ajay krishnaFeb. 28, 2020
Inventory valuation is the cost associated with an entity's at the end of a reporting period. It forms a key part of the cost of product sold calculation. This valuation appears as a current asset on the entity's balance sheet. The inventory valuation is based on the costs incurred by the entity to acquire the inventory, convert it into a condition that makes it ready for sale, and also have it transported into the proper place for sale. In Odoo 13 we can easily valuate the inventory. In this blog we will discuss in detail on Odoo13 FIFO Inventory Valuation.
The inventory valuation depends on the way you compute the cost of your stored items. Here we can valuate inventory under FIFO(First In First Out). It actually updates the cost price of the product according to the last outgoing product in inventory. So the removal strategy like FIFO has a major role in this costing method. The cost price of the product doesn't changes until a product is removed from inventory by any of the removal strategies. That's why the process is real time and which is widely acceptable.
First we want to create a product category by FIFO method.
Select the Create-> button to create a new category.
Then Save-> the form.
Then go to the Products page.
Click the Create-> button to create a new product.
Here the cost price is 0rs and 0 product in hand. So let's do the two purchase with the unit price 800rs for 10 products and 900rs for the 5 products respectively.
Create-> a new order.
Then Save-> the RFQ and click Confirm Order->.
Select the Receive Products-> button to receive the products.
Change the done values from 0 to 10 and Validate-> the form.
Create the second RFQ and receive the product by the same method.
Here the quantity is 5 units and the price is 900rs/unit.
After purchasing the 10+5 quantities go to the product details to check the on hand quantities.
Here we can see we have 15 units are available in on hand but the cost price is not changed.
The cost price only change only when we sale the product.
Click the Create-> button to create a new order.
Here 12 quantities are selected for sale.
Select the Confirm-> button to confirm the sale.
Go to the Delivery-> for the product’s delivery.
Change the Done quantities from 0 to 12 and Validate-> the delivery form.
Go to the product’s page.
Here we can see, there are 3 quantities in on hand, 12 units sold and the Cost changes from 0 to 900rs.
Go to the Inventory Valuation for valuating the inventory.
We can see the product’s purchases and sales in here with total value.
First we purchased 10 units at 800 rs : 10*800=8000
Then purchased 5 units at 900 rs : 5*900=9000
Delivered 12 quantities : (10*800)+(2*900)=9800
So we can see the product sale is under the FIFO method. And the cost of the product changes to 900 rs because there are 3 units are in on hand so its cost is 900 rs.
We hope the blog help in understanding Odoo13 FIFO Inventory Valuation.