Automate Parallel Posting of Inventories at Actual Cost Using the Material Ledger

  • by Kedar Muzumdar, Principal FICO Consultant, Infosys Limited
  • February 25, 2013
Learn the configuration necessary to enact a new functionality in SAP ERP Central Component (SAP ECC) 6.0 for parallel valuation of cost of goods manufactured.

Many multinationals have a requirement to value and report their inventories including work in process (WIP) and consumption at actual costs. These requirements are primarily driven by the need to present the financial statements as per multiple accounting principles such as International Financial Reporting Standards (IFRS) and local Generally Accepted Accounting Principles (GAAP).

Although the functionality of actual costing in the material ledger helps to achieve the valuation and posting of inventory and consumption at actual costs, up to enhancement package 4 in SAP ERP Central Component (SAP ECC) 6.0, it was not possible to make ledger-specific postings automatically through the actual costing run. The postings were always made to the leading ledger and non-leading ledgers simultaneously with the post-closing step in the actual costing run (transaction code CKMLCP). Companies had to use manual postings or custom-built solutions, such as user exits and custom programs, to value inventory and post actual costs as per multiple accounting principles to specific ledgers.

However, with enhancement package 5 in SAP ECC 6.0 a new functionality of parallel valuation of cost of goods manufactured (COGM) is introduced. This functionality automates the valuation and posting of ledger-specific inventory values during an actual costing run or alternative valuation run. I explain the key configuration steps to enact this functionality in actual costing with the material ledger. I also explain the minor changes to execution of the alternative valuation run with this new functionality. I assume in my example that the SAP General Ledger is used with leading ledger 0L for IFRS and non-leading ledger LG for local GAAP.

Kedar Muzumdar

Kedar Muzumdar is an SAP-certified FICO consultant and a chartered accountant (CA) from the Institute of Chartered Accountants of India. He has been working as a principal consultant on SAP implementation, upgrade, and support projects involving the new GL, AP, AR, material ledger, product costing, cost object controlling, and profitability analysis for the past nine years.

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Comments

1/14/2016 9:43:17 AM
Sridher Sathi

Thanks for such a wonderful article

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