Stock Obsolescence functionality provides for the depreciation of non-saleable stock by way of provisioning, on a straight line basis over a prescribed period. The carrying value of the stock is not actually adjusted or written down. The purpose therefore of this process is to provide by way of provision the depreciation of stock on a straight line basis over a prescribed period defined by the user.
The calculation process involves determining the current written down value of inventory based on the age of the products and generating journals for the difference between that and the previously adjusted written down value. The actual inventory value is not affected and if the stock is subsequently sold, a reversal of the provision is produced by this process. The fact that the value of the stock has not been diminished means that when an obsolete product is sold, the margin is not exaggerated. The calculation of the provision for obsolescence is defined independently of the definition for General Ledger accounts for the journals so ongoing maintenance is simplified.
Stock obsolescence process flow
- Add Formulas
Can have multiple formulas based upon:
Company or Tax
Product groups
Amortization period type/length/% rate
Various start dates by publication date, receipt date, immediate date
Multiple General Ledger Expense/Inventory Accounts
- Perform Calculations
Calculations can be performed by:
Company or Tax
Period
Straight line write down
Calculations can also be re-run multiple times.
- Generate Reports
Generate reports to check formula calculations. Reports can be generated using the following criteria:
Formula set
Period
Hierarchy
Write down value for period
Output – Report or File
- Make Amendments
Make changes to the formulas if required
Re-run calculations
- Generate Journals
Journals are generated through the General Ledger End of Day
Contents
GL stock obsolescence formula definition
GL stock obsolescence definition maintenance
Generate GL stock obsolescence
GL future stock obsolescence
GL stock obsolescence report
Generate GL stock obsolescence journals
