Understanding Adjusting Works in Process for Inflation

Inventory valuation can be done in different ways, depending on the company's industry or market as well as the legal and fiscal requirements of the country in which the company operates.

In an inflationary economy, the valuation of works in progress is as important as the valuation of stock. The Work in Process - Inflation Adjustment process is designed to reflect the effects that inflation has over works in process. The system calculates the value of stock issues, which are considered works in progress within work orders, and then revalues the stock issues with prices that are calculated by using the PLAP method.