Tax inventory valuation

When you trade or produce excise (tax) goods, you probably have a bonded location and a tax paid location. When these goods are stored in a tax paid location, and the tax is not included in the inventory value yet, you still want to able to include the tax amount in the inventory value of the goods. Examples of scenario’s where inventory valuation including tax can be applicable:

• Purchase receipts from bonded vendors to tax paid locations

  • Tax was not included in the purchase cost of the goods.
  • You pay the tax to the authorities.
  • The tax you paid is part of the inventory value.

• Transfers from bonded locations to tax paid locations.

  • The tax is not included in the inventory value of the goods in the bonded location.
  • You pay the tax to the authorities.
  • The tax you paid is part of the inventory value in the tax paid location.

• Sales shipments from tax paid locations to tax paid customers.

  • The tax is included in the inventory value of the sold goods.
  • There is no tax inventory value for the sold goods anymore.

• Positive adjustments in tax paid locations.

  • You pay the tax to the authorities.
  • The tax you paid is part of the inventory value in the tax paid location.
    

• Negative adjustments in tax paid locations.

  • The tax is included in the inventory value of the goods.
    
  • There is no tax inventory value for the goods anymore.

Set up Inventory Valuation on Tax

As the example scenario’s already explain, it depends to specific product movements whether you want the system to post tax amounts as part of the inventory value for a product. In Drink-IT Tax Management, the characteristics of all possible movements are managed in the Tax Rules.

1. Select the Search icon , enter Tax Management Setup, and then choose the related link.
2. On the Tax Management Setup page, verify that the Tax Posting to G/L field is selected. Without enabling this field, general ledger entries will not be created for tax amounts.
3. Select the Search icon , enter Tax Rules, and then choose the related link.
4. Select the Inventoriable field in the rules you want to register tax inventory value for. When Tax Amounts Due are posted to the general ledger, Drink-IT Tax Management will post:
   • Tax Recover Account (Debit)
   • @ Tax Due Account (Credit)

But for the posting of Tax Inventory Value, there is not tax due, you want to post to an inventory account in the general ledger (see the example scenario’s). So, when an inventoriable tax amount is posted to general ledger, it will use a Tax Inventory Account: * Tax Inventory Account (Debit) * @ Tax Recover Account (Credit)

The Tax Inventory Value report

Since the posting of tax amounts to inventory accounts is done in parallel with the inventory values for the products itself, the values are available in a specific Tax Inventory Valuation Report. This report is a copy of the standard Inventory Valuation Report, but extended with Tax Amount Totals per Item and Inventory Posting Group:

1. Select the Search icon , enter Inventory Valuation Incl. Tax, and then choose the related link.
2. On the Inventory Valuation Incl. Tax request page, select the Include Tax Inventory value field.
3. Fill in other fields as necessary. Hover over a field to read a short description.

Tax Inventory Value in the Subledger

The Tax Ledger Entries are the subledger for Aptean Beverage Tax Management postings. The entries explain the data for posted Tax Inventory Amounts in these fields:

• Inventoriable. When this field is checked, the tax amount is considered to be part of the inventory value of the item.
• Tax Inventory Amount. Specifies the impact of the entry on the inventory value of the item.
• Posted to G/L Specifies whether the tax entry has been posted to G/L.