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Re: Return products and average cost

by
Graeme Gellatly
- 01/09/2015 19:21:01
Hmm,

I probably reported one of those, if I did I was wrong.  Anyway FWIW really I agree with Fabien here having read the accounting docs.  Items leaving stock do not affect average cost. 

If there is a difference between average and supplier price the difference should go to an inventory adjustment account.  The only things that should update average cost are incoming shipments, either suppliers, or customer returns (which must use the average cost at time of original sale or else P&L inconsistency arise)

So in Fabiens example (only point 4) the entry should be
Inventory CR 15
Accounts Payable/Stock Contra (depending on Anglosaxon, but ultimately Accounts Payable)  DR 20
Inventory adjustment CR 5 (P&L probably a sub COGS)

Note that the inventory adjustment is effectively revaluing all the prior sales at an aggregate level on the P&L, your accounting and stock are all correct. 
Total Expenses is 10 (15-5), Stock is zero (10+20-15-15), Accounts Payable is 10(10+20-20)

ALso not that say you returned the first piece it all works as well
Inventory CR 15
Accounts Payable/Stock Contra (depending on Anglosaxon, but ultimately Accounts Payable)  DR 10
Inventory adjustment DR 5 (P&L probably a sub COGS)
Total Expenses is 20 (15+5), Stock is zero (10+20-15-15), Accounts Payable is 20(10+20-10)

On Sat, Jan 10, 2015 at 5:33 AM, Fabien Pinckaers <fp@openerp.com> wrote:

In my opinion, only the first scenario is correct. It's the definition of average price in every accounting books (product leaving the stock do not impact the average price) and I never saw a legal exception to this definition.

More over, if we accept the second scenario, this would lead to serious inconsistencies. Here is a scenario:

- product configured in average price and real time
- buy 1 piece at 10€ (average price = 10€) - buy 1 piece at 20€ (average price = 15€)
- deliver first piece to your customer (avg price = 15€)
- return the last purchase to the supplier (avg price = -5€, inventory valuation is negative) --> serious inconsistency!

Please do not implement the suggested change (second scenario) unless someone has a legal document explaining we should do it that away and not the other way.

Our position is NOT that both are acceptable, only the first one is. (The one currently implemented in Odoo)

Thanks,

On Jan 9, 2015 8:03 AM, "Martin Trigaux" <mat@odoo.com> wrote:
Hello,

We would like to statue on an (old) bug and would appreciate advices
from people with experience in stock accounting.

The bug lp:610738[1] "return products to supplier does not update price
average" concerns the following scenario:
- product configured in average price and real time
- buy 1 piece at 10€ (average price = 10€)
- buy 1 piece at 20€ (average price = 15€)
- return the last purchase to the supplier

Current situation:
- the average price is unchanged
- the stock input account and stock valuation is decreased of 15€

Suggested change:
- the average price is changed to 10€
- the stock input account and stock valuation is decreased of 20€

Should the return be made at the purchased price or at the current
average price.

Our position has been that both behaviour are acceptable and dependant
of the management of the company.
One of the last comment[2] suggested that it is indeed the case (with
preference for the suggestion behaviour) while most of the previous
suggested the current behaviour is incorrect.

Some time has passed, modules have evolved but the bug is still opened.
To close this debate once and for all, what is the opinion of experts on
this?
Accounting references would of course be of great help here.

Thank you in advance,

Martin

[1] https://bugs.launchpad.net/bugs/610738
[2] https://bugs.launchpad.net/openobject-addons/+bug/610738/comments/48

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