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Price difference account

Hi All

1. Whenever we maintain the std cost for a mat (say Rs 100) in its master and if GR/IR is made for that material at higher/ lower price (say Rs 120 in PO), the inventory gets updated by Rs 100 only and the diff of Rs 20 gets posted in price diff GL.

I want to know whether this amount of Rs 20 from price diff a/c needs to be settled to the inventory? Because if i dont do this my inventory valuation will not be correct.

If the diff is not settled then what treatment needs to be given to give correct pic of inventory valuation or whether showing inventory at std price is correct practice?

2. When i run SCE for the mat with std cost, how will the change in price be treated? Will this be also accounted in price diff GL? or any other steps need to be followed.

Request you to pls let me know.

Regards

Rakesh

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