Costing and Accounting for Consigned Inventory
If you use the inbound consignment inventory option, a supplier can place goods at your location, but payment is not due until you sell or use the goods.
When you receive a consigned item into inventory, the quantities are tracked but no accounting is performed. The liability is not recognized until the consigned receipt is consumed. Consumption transactions and any subsequent transactions are costed and accounting entries are created. Consumption transactions for consigned items include:
Transfer from a non-owned location to an owned location.
Shipping/Issue or Express Issue.
Adjustment.
Physical accounting adjustment.
Stock used as a component in a PeopleSoft Manufacturing production order.
Stock issued to a work order in PeopleSoft Maintenance Management.
The receipt cost associated with the depletion transaction (as defined by the item's cost profile within each cost book) determines the transaction values.
PeopleSoft Cost Management does not include consigned receipts in an item's average cost, but it does include stock transfers from a non-owned to an owned location. The system costs consigned depletions at the consigned receipt's cost, instead of the average cost of the item. When consigned items are issued to a production ID in PeopleSoft Manufacturing or a work order in PeopleSoft Maintenance Management, the receipt cost is used to value the issue transaction. For items using an average cost method, the system updates the average cost when you:
Put away a consignable item in an owned location.
Receive a consignable item from a non-consignment supplier.
Transfer a consignable item from a non-owned storage location to an owned storage location.
When consigned inventory is consumed and costed, the Accounting Entry Line Creation job generates the appropriate distribution accounting for each transaction group that is processed.
Transfer From a Non-Owned to an Owned Location
Inventory transfer transactions (060), where a consigned item is moved from a non-owned to an owned location, create this entry:
DR Inventory
CR Accrued Liability
If location accounting is not used, the bin-to-bin transaction pulls the debit side of the accounting entry from the Accounting Rules page. If location accounting is used, the bin-to-bin transaction pulls the debit side of the accounting entry from the Storage Area Accounting page for the destination storage location.
Shipping/Issue or Express Issue
Issue transactions (030-034) create this entry:
DR COGS
CR Accrued Liability
The COGS account is determined using existing logic.
Issue to PeopleSoft Maintenance Management
Issue consigned inventory stock to a work order in PeopleSoft Maintenance Management using transaction group 231 (WM Usage).
DR Work Order
CR Accrued Liability
When items are issued from PeopleSoft Inventory to a work order, PeopleSoft Maintenance Management can provide overriding ChartField combinations on the work order. These account distribution overrides are used with the existing accounting logic in PeopleSoft Cost Management to create the necessary accounting entries. If overrides are not provided, the work order expense account is determined using existing logic.
Adjustments and Physical Accounting Adjustments
Inventory adjustment transactions (050, 051, 053) and inventory counting adjustment transactions (040, 041) that adjust the stock level down will create this entry:
DR Adjustment Account
CR Accrued Liability
The adjustment account is determined using existing logic.
Stock Consumed as a Component in Manufacturing
Component consumption transactions (230 and 220) create this entry:
DR WIP
CR Accrued Liability
The WIP account is determined using existing logic.