost of 112.49 on the same posting date as the negative adjustment. Then post another negative adjustment for qty 2 with the correct amount of 860.00

Then search for application worksheet.

You will need to do this setup for both negative adjustments, the one costed at 112.49 and 860 as they will be applied to positive adjustments albeit just the wrong way around.

Find the entry for the negative adjustment and select applied entries.

Make sure that the applied entry is the original positive adjustment and then select remove application.

Then repeat this for the second negative adjustment.

Then find the first positive adjustment and select unapplied entries.

You should see the two negative adjustment entries here so select the correct one cost wise and click ok.

Repeat for the second positive adjustment and that should be the issue resolved. I will point out that you need to stay within the application worksheet to do all these steps otherwise it will revert back and you need to start again. It is also better to do this when the system is not in use as you could get errors when trying to reapply the entries.

Hope that helps,

Shauna

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KasparsSemjonovs 4,782 Super User 2025 Season 2 on at

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In Inventory Setup - check if You have automatic Cost Adjustments and Automatic Cost posting.

At the moment seems like no. And You would need to manually run process "Adjust Cost - Item Entries" (and Post Inventory Cost to G/L (but this can be done within the AC-IE process if you place checkmark to post)).

The process checks that outgoing entries have the same unit cost as the incoming entry that they are applied to, meaning, used item is worth the same as it was purchased for).
If the Application to inbound entry has to be changed, Shauna already described steps to do this in previous comment.

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Inge M. Bruvik 1,111 Moderator on at

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Just to add to the other answers here.

I hope my blogpost around item revaluation can be of assistanse to you.

Item Revaluation In Microsoft Dynamics 365 Business Central • Business Central Explained (bc365.co)

I also think this article around cost adjustment can be worth reading:

Cost Adjustment In Microsoft Dynamics 365 Business Central • Business Central Explained (bc365.co)

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