FIFO and LIFO Calculations

The JD Edwards EnterpriseOne Advanced Stock Valuation system uses FIFO and LIFO calculations to determine stock valuations. The value of the inventory is based on the activity that occurred on a year-to-date basis instead of a rolling inventory balance that is carried forward. To facilitate this type of processing, when the system applies the calculation method for each period, it reverses the entries for the prior period, which makes the new entries the current year-to-date values. This reversal occurs for all periods except for the last period of the year.

The reversals for every period also keep the opening inventory constant until the end of the year. Thus, because the previous period's entries are reversed, the opening inventory is always the same, regardless of what transpired in the previous period.

The system stores the total purchase quantity, amount, and average price for each period of the year. The stored information enables the system to allocate the closing inventory, starting with the current period and allocating to previous periods.

You might not always know the price of an item when you receive it. Because a quantity without a price can cause a large fluctuation in the average price, you can enter and use an override price for each period.

The information that follows includes examples of FIFO and LIFO calculations.