To define LIFO inventory valuation parameters:Before running the LIFO Inventory Valuation Report, you need to run the LIFO Updating program. This program serves two purposes:
These settings should not change after your company begins using LIFO.
The Product LIFO file stores product cost information for a base year, current year, and last year as determined by the As of Date set for LIFO Inventory Valuation. This information is used to create the LIFO Inventory Valuation Report.
The LIFO Updating program selects all products except kits and those with a status of MiscChrg or Comment. It then posts As of Date quantities and costs to the Product LIFO file. New products are added to the file whenever LIFO is updated.
The file stores the last year's As of Date, this year's As of Date, and a Base Year Date. The updating program uses these dates to determine when to roll the current year information into the last year to make room for the new current year information. You can run the update as often as needed.
To define LIFO inventory valuation parameters:
From the Reprts > End of Month Reports #2 menu, select LIFO Updating to display the Br/Terr selection list.
Select a branch or territory from the list and press Enter to display a second Br/Terr selection list.
Select a branch or territory from the list and press Enter to display the branch in the Br/Tr/All field on the LIFO Updating screen.
In the As of Date field, enter the date as of which to value the inventory. The system populates the field with the most recent LIFO update date. This field supports variable dates.
In the Cost Basis #1 and Cost Basis #2 fields, enter the global basis costs to use to value your inventory. The order of the basis codes is irrelevant.
The LIFO Inventory Valuation program tracks two costs: typically COGS-COST and LASTCOST. The program tracks these costs for the Base Year, Last Year, and This Year.
Note: Avg Cost, Last Cost, Landed Avg, and Landed Cost are system-calculated costs. They are not date-sensitive and should not be selected. If you run the Capture Avg Cost program to capture the year-end value for each of these costs, you can select Frozen Avg Cost, Frozen Last Cost, Frozen Landed Avg, or Frozen Landed Cost as a LIFO cost basis from the F10 selection list.
In the Default Basis field, enter the cost basis from either the Cost Basis #1 or Cost Basis #2 field for the LIFO Report and LIFO Maintenance screen to use as the default value.
In the Report Method field, enter one of following accounting methods to use for LIFO reporting:
BASE-YEAR – Compares current year pricing with pricing for a designated beginning year.
LINK-CHAIN – Compares current year pricing with previous year pricing.
If LIFO reporting is used for tax purposes, once you select a method and exit this screen, do not change it.
In the Cost Branch field, if one branch purchases product for all branches, specify the branch whose costs determine the costs for all other branches. Unless pricing policy changes, do not change the entry in this field.
Continue with the steps in the following procedure to update the Product LIFO file.
To update the Product LIFO file with product cost information:
From the Reprts > End of Month Reports #2 menu, select LIFO Updating to display the Br/Terr selection list.
Select a branch or territory from the list and press Enter to display a second Br/Terr selection list. We recommend that you select ALL, because you should post LIFO for all branches at the same time.
Select a branch or territory from the list and press Enter to display the LIFO Updating screen.
This screen displays the LIFO inventory valuation parameters. Once set, they should not be changed.
Verify that the date in the As of Date field is correct. This date is typically the fiscal year end. The system uses this date to update the cost and on-hand quantity of the products included in the LIFO Valuation Report. Changing the year typically causes the current year's data to roll into the previous year's data if you are using date-sensitive costs.
Note: Run the Capture Avg Cost program before entering any transactions following the LIFO As of Date. This program cannot be scheduled.
To use a date other than the As of Date for the calculation of product costs for the LIFO Valuation Report, enter the date in the Cost As of Date field. This is an override date for costing only and has no effect on the calculation of on-hand quantities.
The system populates the Last Posted On field with the date when the LIFO Update Program was last run. This field is view-only.
Use the Update hot key to run the update and post the information to the LIFO file. Alternatively, you can use the Schedule hot key to schedule the update to run later.
Note: The amount of time required to update the LIFO file depends on how many products exist in the product file.
See Also:
LIFO Inventory Valuation Overview