sales order for scrapping

[Former Member]

Hi friends,

We had some old materials recycled . Our gain from recycling is far under material's standard cost. For the recycling gain, we are going to bring in it with sales order. However, the margin will be too low and will make the gross sales revenue inaccurate.

My question is

1. What is the process like to handle this scrapping scenario with sales order.

2. should we handle this scenario with new order type

3. Will the GL against this type of sales be changed from sales revenue to something else?

Your advices will be deeply appreciated.

Thanks,

Linda

[Former Member]

closed

[Lakshmipathi]

It is always better to have a separate document types (sale order and billing types) for scrap sales. As like normal sales, for scrap sales, your FI people should create a new G/L account in FS00 which should then be assigned in VKOA. Last but not least, for scrap sales, your pricing procedure should have a condition type for TCS.

thanks

G. Lakshmipathi

[Former Member]

Hi Linda

If I understand correctly, you sold some old materials to a recycler at a reduced price.

On the basis of what you have told us, this should be treated as any other sale. The fact that the sales price is less than the material's standard cost is irrelevant. Technically, your accountants should have written down the value of the stock when it was realised that the stock had declined in value. If they have not done so, then you should be taking the financial hit when you sell the stock.

I do not understand why you say that this transaction will make the gross sales value inaccurate. Product is being sold. The average margin will be brought down by this transaction, but that is what is happening.

For the sake of simplicity I would not create any new config just to support this one transaction. If the accountants in your organisation feel that this transaction should not be accounted for as a normal sale then they should make FI adjustments to reflect this.

Regards

James