Example of Acquisition Cost Adjustment with Accrual Clearing

This example illustrates the accounting entries for an acquisition cost adjustment with accrual clearing.

Scenario

An organization has a purchase order receipt, for which it subsequently processes an invoice price variance adjustment.

Transaction Details

The details of the transactional data are listed in this table.

Transaction Type	Cost Component	Quantity	Price	Comments
PO		10	$10.00
Receipt Accrual	PO Price	8	$10.00
Deliver to Inventory	Standard Cost	8	$8.00
Invoice (Match to PO)	Invoice Price	6	$12.00	Invoice Price Variance: $2.00
Accrual Clearing	PO Price	2	$10.00

Note: You haven't opted in to the Calculate Acquisition Cost for Purchase Order Transactions with Enhanced Cost Processing feature.

Analysis

Run the cost processor to cost the initial PO receipt. After entering the receipt cost adjustment for the invoice price variance of $2 per unit, rerun the cost processor.

Resulting Accounting Distributions

The cost distribution processor creates these accounting entries.

Application	Transaction Type	Accounting Event	Item	Line Type	Cost Element	Dr.	Cr.
Receipt Accounting	Receipt	PO Receipt	AS54888	Receiving Inspection	N/A	$80.00
Receipt Accounting	Receipt	PO Receipt	AS54888	Accrual	N/A		$80.00
Cost Accounting	Delivery	Deliver to Inventory	AS54888	Inventory	Material	$64.00
Cost Accounting	Delivery	Deliver to Inventory	AS54888	Purchase Price Variance	Material	$16.00
Cost Accounting	Delivery	Deliver to Inventory	AS54888	Receiving Inspection	Material		$80.00
Accounts Payable	Invoice	Invoice	AS54888	Accrual		$60.00
Accounts Payable	Invoice	Invoice	AS54888	Invoice Price Variance		$12.00
Accounts Payable	Invoice	Invoice	AS54888	Liability			$72.00
Receipt Accounting	Accrual Clearing	Accrual Clearing	AS54888	Accrual		$20.00
Receipt Accounting	Accrual Clearing	Accrual Clearing	AS54888	Receiving Inspection			$20.00
Cost Accounting	Acquisition Cost Adjustment	Acquisition Cost Adjustment	AS54888	Receiving Inspection		$20.00
Cost Accounting	Acquisition Cost Adjustment	Acquisition Cost Adjustment	AS54888	Purchase Price Variance			$20.00