Operational Gain or Loss Calculations

As operations are performed on vessels, for example operations that transfer blend lots from one vessel to another, the product might incur gains or losses. Gains or losses are recognized by taking measurements before or after an operation. Gains and losses must be accounted for in the system. To track the cost impact of operational and survey gains and losses, you set up each configured operation with an accounting method that is used to calculate and account for gains and losses. The system provides three options:

• Proportional method

• Expense method

• Cost component method

If you set up a configured operation to use the proportional method, the system adjusts the unit costs for each cost for each cost component, but records the same lot cost amounts for Before and After lots. The system does not create journal entries for gains and losses.

If you use the expense method, the system adjusts the lot cost amounts for each cost component, but not the unit costs, and writes journal entries for gain or loss.

If you select the cost component method, the system records gains and losses as separate cost components. You have to set up these cost components in advance to use this method. When gains or losses are incurred, the system adjusts the lot cost amounts for each component, but records the gain or loss in the additional cost component that you set up. The system adjusts the unit costs for each cost component and records the loss or gain as a unit cost and a cost component total for the additional cost component.

The following table illustrates how the system calculates gains and losses for the cost component method assuming a Before lot quantity of 100 gallons and an operational gain of 10 gallons

Cost Component	Total Cost	Unit Cost
Cost Component 1	22	0.20
Cost Component 2	33	0.30
Cost Component 3	55	0.50
Cost Component Gain/Loss	–10	–0.0909