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Landed Cost

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Contents

Introduction

Landed Cost window allows to allocate additional costs such as freight, insurance or duties to goods receipt(s) therefore the cost of the products included in the receipt(s) is adjusted as applicable.

All those cost are needed to place the product in the organization's warehouse.

Every time that a landed cost is booked for a product receipt valued at "Average" cost, a landed cost adjustment is created.

Landed costs distributed and allocated to products valued at "Average" cost implies a change in the inventory value of the product. In other words, the calculated cost ("Total Cost") of the product receipt will need to be adjusted same as the "Average" cost of the product.

Note, that the "Unit Cost" of the receipt transaction will not change as this type of adjustments is not a unit cost adjustment type but an "extra" cost.

All of the above will have an accounting impact therefore product inventory value can be the same as product accounting value.

On the other hand, if a landed cost is booked for a product receipt valued at "Standard" cost, no cost adjustment will be created but a "Variance" between the "standard" cost defined for the product and its "actual" cost. This variance which will need to be posted to a "Landed Cost Variance" account, so it can be later on analysed.

Landed cost window allows both:

Landed cost window also allows to post landed costs once processed.

"Estimated" Landed Cost scenario:


"Actual" Landed Cost scenario:

In Summary, landed cost feature follows below detailed steps:

Header

A Landed Cost document can be created, processed and post in this window.

Some fields to note are:

LandedCostDocument Header.png

Cost

A Landed Cost Document can have as many cost (lines) as landed cost types to allocate to the Goods Receipt(s) selected.

LandedCost CostTab.png

Some fields to note are:

Once a receipt(s) have been selected in Receipt tab, landed cost document (header) can be processed by using the process button "Process".
This action creates a landed cost adjustment linked to the landed cost document.
This cost adjustment has as many adjustment lines as products included in the goods receipt(s) selected, therefore the cost of those products is adjusted as applicable.

Once processed a landed cost document can be:

Landed Cost posting creates the following accounting entries in case of a "Product" landed cost type:

Account Debit Credit
Product Asset "Estimated" Landed Cost Amount.
(*)This ledger entry gets goods receipt "accounting dimensions" such as "Vendor" or "Product". See "Detail" link.
Product Expense "Estimated" Landed Cost Amount

Landed Cost posting creates the following accounting entries in case of an "Account" landed cost type:

Account Debit Credit
Product Asset "Estimated" Landed Cost Amount.
(*)This ledger entry gets goods receipt "accounting dimensions" such as "Vendor" or "Product". See "Detail" link.
G/L Item "Estimated" Landed Cost Amount


Process Matching

Matching between an "estimated" landed cost and an "invoiced" landed cost can be processed in:

1. the GOODS RECEIPT window before processing and by using the process button "Complete"

This scenario takes place whenever all landed cost related information below is available and entered in the Landed Cost tab of the Goods Receipt :

This scenario automatically creates:

2. the Landed Cost PURCHASE INVOICE window, by using the process button Match LC Cost which can be found in each landed cost purchase invoice line. After that "Process Matching" check-box is selected.

This scenario takes place whenever:

This scenario automatically creates:

3. the LANDED COST window, by using the process button "Process Matching"

This scenario takes place whenever the matching has been executed in the landed cost purchase invoice, see scenario 2 above, but the check-box "Process Matching" was not selected there.

This scenario automatically creates:

4. the LANDED COST window, by using the process button "Process".

This scenario takes place whenever all landed cost related information is entered in the landed cost window.:

This scenario automatically creates:

Post Matching

A landed cost matching can be posted, after being processed. This posting will have different ledger entries depending on the scenarios listed below:

1. "estimated" landed cost equal to "invoiced" landed cost

Account Debit Credit
Product Expense "Estimated"="Invoiced" Landed Cost Amount
Product Expense "Estimated"="Invoiced" Landed Cost Amount
(*)This ledger entry gets landed cost invoice "accounting dimensions" such as "Business Partner". See "Detail" link.
Account Debit Credit
G/L Item "Estimated"="Invoiced" Landed Cost Amount
G/L Item "Estimated"="Invoiced" Landed Cost Amount
(*)This ledger entry gets landed cost invoice "accounting dimensions" such as "Business Partner". See "Detail" link.

The purpose of above ledger entries is to get that landed cost expense accounting gets invoice landed cost "accounting dimensions".


2. "estimated" landed cost not equal to "invoiced" landed cost & "Is matching adjusted" = No.
This last setup ("Is matching adjusted" = No) leads to NOT creating a landed cost adjustment which takes the difference to the product cost (product accounting), therefore that difference remains either in the credit side (estimated>invoiced) or in the debit side (estimated<invoiced) of the product expense account.


Account Debit Credit
Product Expense "Invoiced" Landed Cost Amount
Product Expense "Invoiced" Landed Cost Amount
(*)This ledger entry gets landed cost invoice "accounting dimensions" such as "Business Partner". See "Detail" link.
Account Debit Credit
G/L Item "Invoiced" Landed Cost Amount
G/L Item "Invoiced" Landed Cost Amount
(*)This ledger entry gets landed cost invoice "accounting dimensions" such as "Business Partner". See "Detail" link.


3. "estimated" landed cost higher than "invoiced" landed cost. "Is matching adjusted" = Yes
This last setup ("Is matching adjusted" = Yes) leads to creating a landed cost adjustment which takes the difference to the product cost (credit side of product accounting).

Account Debit Credit
Product Expense "Estimated" Landed Cost Amount
Product Expense "Invoiced" Landed Cost Amount
(*)This ledger entry gets landed cost invoice "accounting dimensions" such as "Business Partner". See "Detail" link.
Product Asset Difference (estimated>invoiced) Landed Cost Amount
Account Debit Credit
G/L Item "Estimated" Landed Cost Amount
G/L Item "Invoiced" Landed Cost Amount
(*)This ledger entry gets landed cost invoice "accounting dimensions" such as "Business Partner". See "Detail" link.
Product Asset Difference (estimated>invoiced) Landed Cost Amount

4. "estimated" landed cost smaller than "invoiced" landed cost. "Is matching adjusted" = Yes
This last setup ("Is matching adjusted" = Yes) leads to creating a landed cost adjustment which takes the difference to the product cost (debit side of product accounting).

Account Debit Credit
Product Asset Difference (estimated<invoiced) Landed Cost Amount
Product Expense Difference (estimated<invoiced) Landed Cost Amount
Product Expense "Invoiced" Landed Cost Amount
(*)This ledger entry gets landed cost invoice "accounting dimensions" such as "Business Partner". See "Detail" link.
Account Debit Credit
Product Asset Difference (estimated<invoiced) Landed Cost Amount
G/L Item Difference (estimated<invoiced) Landed Cost Amount
G/L Item "Invoiced" Landed Cost Amount
(*)This ledger entry gets landed cost invoice "accounting dimensions" such as "Business Partner". See "Detail" link.


Cancel Matching

A landed cost matched can be cancel by using header process button "Cancel Matching". Before that landed cost matching needs to be "Unpost".

Cancel matching action implies that:

Matched Amount

Matched Amount tab is a red only tab that allows to review the purchase invoice lines matched against landed cost lines.

MatchedAmount2.png

Accounting Cost

This tab provides Landed Cost document accounting information.

As any others accounting tabs, this tabs shows the ledger journal entries of landed cost posting.

LandedCost AccountingHeader.png

Receipt

Receipt tab allows to select either the receipt(s) or receipt line(s) to which landed cost types booked are going to be allocated.

Once Landed Cost header has been properly filled in and saved a receipt(s) line can be registered in this tab.

Landed cost amounts entered in the "Cost" tab can then be allocated/distributed among the receipt(s) entered here.

Some relevant fields to note are:

Note that either a good receipt or a good receipt line needs to be selected in a record.

LandedCostReceipt.png

Receipt Line Amount

Receipt Line Amount is a read only tab that shows detailed information about the landed cost type line allocated to each receipt line, as well as the landed cost amount distributed to each receipt line.

It is important to remark that the "Amount" distributed is calculated by taking into account "Costing" precision defined for the Currency.

ReceiptLineAmountLandedCost.png

Accounting

This tab provides Landed Cost Matching accounting information.

LandedCost AccountingAccounting.png



Full list of Landed Cost window fields and their descriptions is available in the Landed Cost Screen Reference.

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