1.

Receive the PO with estimated landed cost calculated Receiving Inspection a/c DR Estimated Landed Cost AP Accrual a/c CR @ PO Price inclusive of Non-Recoverable tax Landed Cost Absorption a/c CR @ (Estimated Landed cost PO Price inclusive of Non-Rec These accounting entries can be viewed from Receiving Transaction summary > Transactions > Tools > View Accounting These entries get created in rcv_receiving_sub_ledger 2. Deliver the PO to Inventory destination For Standard Costing organization Material Valuation a/c Purchase Price Variance a/c Receiving Inspection a/c For Average Costing organization Material Valuation a/c Receiving Inspection a/c

DR DR

@ Std Cost @ difference between Std Cost and Estimated Landed Cos CR @ Estimated Landed Cost

DR

@ Estimated Landed Cost CR @ Estimated Landed Cost

These entries can be viewed from Inventory > Material Transactions > Distributions These entries get created in mtl_transaction_accounts 3. Invoice validated and actual landed cost calculated

Once the Actual Landed Cost is calculated, LCM will populate this information in cst_lc_adj_interface with rcv_transaction corresponding to the receipt to which the invoice is matched. Then the adjustment entries would get created as given bel running the Landed Cost Adjustment Processor Landed cost Adjustment Receiving Receiving Inspection a/c Landed Cost Absorption a/c

DR

@ difference between Actual LC and Estimated LC CR @ difference between Actual LC and Estimated LC

Landed cost Adjustment Delivery (Standard Costing) Purchase Price Variance a/c DR @ difference between Actual LC and Estimated LC Receiving Inspection a/c CR @ difference between Actual LC and Estimated LC These accounting entries can be viewed from Receiving Transaction summary > Transactions > Tools > View Accounting These entries get created in rcv_receiving_sub_ledger Landed cost Adjustment Delivery (Average Costing) Landed Cost Absorption a/c DR @ difference between Actual LC and Estimated LC Receiving Inspection a/c CR @ difference between Actual LC and Estimated LC Average Cost Update (Average Costing) - Material Valuation a/c DR @ difference between Actual LC and Estimated LC - Landed Cost Absorption a/c CR @ difference between Actual LC and Estimated LC

If this Average cost update happens for updating the item cost with the difference between Actual and Estimated landed c negative on-hand quantity, then the accounting entries would be as follows: Material Valuation a/c Landed Cost Variance a/c Landed Cost Absorption a/c DR DR

@0 @ difference between Actual LC and Estimated LC (This a/ CR @ difference between Actual LC and Estimated LC

These entries can be viewed from Inventory > Material Transactions > Distributions These entries get created in mtl_transaction_accounts

The link between the Receiving transaction and Average Cost update is done through txn_source_line_id. Rcv_transactio stamped as txn_source_line_id in mtl_material_transactions for the LCM adjustment transaction which has the transact 4. Create accounting for item invoice AP Accrual a/c Tax a/c LCM:Invoice Price Variance a/c LCM:Exchange Rate Variance a/c Liability a/c 5. Create accounting for charge invoice Default Charge a/c Liability a/c DR DR DR DR DR

@ PO Price @ tax rate @ difference between PO Price and Invoice Price (This IPV @ difference between receipt exchange rate and Invoice e CR @ Invoice Price including tax

@ invoice price (This charge a/c is defined in Receiving op CR @ invoice price

6. Perform Return transaction or negative correction after invoice is accounted and actual landed cost is calculated Return to Vendor /Negative Correction AP Accrual a/c Landed Cost Absorption a/c Receiving Inspection a/c

DR DR

@ PO Price + Non-Recoverable Tax (Actual Landed Cost {PO Price+Non-Recoverable Tax}) CR @ Actual Landed Cost

These accounting entries can be viewed from Receiving Transaction summary > Transactions > Tools > View Accounting These entries get created in rcv_receiving_sub_ledger Return to Receiving/Negative Correction (Standard Costing) Receiving Inspection a/c DR @ Actual Landed Cost Material Valuation a/c CR @ Std Cost Purchase Price Variance a/c CR @ difference between Std cost and Actual Landed Cost Return to Receiving/Negative Correction (Average Costing) Receiving Inspection a/c DR @ Actual Landed Cost Material Valuation a/c CR @ Actual Landed Cost These entries can be viewed from Inventory > Material Transactions > Distributions

These entries get created in mtl_transaction_accounts 7. Raise a Debit Note - AP Accrual a/c CR @ PO Price - Tax CR @ tax rate - Liability a/c DR @ Invoice Price including tax - Invoice Price Variance a/c CR @ difference between PO price and Invoice Price Note:

1. Estimated and Actual Landed Cost are always inclusive of PO price and Non-Recoverable tax. 2. Landed Cost Absorption account need not be having zero balance at the end of this procure to pay cycle in LCM enabled 3. Accounting entries for Expense POs and Shopfloor destination POs has no impact as Landed Cost Management is not ap 4. Landed Cost Management has no impact on the Encumbrance Accounting as the PO gets reserved at PO price and it ge 5. Retroactive Pricing is not supported in LCM enabled organization and hence retroactive price update program will not c

ice inclusive of Non-Recoverable tax) (This a/c is defined in Receiving options)

ools > View Accounting

d Estimated Landed Cost

ace with rcv_transaction_id get created as given below on

nd Estimated LC nd Estimated LC

nd Estimated LC and Estimated LC

ools > View Accounting

nd Estimated LC nd Estimated LC

l and Estimated landed cost for an item which has 0 or

nd Estimated LC (This a/c is defined inventory > Set up > Organization > Parameters) nd Estimated LC

e_line_id. Rcv_transaction_id of deliver transaction is n which has the transaction type as Average Cost Update.

nd Invoice Price (This IPV a/c is defined in Receiving options) hange rate and Invoice exchange rate (This ERV a/c is defined in Receiving options)

defined in Receiving options)

cost is calculated

Non-Recoverable Tax})

ools > View Accounting

d Actual Landed Cost

pay cycle in LCM enabled organization. It will be zero only if default charge a/c defined in Receiving options is same as the landed cost abs st Management is not applicable for Purchase Orders with Expense and Shopfloor destination. ved at PO price and it gets reversed at PO price only even though the actual charge account get hit at landed cost. pdate program will not create the retroactive price adjustment entries in Receiving subledger for the receiving transactions created.

ons is same as the landed cost absorption a/c and Actual landed cost is same as the Estimated landed cost.

ceiving transactions created.