Get More Detail About the Value of Stock with Split Valuation
- by Mark van Hoving, FI/CO Consultant, Oxygen Business Solutions
- May 15, 2006
A real-life example illustrates the concept and necessary settings for split valuation based on the origin of the product.
Split valuation is a function in SAP R/3 and mySAP ERP Central Component that allows you to value stock for a product based on different attributes – for example, the origin of the product or whether or not the product is produced in-house or procured externally. This method provides more accurate information for the actual value of particular stock. It requires that you have the Materials Management (MM) and FI modules implemented.
Split valuation is important to management accountants as it assists in understanding the true value and costs of stock holdings. SAP R/3 and mySAP ERP Central Component (ECC) use valuation types to allow for split valuation. A valuation type is an extension of the material master, adding another level to the material master data.
Figure 1 shows the three data levels. Initial creation of the material master is on the client level, which allows all plants in the system to use this material, thereby avoiding multiple identical materials for the plants. The second step is to create the material on plant level, assigning more specific data, such as profit center, valuation class, and sales organization, which distinguishes the material per plant. When using split valuation, you create an additional level using the valuation type. This provides the ability to recognize stock within a plant based on certain characteristics.
I’ll provide an example of the use of split valuation to determine tax benefits when a product is manufactured in two different countries.
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