Inventory Value Zero

Fisherman

All -

I have a question regarding the Inventory Value Zero field in the Item Card. I see the help entry on it (pretty short and non-descriptive)...

Inventory Value Zero Field
The Item Table


Click this field to enter a check mark if the item on inventory must be excluded from inventory valuation. This is relevant if the item is kept on inventory on someone else's behalf.

This says that it affects inventory valuation - but how far does that actually reach?

For example - we have items that we warehouse for other companies. We don't own them, and we don't want their value on our books, but we need to be able to total the quantity and cost of inventory in our warehouse. The setup that we had previously gone with is causing issues, and I'm wondering if this would be effective.

nunomaia

When you post an item with that check mark, the item will post a zero value in item ledger entry.

It's a simple way of keeping items from other companies in warehouse inventory.

nunomaia

If codeunit 22 Calculating Average Value

    IF Item."Inventory Value Zero" THEN BEGIN
      "Cost per Unit" := 0;
      "Cost per Unit (ACY)" := 0;

Fisherman

so, effectively, if this field is "YES", then the item will have no value in our accounting?

I appreciate the information. I will check out that code unit.

Thanks.

Fisherman

I see that this influences how the Item Journal Lines are created/valued -

Is there any documentation that would show where else this field would be used in codeunits/tables?

ara3n

I ran code coverage.
It is only used at posting time

- Table 27 [Fld/Cntrl/Elem.] Inventory Value Zero
  - * Where Used
    + Where Used Options
    - Codeunit 22 Item Jnl.-Post Line
      + Local Procedure 5800 InitValueEntry(VAR ValueEntry : Record 5802;ItemLedgEntry : Record 32)
      - Local Procedure 5812 InsertOHValueEntry(ValueEntry : Record 5802;OverheadAmount : Decimal ;OverheadAmountACY : Decimal)
          * IF Item."Inventory Value Zero" THEN  ValueEntry."Item Charge No." := '';
      - Local Procedure 5808 InsertVarValueEntry(ValueEntry : Record 5802;VarianceAmount : Decimal ;VarianceAmountACY : Decimal)
          * IF (NOT ValueEntry.Inventoriable) OR Item."Inventory Value Zero" THEN  ValueEntry."Item Charge No." := '';
      - Local Procedure 5807 ValuateAppliedAvgEntry(VAR ValueEntry : Record 5802;Item : Record 27)
          * IF Item."Inventory Value Zero" THEN BEGIN      END ELSE BEGIN        IF "Item Ledger Entry Type" = "Item Ledger Entry Type"::Transfer THEN BEGIN          IF SKUExists AND (InvtSetup."Average Cost Calc. Type" <> InvtSetup."Average Cost Calc. Type"::Item) THEN            "Cost per Unit" := Item."Unit Cost";

maheupp

A comment:
IF you want to use Profit Calculation even though you are using Inventory Zero Value, remember to enter the Unit Cost before you create transactions. The Unit Cost will be fixed, that is it won´t be affected by Positive Adjustments etc.
(This is how it works in Attain. In 2.0 the Unit Cost decreases or will be fixed due to the Costing Method).
Best regards, Maria

Kowa

If "Inventory Value Zero" is checked, you only get the quantity, but not the value of the inventory. "Cost Amount (Actual)" in the item ledger entries and value entries are zero, and subsequently no value is posted to your inventory accounts.

As the profit margin is based on the "Cost Amount (Actual)" field too, if those items are sold, you always get a profit of 100% for these items.

maheupp

It´s true that the Profit margin is 100% for the item and related reports that uses the Value Entries.

Reports such as Sales Statistics and Posted Invoices will show a Profit %and Profit (LCY) based on the Unit Cost. (That is not 100%).

Thanx for beeing partly corrected! :-)

Fisherman

Thanks, all for your replies.

I will definitely be looking into this. Like I said, we need to retain the cost of the item for reporting purposes, but we don't want that cost to reflect on our books.

I think this may be up our alley to meet this requirement.

Our existing strategy involves using a separate Gen. Product Posting Group to place the value in a clearing account. We have problems with this, though, because it requires the users to have accounting knowledge, and because it becomes impossible to combine an owned and nonowned item on a document, so this would be much easier to work with.

Thanks again!

nunomaia

In Navision I have made several tests before posting Item value zero. In sales order and other places, if the item is checked then the unit price must be zero, and other things.

Kowa

Fisherman wrote:

Our existing strategy involves using a separate Gen. Product Posting Group to place the value in a clearing account.

If you don't use "Automatic Cost Posting", you could also leave "Inventory Cost Zero" unchecked.
If you use a separate Inventory Posting Group for these items, you can filter (<>ThisGroup) when posting to G/L. This way no COGS or inventory account will be spoiled with unwanted posts. It is best to set this filter in the report hardcoded , otherwise it may be forgotten.

When running inventory valuation reports you can use this filter to get the value of your stock ( with COGS , Profit etc. ) as well as that of the other companies.