Example of Acquisition Cost Adjustment With Match Option Set to Receipt
This example illustrates the accounting entries for an acquisition cost adjustment when the match option is set to Receipt in the purchase order schedule.
Let's consider a purchase order with partial receipt and a corresponding invoice. The table here lists the transactions.
| Transaction Date | Document | Quantity | Unit Price | Total Amount |
|---|---|---|---|---|
| 1/17/2023 | PO 01 | 2000 | 1000 | 2,000,000.00 |
| 1/18/2023 | RC 01 | 1000 | 1000 | 1,000,000.00 |
| 1/18/2023 | Deliver - RC 01 | 1000 | 1000 | 1,000,000.00 |
| 1/31/2023 | INV 01 | 800 | 1200 | 960,000.00 |
Also, you've opted in to the Calculate Acquisition Cost for Purchase Order Transactions with Enhanced Cost Processing feature.
After you run the cost processor, these entries are created in Receipt Accounting.
| Transaction Type | Accounting Line Type | Document | Dr. | Cr. |
|---|---|---|---|---|
| Receipt | Receiving Inspection | RC 01 | 1,000,000.00 | |
| Receipt | Accrual | RC 01 | 1,000,000.00 | |
| Invoice Price Adjustment | Receiving Inspection | INV 01 | 160,000.00 | |
| Invoice Price Adjustment | Invoice Price Adjustment | INV 01 | 160,000.00 |
These entries are created in Cost Accounting.
| Transaction Type | Accounting Line Type | Document | Dr. | Cr. |
|---|---|---|---|---|
| Delivery | Inventory Valuation | RC 01 | 1,000,000.00 | |
| Delivery | Receiving Inspection | RC 01 | 1,000,000.00 | |
| Delivery | Inventory Valuation | INV 01 | 160,000.00 | |
| Delivery | Receiving Inspection | INV 01 | 160,000.00 |
As you can see, the entire invoice amount is absorbed over the net delivered quantity rather than the ordered quantity on the purchase order.
Let's consider few more transactions to fully receive the remaining purchase order quantity.
| Transaction Date | Document | Quantity | Unit Price | Total Amount |
|---|---|---|---|---|
| 2/05/2023 | RC 02 | 1000 | 1000 | 1,000,000.00 |
| 2/05/2023 | Deliver - RC 02 | 1000 | 1000 | 1,000,000.00 |
| 2/07/2023 | INV 02 | 1200 | 1200 | 1,440,000.00 |
After you run the cost processor, these entries are created in Receipt Accounting.
| Transaction Type | Accounting Line Type | Document | Dr. | Cr. |
|---|---|---|---|---|
| Receipt | Receiving Inspection | RC 02 | 1,000,000.00 | |
| Receipt | Accrual | RC 02 | 1,000,000.00 | |
| Invoice Price Adjustment | Receiving Inspection | INV 02 | 240,000.00 | |
| Invoice Price Adjustment | Invoice Price Adjustment | INV 02 | 240,000.00 |
These entries are created in Cost Accounting.
| Transaction Type | Accounting Line Type | Document | Dr. | Cr. |
|---|---|---|---|---|
| Delivery | Inventory Valuation | RC 02 | 1,000,000.00 | |
| Delivery | Receiving Inspection | RC 02 | 1,000,000.00 | |
| Delivery | Inventory Valuation | INV 02 | 240,000.00 | |
| Delivery | Receiving Inspection | INV 02 | 240,000.00 |
On the Review Transaction Costs page, you can track each purchase order price events.