Project Material Management: Accrual of the Non-Stock Item’s Cost

The following sections summarize the key information about settings that may affect the result of processing documents with non-stock items in projects, explains how the system accrues item cost, and describes which transactions the system generates to record item cost to project budget.

Cost Accrual Settings of Non-Stock Items

For non-stock items, the way the system posts the expenses also depends on the option specified in the Post Cost to Expenses On box on the Non-Stock Items (IN202000) form. The following options are available:

  • Purchases: No transactions to the Expense Accrual account are generated on release of the inventory receipts, AP bills, and sales invoices. By default, the system inserts this option.

    If a purchase document is related to a particular project, the system specifies the project budget key of the project (that is, the project, project task, account group, and, optionally, cost code) in the transaction line that is posted to the Expense account on release of an AP bill or purchase receipt.

  • Sales: When the non-stock item is included in a purchase receipt (if the item requires a receipt) or an AP bill (if the item does not require a receipt), on release of the document, the Expense Accrual account is debited in the related GL transactions. (That is, the item cost is accrued to the Expense Accrual account.)

For more information, see Project Material Management: Accrual of the Non-Stock Item’s Cost.

Accrual of Cost on Purchases

By default, Purchase is selected in the Post Cost to Expenses On box on the Non-Stock Items (IN202000) form. We strongly recommend that you use this setting for any non-stock items that you are using with projects. When Purchases is selected, the system records the expenses related to the item during the processing of the purchase documents. When you process a project-related purchase document, the project budget is updated on release of either the inventory receipt or the AP bill, depending on the type of the document being processed and the type of the item in the document line as follows:

  • If a stock item is selected in the line of the Normal purchase order on the Purchase Orders (PO301000) form, the purchase receipt and AP bill produce no project transactions. The system records the project expenses to the project budget on release of the inventory issue with this item for project on the Issues (IN302000) form. The following GL transaction records the item’s cost:
    • The PO Accrual account of the item is credited with the non-project code.
    • The Expense account of the item is debited with the project budget key.

    For a complete list of the generated GL transactions and project transactions, see Project Inventory Tracking: Generated Transactions.

  • If a non-stock item requiring receipt is selected in the line of the Normal purchase order on the Purchase Orders form, the project expenses are recorded on release of the inventory receipt for the purchase receipt. The following GL transaction records the item’s cost:
    • The PO Accrual account of the item is credited with the non-project code.
    • The Expense account of the item is debited with the project budget key.

    For a complete list of the generated GL transactions and project transactions, see Project Inventory Tracking: Generated Transactions.

  • If a non-stock item not requiring receipt is selected in the line of the Normal purchase order on the Purchase Orders form or in the line of the subcontract on the Subcontracts (SC301000) form, the project expenses are recorded on release of the AP bill. The following GL transaction records the item’s cost:
    • The AP account of the vendor is credited with the non-project code.
    • The Expense account of the item is debited with the project budget key.

    For a complete list of the generated GL transactions and project transactions, see Project Inventory Tracking: Generated Transactions and Subcontracts: Generated Transactions.

Accrual of Cost on Drop-Ship Purchases

Note:
Regular drop-shipment orders (purchase orders of the Drop-Ship type) are not intended for use with projects.

In the project drop-ship orders, the system captures the material expenses based on the project settings on the Defaults tab of the Projects (PM301000) form as follows:

  • If On Bill Release is selected in the Record Drop-Ship Expenses box on the tab, expenses are recorded to the project cost budget on release of the AP bill. The following GL transactions are generated:
    • The Expense account of the item is debited with the project budget key.
    • The AP account of the vendor is credited with the non-project code.

    For a complete list of the generated transactions, see Purchases to the Project Site: Generated Transactions.

  • If On Receipt Release is selected in the Record Drop-Ship Expenses box on the tab, expenses are recorded to the project cost budget on release of the purchase receipt. The following GL transactions are generated:
    • The Expense account of the item is debited with the project budget key.
    • The PO Accrual account of the item is credited with the non-project code.

    For a complete list of the generated transactions, see Purchases to the Project Site with a Receipt: Generated Transactions.

Accrual of Cost on Sales

The expenses for non-stock items that have Sales selected in the Post Cost to Expenses On box on the Price/Cost tab of the Non-Stock Items (IN202000) form are recorded on release of the sales invoices. On a purchase of these items for a project, expenses are recorded with the non-project code, regardless of the system settings and item settings.

Important:
Be sure that you do not use non-stock items with this setting in projects; expenses related to these items are never recorded to actual project values. This option is used solely in order management to record expenses on release of sales invoices. When a sales invoice that includes the non-stock item is released, the Expense account is debited and the Expense Accrual account is credited in the related GL transactions. Since the project flow does not include sales invoices, the accrued expenses will not be posted with the appropriate project code.