Valuation Control

In Repair Orders, valuation control ensures that customer returns are handled without distorting inventory values and that the true repair cost is captured and aligned across financial and operational ledgers.

Key Principles

The key principles of valuation control are described in the following sections.

Zero Inventory Value on Return

Returned items must not inflate inventory valuation or reverse prior cost flows. To enforce this:

  • A specific Repair Return Reason Code is configured in the Configure to Order Setup page.
  • When selected in the Sales Return Order, the returned item is posted with:
    • Inventory Value = 0
    • No reversal of original sale or cost recognition

This mechanism cleanly separates the returned item from standard inventory and prepares it for repair processing.

Temporary Valuation in Service

Once a repair item (e.g., MCH-1000_REP) is created and added to the Service Line:

  • Its Direct Unit Cost is copied from the original item.
  • This temporary cost is stored in both the:
    • Service Line
    • Service Ledger Entry when the invoice is posted

At this stage, the actual production effort has not yet been considered.

Production-Based Cost Accumulation

The actual repair work – performed via Construction Order and Production Order – generates:

  • Material, resource, and time consumption
  • These are posted to the Value Entries of the new repair item

This forms the basis for correct financial evaluation of the repair but remains independent of the Service Ledger initially.

Cost Synchronization with Service Ledger

After production is complete:

  • The Adjust Cost - Item Entries batch job must be run.
  • If a matching Value Entry is found for the service transaction, the Service Ledger Entry is updated with the correct cost.

This aligns:

  • General Ledger
  • Value Entries
  • Service Ledger Entry

Why This Matters

Important

The Service Ledger does not automatically inherit production costs. Synchronization requires post-processing to ensure financial accuracy.

By separating return handling, production costing, and service invoicing, the system maintains full transparency and auditability – especially relevant for warranty repairs and customer-specific refurbishments.


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