Performing Settlement of Work in Process (WIP)

When you settle WIP, the system transfers it to Financial Accounting (FI).

The following actions are performed by the system to settle WIP:

• If the debit of the order item is greater than the credit, the system debits Unfinished Goods Inventory and credits Unfinished Goods Inventory Change.
• If the debit of the order item is less than the credit, the system debits Expense for Reserves for Unrealized Costs and credits Reserves for Unrealized Costs. This expense posting corresponds to a value adjustment for finished products that the system capitalizes in FI.

• Settlement transfers work in process to Financial Accounting for inventory actualization.
• Settlement debits or credits inventory accounts based on work in process balance.
• Work in process accrual does not update the controlling object.