Acquisition Cost with Enhanced Cost Processing

After you opt in to the Calculate Acquisition Cost for Purchase Order Transactions with Enhanced Cost Processing feature, the acquisition costs for purchase order transactions are calculated using the new processing logic.

With the new processing logic:

• Acquisition cost is computed every time a new document information is available.

• If the match option is set to Order, invoice variance amount is considered for the entire purchase order quantity and prorated to the delivered quantity.

• If the match option is set to Receipt, invoice for each receipt can be determined and the invoice variance amount is applied to the receipt quantity for receipt matched with the invoice.

• New acquisition cost is compared with the old acquisition cost to generate delta acquisition cost adjustments.

• Accrual clearing triggers an acquisition cost adjustment and the invoice amount is considered as the final amount for prorating to delivered quantity.

The benefits of using this new processing logic include:

• Reconcile the Receiving Inspection account across Cost Accounting and Receipt Accounting with the enhanced logic.

• For the purchase order related transactions, the processor uses transaction dates instead of the cost accounting process date for more accurate currency translation calculations.

• Invoice price variance adjustment events in Cost Accounting are posted to the General Ledger period that is same as the period used by Accounts Payable.

• Absorb the entire invoice amount over the net delivered quantity rather than the ordered quantity on the purchase order.

• Granular tracking, easier reconciliation and processing of each purchase order price events, and eliminate commingling of events.

Let’s look at an example of transactions and the corresponding accounting dates for the Jan-23 period which is in the Open status.

Transaction Date	Costed Date	Event	Quantity	Unit Price	Total Amount	Accounted Date
1/17/2023	1/17/2023	Purchase Order	2000	900	1,800,000.00
1/18/2023	1/18/2023	Receipt	1500	900	1,350,000.00	1/18/2023
1/18/2023	1/18/2023	Deliver	1500	900	1,350,000.00	1/18/2023
1/31/2023	2/01/2023	Invoice	1500	1000	1,500,000.00	2/01/2023

The transactions and the corresponding distributions are accounted as per the accounted date in the table. The invoice is accounted on 2/01/2023 in General Ledger. This date is used as the accounted date in Receipt Accounting and Cost Accounting.

Let's say the invoice is accounted on 1/31/2023 in General Ledger but the Jan-23 period is closed in Cost Accounting, then the accounted date in Receipt Accounting will be 1/31/2023 and the costed date and accounted date in Cost Accounting will be 2/01/2023, if the Feb-23 period is open.