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According to IFRS, Inventory Valuation should be at landed cost which includes the Purchase Price, Freight Cost, Customs and any other costs needed to make the product available in our warehouse

Based on this standard the correct financial entry for Goods Receipt should be:

Account Debit Credit Notes
Inventory 820
Goods Receipt Invoice Receipt 800 Purchase Price
Goods Receipt Invoice Receipt 20 Freight, Customs, Duties, ..etc

And furthermore, any Purchase Price Variance (PPV) during invoice processing should also impact:

  • The inventory value in case of moving average valuation

  • The Inventory PPV in case of standard cost valuation

How can we easily post the freight and other related expenses to our inventory value without activating Transportation Management or any other components?

Check the video below for:

  1. Business Process explanation

  2. Full demo on the process on SAP S4HANA which is also applicable to ECC



Many SAP users don't know about this process, so they end up posting the freight and other similar expenses (insurance, duties, customs, etc) to expense accounts without any link to the inventory, and this is wrong as it leads to wrong inventory valuation and a lot of manual processing

Let me know your thoughts in the comments and help me spread the knowledge by sharing this everywhere!


See you in the next blog post 😉
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