Using the Adjust Costs inventory Utility Warning!

Adjust Costs.

It looks like a simple enough tool and it does exactly what you tell it to do. However, read on, what it does may not be exactly what you want it to do. Here's what it does. Say you have a purchase receipt that went through the system at $1465. Several of the items were sold but now the inventory is obsolete and the powers that be task you to write it off. They still want the items in inventory in case they can sell them later, but the carrying value should be zero. No Prob! you say. You open up the adjust cost screen and take each of the receipts that have not been completely sod and adjust the cost to zero. A bunch of reports print, you check that your stock status shows zero and you think you are done.

Not so fast. When you make a cost adjustment to a receipt in the Adjust Cost window you are telling the system that the entire receipt had a bad cost, not just the items left over. Dynamics GP will go back and attempt to adjust the cost on the posted sales from this receipt to the new cost (in our case $0). You may not want that. If all you are trying to do is write the current inventory down to zero cost, make Inventory Transaction Entries. First, a negative entry which will pull the correct cost. This will give you your 'write off' journal entry. Next do an increase adjustment at $0.00 cost. Now you have written off exactly the inventory you want and the carrying value is zero.

You can go home fulfilled from a good writeoff :)

UPDATE! I read a post on the GP Forum the other day that was posted by fellow MVP Mahmoud M. AlSaadi  where he provided an excellent explanation of how the Adjust Cost Utility worked. I've modified the post only slightly, but this is what it told us.
The Inventory Adjust Cost Utility primarily does the following;
· Update the (UNITCOST) field  in IV10200 | Inventory Purchase Receipts Work. (The old Unit Cost will be reserved under ADJUNITCOST field ) 
· Since the purchase receipt within the IV10200 is linked to the Inventory Purchase Receipts Detail, these cost layers will be updated accordingly.
· A new Cost Adjustment Record is written to the HITB | Historical Inventory Trial Balance either to decrease or increase the cost.
· A Corresponding Journal Entry to adjust the Purchase Receipt Cost in General Ledger is created. That Journal Entry is linked to the cost adjustment record in the HITB
· No changes at all to the IV30300 | Transaction Amounts History
In summary, if you have received and invoiced the items, but the cost is not correct and needs to be adjusted, the best way is to correct this is to use the "Adjust Cost Utility". If the cost had been corrected through the Enter/Match invoice transaction, then the cost adjustment record and all of the corrections mentioned above would have been applied. However, if the invoice cost was not corrected at the time of invoicing, the Adjust Cost Utility is your answer for fixing it.

Until Next Post

Leslie