Estimated Landed Cost in local currency (or any other currency)
Description
Environment
Activity
Michael Powacht September 21, 2017 at 2:47 AM
Many thanks Soo Fang,
the landed cost process definitely involves the invoice (vendor) process but I don't think a change to the invoice function is needed and we can use the existing Invoice (vendor)=>Invoice Line=>Landed Cost sub-tab function but we may need to verify this through further testing.
Let me explain by means of an example:
Costing method = Average PO
2 accounting schemas: USD (primary schema), THB (our local currency, secondary schema)
Currency rate EUR/USD 1/1.1, EUR/THB 1/40, USD/THB 1/30
1 PO line with 1 x product A EUR 1000 (foreign currency PO for us). The product order currency is EUR as we purchase the products from a european supplier.
Estimated Landed Cost product A for THB 1000 e.g. import duty (there can be several estimate cost lines such as freight, insurance, import duty etc.). We estimate import duty expenses in THB because these are "local costs" and are also being invoiced in THB.
MR/Matched PO Costing record: 1000*1.1+1000/30 = 1133.33 (USD schema), 1000*40 + 1000 = 41000 (THB schema)
MR/Matched PO posting (USD schema)
DR Inventory 1133.33, CR NIR 1100, CR Landed Cost Clearing 33.33 (inventory includes estimated landed cost portion)MR/Matched PO posting (THB schema)
DR Inventory 41000, CR NIR 40000, CR Landed Cost Clearing 1000 (inventory includes estimated landed cost portion)
Invoice (vendor) Customs Department THB 2000 (under estimated in PO). I distribute import duty expense of THB 2000 assigning the expense to the MR above using Invoice (Vendor)=>Invoice Line=>Landed Cost sub-tab. This should result in the following costing record updates and GL postings:
Update costing record: +33.33 (USD schema), +1000 (THB schema)
DR Inventory 33.33 (unplanned landed cost), DR GL Landed Cost Clearing 33.33 (planned/estimated landed cost), CR AP 66.66 (USD schema)
DR Inventory 1000 (unplanned landed cost), DR GL Landed Cost Clearing 1000(planned/estimated landed cost), CR AP 2000 (THB schema)
I hope this helps explain,
Michael
Soo Fang Lee September 21, 2017 at 1:09 AM
Hi Micheal,
Is this enhancement involve Invoice too ? Please provide test case for the enhancement.
Currently a landed cost estimate in a purchase order can only be made in the PO's pricelist currency. E.g. if I order a product from my supplier in Europe, it's a EUR pricelist and a landed cost estimate in PO=>sub-tab Estimated Landed Cost only provides an amount field but no currency field which can be changed.
However, it is very common that for imported products/POs in foreign currency, the landed costs incur in local currency (not in the POs order currency), including import duty, clearing expenses, import taxes, freight etc.
In order to estimate PO landed costs in local currency (or better, in any currency to be more flexible), a currency field should be made available in PO=>sub-tab Estimated Landed Cost where the currency can be changed to whatever the estimated landed costs are going to incur in (operating in Thailand, I'd be selecting currency THB).
If this currency also happens to be the currency in any of the accounting schemas the organization is a member of (primary or secondary schema), then the specified estimated amount should be posted "as-is" (w/o further conversions) to GL "Landed Cost Clearing" in that respective schema.