The Inventory Margin calculation determines the margin amount on inventory transfers between buyer and seller entities within a group. The system calculates the inventory margin based on the margin percentage (by seller entity) and the remaining inventory amount (by buyer entity). This inventory margin can then be used to eliminate unrealized gain/loss due to the transfer of inventory.
The elimination follows the normal consolidation rules using the margin amount as the source. You can then use the margin amount to post inventory margin elimination using standard consolidation rules. You can use the Inventory margin amount as the source to post unrealized gain/loss on inventory elimination using standard consolidation rules (debit Cost of Goods Sold and credit Inventory).
Access the form
To access the form:
- Select the Maintain module.
- Select Inventory Margin from the Consolidation card.
Use the toolbar in the upper right to create, delete, import, export, refresh, or save Inventory Margin calculations.
To add a new Inventory Margin calculation, select Create on the toolbar. The columns for the form include:
| Column | Description |
| Margin Percentage Account (Source) and Margin Percentage Movement (Source) | Select the source account and movement used by the seller entity with the buyer's intercompany to capture the margin percentage charged while transferring inventory. |
| Inventory Account (Source) and Inventory Movement (Source) | Select the source account and movement used by the buyer entity with the seller's intercompany to capture the remaining inventory in the buyer's books. |
| Margin Account (Target) and Margin Movement (Target) | Select the target Margin account and movement to store the margin amount based on margin percentage and inventory for each buyer & seller combination. |
| Force Closing (Target) | Set to TRUE if the Margin Movement is other than closing to additionally post to the closing balance. Otherwise, set to FALSE. |
| Post To (Target) | Define whether the margin amount posts to the Buyer or Seller entity. The margin amount is either posted on the buyer's books with the seller's intercompany or on the seller's books with the buyer's intercompany. |
Execute the calculation as part of the Run All process or as part of the Run Inventory Margin process found in Global > Consolidation > Processes > Calculations > Run Inventory Margin in the Explorer module.
