Managing scrap in project

[Former Member]

Hi all,

I have a doubt, just need a clarification.

I have some project stock in my capex project and this material is actually with the vendors, they consume some and scrap some as they use it. Now I can consume this material in project by MB1A / 221 Q.

Now when I scrap some of the materials I can use MB1A / 551 Q or transfer the stock to a scap material by MB1B / 309 Q.

But my client want to sale this scrap material. So which method would be best suited to scrap and sale and finally settle the project to AUC.

Regards,

VIshal.

[virendra_pal · Accepted solution]

once the stock is transferred to inventory only the cost of consumed material is added to the project which is settled to AuC as cost of asset acquisition

the sale of the scrap material should credit the inventory account and has nothing to do with WBS/NWA

[Former Member · Accepted solution]

Hi Virendra,

Agree with you, but are u suggesting that I need to scrap it directly with 551Q and show it as a loss on project and settle it.

[virendra_pal · Accepted solution]

i wouldn't call it loss - i would call it return to store

it depends on how you want to treat scrap

example 1

Material issued to project 5

material used in project 4.8

Return 0.2 back to store (use mvt type to transfer stock from project stock to plant stock)

Cost to project 4.8

Settle to AuC 4.8

example 2

Material ued to project 5

material used in project 4.8

material sold as scrap 0.2

material cost to project 5

revenue from sale of scrap 0.2

Net cost to project 4.8

Settle to AuC 4.8

In example 2 if the revenue was say 0.3, then net cost settled to AuC could be 4.7

[Former Member · Accepted solution]

Hi Again,

I was expecting the answer that you have posted. Thanx a lot, it has confirmed the way I was thinking to plan.

Regards,

Vishal.