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Vendor Freight Account nature P/L or B/s Account?

Former Member
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We have freight condition types in PO pricing procedure.

Can we assign GL accounts that are PL in nature with cost object as cost centre.

In my previous project, the accounts that we assigned to freight condition types were of balance sheet accounts.

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
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Hi,

Yes you can assign a P&L account for booking freight expense. You have to assign a cost center in OKB9 or KA02 to that G/L account. The entries will be as follows for a PO with one item

GR:

Inventory Account - Dr

GR/IR Material - Cr

Freight Expense - Cr - Cost Center (As per assigned)

MIRO:

Vendor A/C: - Cr

GR/IR Material - Dr

Freight Expense - Dr - Cost Center (As per assigned)

The only advantage that you will get by this is that you can analyse your freight expenses against that cost center.

Regards

Ayyallas

Former Member
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Thanks for your reply.

We transfer finished goods by either rail or road from one plant A to another plant B, will use STO 351.

In plant B packing is done.

Have 2 different condition types for each type of mode of transportation.

do it is adviseable to have PL account with cost object cost centre.

client have 2 legacy account for this

for material procurement in PO we use also freight, that is a BS account.

what is ur advice?

Former Member
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Dear Ajit.

Freight GL SHould be as a Balance Sheet (Liabilities) account not required any cost center or assigning in OKB9.

Entry on MIGO: When Freigh to be included in material cost.

Inventory Dr 100

GR/IR Clearing Account cr  90

Freight Clearing Account cr 10

MIRO: 

GR/IR Clearing Account 90 Dr

Freight Clearing Account 10 Dr

Vendor Account 100

This is the entry.

Note: Vendor is liability and unless miro is not done GR IR/Freight Clearing account are considered as liability.

Regards

Ruksana

PRASANTH_GOP9
Contributor
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Hi Ruksana,

Can you please let me know why  the frieght GL account should be treated as Balance Sheet account?

My client wants to add the freight charges to Inventory account while posting the Goods Receipt.

To achieve this functionality, we can add a GL account in automatic account determination for FR1 key.

I would like to know, what type of GL account we should assign in OBYC for FR1 key? Whether it should be a balance sheet account or P&L account and also the reasons. I would like to know the benefit of adding the freight charges to inventory.

I did some googling and noticed the below statement:

- If the freight is part of an asset’s cost, it is to be considered an extension of the asset’s overall value. That means that, in practice, it is recorded as part of the asset’s value and figured into your calculations as a “laid down cost.”

Can you please give your valuable suggestions on the above.

Former Member
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As soon as your freight gets added to your inventory, it becomes a part of your asset.

The reason the freight clearing should be a balance sheet account is as explained above: the freight vendor will eventually send an invoice for his services. This when captured will be a liability. Now say I check the balance sheet of the company today, and the freight vendor has still not sent his invoice.

I have inflated my asset side by loading the freight there, but what about my liability. We know the freight vendor is going to send his invoice soon. So in this case, the freight clearing is treated as a provisional liability in the balance sheet, till I can actually firm up the liability against the freight vendor during invoice capture.

This is the case with GR/IR clearing as well.

Answers (1)

Answers (1)

ajitkumar
Active Contributor
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yes , the cost object come from the account assignment in PO , i Suppose