SAP Note 1650812 - Replacement Cost Valuation for Chile Version 12 Validity: 07.01.2015 - active Language English Header Data Released On 14.01.2015 17:55:47 Release Status Released for Customer Component XX-CSC-INMA-MM Materials Management Priority Correction with medium priority Category Legal change Symptom Chilean companies that use Chilean peso as local currency must report their inventory according to IFRS as well as according to Chilean tax regulations ("replacement cost valuation"). Inventory valuation according to IFRS is different from inventory valuation according to Chilean tax regulations. As a consequence companies are required to report inventory according to at least two standards in parallel. The existing solution does not support parallel valuation properly. Other Terms Inflation management Chile, J1ARC, J1AX, J1AZ, J_1ARCVM, J_1AMCIP, J_1AIDX1 Reason and Prerequisites Prerequisites: l Inflation Management is active for the respective company codes l The company codes use fiscal year variant K4 Solution First implement note 1904757, then implement the attached correction instructions. A new transaction J1ARC is provided that determines replacement cost according to Chilean tax law for purchased materials. It is integrated with the general capabilities for parallel accounting based on Material Ledger (CO-PC-ACT), Balance Sheet Valuation (MM-IM-VP), and the New General Ledger. Furthermore a new program J_1ARCVN_LDT is provided for legacy data transfer for the inflation view of the material master. Integration overview: 1. If you use inflation management for Chile for the first time, use program J_1ARCVN_LDT to transfer legacy data for the previous fiscal year. Consult the program documentation that is available after implementing the correction instructions. 2. Use transaction J1ARC to calculate replacement cost for purchased materials according to Chilean tax regulations. The exact algorithm is described in the program documentation that is available after implementing the correction instructions. Besides the replacement price in the inflation view of the material master, J1ARC updates price fields in the Accounting 2 view of the material master as well as valuation alternatives. 3. Calculate replacement prices for finished goods via inventory cost estimates (CO-PC-PCP) or single-/multilevel actual costing (CO-PC-ACT). Results are stored in price fields in the material master or in valuation alternatives. Finished goods are valuated for inflation accounting purposes only based on the direct costs. These include raw materials and direct labor. The raw material portion in the finished goods has to be valuated at the inflation price of the period to be reported. The labor has to be valuated at a special rate that will differ from the rate used for standard cost estimate and actual costing purposes. 4. Assuming that the leading inventory valuation is according to IFRS, material valuation prices (standard price or moving average price) are left unchanged. Perform a parallel inventory valuation with the help of balance sheet valuation (MM-IM-VP) or alternative valuation run (CO-PC-ACT, implement note 1660176 if necessary) in order to post the inventory value according to Chilean tax law to a different GL account and/or to a different ledger in case of New GL. Please have a look at the PDF attachment for more information. Validity Software Component From Rel. To Rel. And Subsequent SAP_APPL 605 605 606 606 616 617 616 617 Correction Instructions Correction Instructions Software Component Valid from Valid to Number SAP_APPL 605 605 1822343 SAP_APPL 606 617 1518954 Support Packages & Patches Support Packages Software Component Release Support Package SAP_APPL 605 SAPKH60513 606 SAPKH60612 616 SAPKH61607 617 SAPKH61704 References This document refers to: SAP Notes 1904757 ABAP Dictionary Objects for Note 1650812 1660176 External inventory valuation for inflation valuation This document is referenced by: SAP Notes (1) 2103749 Legacy Purchasing Data Importing Process Attachments File Name File Size (KB) Mime Type Replacement Cost Valuation for Chile.pdf 240 application/pdf .