RE:[sap-acct] FOB Destination - Accounting treatment

Posted by SAP_Model (CEO/FOUNDER)
on Jul 26 at 12:02 PM
This is a good question and I will provide the answer. When you post the 'actual goods issue date' during post goods issue you should use the date at FOB destination. Example would be if it takes two days to truck the goods to FOB from the shipping point then you would add two days to the date when the post goods issue is transacted but use an actual post goods issue date plus two days. Like you indicate I have never come across a need to report the in transit inventory as such. It will usually just be inventory. If you use the correct actual post goods issue date the accounting will be fine since the cost of goods sold will be in the correct accounting period. The copy control should such that the actual post goods issue date is copied to the billing document as the invoice date (also the posting date for the invoice). Now, whether you actually issue the invoice at time of goods issue posting or the time of the FOB destination wouldn't really matter for the accounting treatment.

For some reason it is always assumed that the actual post goods issue date is the system date as its defaulted by the system during post goods issue when this date should be in accordance with the terms. Some may say that we don't know what the actual date will be for the FOB destination, but in most cases you can argue that as long as you have a good lead time estimate that will be plenty good enough. If there are some exceptions you can always make an accrual entry for purpose of month-end or otherwise. The POD functionality I would only deem required if you are talking special projects when it's not a FOB destination, but rather a construction project milestone of some kind where we have no way to know the actual goods issue date in advance because it is depending on sign off of software functionality or otherwise (say not tangible goods but rather some intangible stuff).

I know this is a little late but hope it can help anyway.

---------------Original Message---------------
From: Unknown User
Sent: Monday, November 22, 2010 12:22 AM
Subject: FOB Destination - Accounting treatment

Does anyone have a resolution to this problem ? Doing what is suggested above is a mini project. Please share how did you come around not doing the enhancements.
Also here is my view of this :-
FOB Destinaton - when the goods leave the warehouse dock on it's way to the destination (customer or another plant), the law says the title
is still owned by the seller until it reaches the destination. The law also says, seller cannot recognize the cogs and
revenue until that period. STD SAP does not handle this very well. At the same time, however, the law does not say anything about showing
this inventory as in-tranit inventory in the financial books. Client is asking for this in-transit inventory value to be
shown on the financial books. This calls for a major enhancement in SAP. Before we give in and say we will do this enhancement, I wanted to take ur opinion. The question I have for you is as follows:
From an financial audit point of view, is this a mandate to show this in-transit inventory value on the GL ? I wud be surprised if it is, as all the clients I have gone live with so far did not have this requirement. I have produced a report that shows the inventory in transit value in my previous clients and that satisfied the requirement.

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