VALUATION OF WAREHOUSE RESERVES

In the Modus system, warehouse reserves are valuated in the real prices of the purchase. Every receipt of the assortment defines the number and the unit price. At the same time, every assortment's disbursement is valuated by the system according to the settings. However, system's specification determines some simplifications in the range of the valuation of the warehouse disbursement documents in the scratchpad - for the valuation of disbursement, the Basis price of the purchase is used. Confirmation of the issued goods document causes the assortment's disbursement and depletion of the warehouse balances. Then, the renewed valuation of the disbursement will be made according to the particular algorithms and real prices of the purchase.

Including version 1.17.x, every consumption will be valuated according to the accepted algorithm at the time of the confirmation of the Goods issue document. This method of valuation guarantees a precise and immediate valuation of warehouse's receipts and issues, as well as precise values in analyses. The biggest minus of such a solution was a lack of possibility of editing a Goods receipt document.

In version 2.0 in the Modus system, the registry of purchase invoices was introduced. With regard to it, the postponed valuation of issues and the postponed valuation of the warehouses is possible. A postponed valuation means, that some changes can be made in the range of purchase prices until the closing of the accounting period on the purchase documents and receipt documents issued at the time. It has got a significant meaning in the companies, where the purchase invoices are delayed against the supplies, and the receipt documents do not have a purchase price. In such cases the assortment is received in stock, usually at the final purchase price. According to this price, the issue is also valuated. If there are fluctuations of the purchase prices, it can happen that the accepted assortment was overvalued or undervalued. A postponed valuation of issue enables you for entering a purchase invoice to the existing receipt and revaluation of the warehouse receipt document and potential issues of this assortment (if, according to the applied algorithm, the valuation of issue was made in line with the price of the the goods receipt). Additional advantage of the postponed valuation is the possibility of keeping a record of receipt documents, purchases and issues in any order (as part of the current period that has not finished yet), without observing chronology. It can have a significant meaning in companies, where several people are responsible for recording documents, and each of them deals with documents independently from others.

In such a case, disadvantages of this solution can be imprecise values in analyses of the current period and differences in values for previous periods. The common situations constitute of big and frequent fluctuations of purchase prices or long periods without the valuation procedure. Therefore, it is advisable to close the accounting period with the frequency appropriate for the company. Results of analyses and reports performed in periods that have not finished yet, should not be treated as the final ones.

In order to complete the accounting period you have to evaluate the warehouse value. The specific period can be classified for completion if all the warehouse receipt documents from this period have already had the appropriate price of the purchase. Then, you have to perform the valuation of the warehouse release. For this purpose, choose Warehouse→ Valuation of a release (rights required!). The window of the valuations concerning warehouses will be displayed. Before making the valuation, you have to perform the analysis (the function is available in the top toolbar). If the system displays contradictions, you should correct them. The analysis can contain the following contradictions:

• assortment with the purchase price that equals zero;
• a lack of the purchase invoices for the receipt documents;
• invoices or receipts saved in the scratchpad (not confirmed);

If there are no contradictions in the analysis, you can perform a valuation by using the function Valuations, and by selecting the appropriate period.

In the system, there are two methods of the product's valuation:

• according to the production cost - the value of a product is defined automatically according to the value of the batches of raw materials in the production process. In case of the production cost, on the algorithm of valuation of particular assortments that constitute the raw materials for the specific product, the values of the product has an impact.
• according to the constant prices - the value of assortment is manually defined, e.g.: on the basis of the price level of the net acquisitions or the net profits.

By establishing the card of a new assortment, a default method of valuation is the Cost of production (manufacturing cost). In this case, the value in the constant price column equals 0,00.

In order to edit the method of the product valuation:

1. In the module Warehouse choose Balances,
2. Select the product,
3. Move to the tab Valuation,
4. Click on Add,
5. Choose the method of the valuation ('Production cost' or 'Constant price'),
6. If you chose 'Constant price', fill out the value in the box 'Constant price',
7. Click on Confirm,
8. Click on Confirm on the assortment's card.

++++ Screen: Method of the assortment's valuation | ++++

In the system, three algorithms of valuation are available. They can be individually defined for every assortment:

• FIFO (a method of the first price) - it is a method of the reserves valuation and their disbursement that relies on registering of disbursement starting from the unit, that has been earlier received to the warehouse. The name FIFO is an abbreviation of First In, First Out. This method can be used for the valuation of products as well as materials.
• LIFO (a method of the last price(cost)) - it is a method of the valuation of the stock depletion that relies on the accounting of issues starting from the last item received in the warehouse. The name LIFO is an abbreviation of Last In, First Out. This method can be used for the valuation of materials, articles, and products.
• Detailed identification of the real prices.

Choice of the valuation algorithm influences evaluation of the warehouse.

According to the chosen valuation algorithm, issues of the batch occurs in different purchase prices. For the FIFO method, the disbursement will be performed according to the prices from the oldest supply. With the assortment's disbursement the choice of the batch from which disbursment will occure. Two options of the assortment are responsible for it:

• Reservation only from the whole amount will occur the consumption of the oldest batch,
• Required reservation from the batch occur the consumption of the chosen batch.

In the warehouse three batches of the assortment were chosen, from which everyone has got a different price of the purchase

• Batch I - 1 item/purchase price 1 PLN
  
• Batch II - 1 item/purchase price 2 PLN
  
• Batch III - 1 item/purchase price 3 PLN
  
• Warehouse value = 1+2+3 = 6 PLN
  

As a result of the warehouse consumption, one 1 item of the assortment at a price 1 PLN/item (the purchase price of the oldest batch).
As a result of this operation, the value of the warehouse will amount to 5 PLN

In the warehouse there are three batches of assortment, from which every one has got a different purchase price

• Batch I - 1 item/purchase price 1 PLN
  
• Batch II - 1 item/purchase price2 PLN
  
• Batch III - 1 item/purchase price3 PLN
  

Warehouse value = 1+2+3 = 6 PLN

As a result of the consumption of 1 item from the warehouse, the batch I will amount to 3 PLN/szt (purchase price of the first batch).
As a result of this operation, the value of the warehouse will amount to 3 PLN

Take into consideration that even if the particular batch was issued (the option Reservation from the batch is required), the warehouse valuation does not change.

In the warehouse there are three batches of the assortment, from which every one has got a different purchase price

• Batch I - 1 item/purchase price 1 PLN
  
• Batch II - 1 item/purchase price 2 PLN
  
• Batch III - 1 item/purchase price 3 PLN
  

Value of the warehouse = 1+2+3 = 6 PLN

As a result of the consumption of 1 item from the warehouse, the batch II will amount to 2 PLN/item (the purchase price of the chosen batch).
As a result of this operation, the value of the warehouse will amount to 4 PLN

Take into consideration that if the concrete batch was issued (the option Reservation from the batch is required - switched on) the chosen batch from the warehouse will be sold in its purchase price.

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