Let us assume that OEC Computers has a legacy system that is closed down. They need to import inventory item quantities and costs as opening balances into SAP Business One, Web client to reflect the legacy system.
You can set up inventory opening balances at these points:
- As initial settings: Before entering any inventory transactions.
- After transactions exist: If opening balances were not set up initially, you can enter them later, even when inventory transactions are already recorded.
The opening balances transaction allows you to enter the in-stock quantity and the unit price for each item, from a single screen.
The item cost is used for calculation of inventory valuation. If the system uses perpetual inventory, the inventory G/L account will be updated when the inventory opening balance document is added.
Considerations for Perpetual Inventory
Here is a simple example of how the valuation method can affect the unit price. In the example, 5 items were purchased at a cost of 100, and another 5 items purchased at a cost of 200.
- With standard cost valuation the item cost is fixed so you can use the cost from the legacy system.
- With moving average, the item cost for an item will be recalculated each time based on the quantity, therefore you need to calculate the average unit cost from the legacy system.
- With FIFO valuation you should enter the item cost multiple times with different quantities in different inventory opening balance documents using the cost price from each layer in the legacy system.
Note that the batch/serial number valuation method is similar to FIFO, in that the unit cost is kept at the level of the batch or individual serial number.