What about the 'Revaluation for moving average' option in D365FO (or AX)?

In the previous months I have shared two articles about the 'Adjustment' options in the 'Closing and adjustment' form of the Inventory Management module. These options makes it possible to correct inventory on-hand values of inventory transaction values when things are not posted correctly. In these articles I explained the 'On-hand' and 'Transactions' options in D365FO (or AX).

To make the list of adjustment options complete, in this article I explain the third option in the list, which is called the 'Revaluation for moving average'. This is a specific adjustment option for items related to the inventory model Moving average.

First I describe the common behavior and show this based on an example, later in the article I describe the effect when using dimensions like serial numbers on financial inventory level.

Revaluation for moving average

For a common specification about moving average, you can read an article I shared earlier about the calculation of all the inventory models. The purpose of the functionality 'Revaluation for moving average' is to be able to revaluate the on-hand value of items related to items that have the moving average calculation. When needed you can correct the on-hand value and average cost price of these items to get right values in case they are not sufficient.

To show you how this option works I have created a new article with inventory model 'moving average'. I have purchased this article twice where I posted both the receival and the vendor invoice:

• A purchasing quantity of 10 for USD 5,- each.
• A purchasing quantity of 15 for USD 7,50 each.

Also I have sold one item where the cost of gods sold was taken for the moving average cost price of USD 6,50 (the total sum of both purchases divided by the total purchased quantity: USD 50 + USD 112,50 / 25):

For this item the (moving average) cost price of the on-hand inventory is also USD 6,50:

Let's assume that for whatever reason this cost price value of USD 6,50 each is not correct and should be USD 5,- each. To make sure that this USD 5,- will be the new on-hand item value, I can go to the Inventory Management module and open the Periodic Task option 'Closing and adjustment'. In this form I can go to the Adjustment options and select 'Revaluation for moving average':

When opening this functionality, you will get an empty form without on-hand inventory values. To get them, you can click on the 'Select' button at the top of the form:

In the pop-up that opens you can select the dimensions to use for the revaluation. It is important to select the right values here, because you will only get lines when you select the level of dimensions where also your item values are values posted on. So if you don't select any dimension:

You will not get any lines to revaluate if you use them on the items:

That doesn't mean that in this legal entity no moving average on-hand values are available, but that the needed specified level of inventory is not selected to present them. Therefor to get the on-hand value of the created item for this article I select the dimension 'Site':

This results in one on-hand line where the remaining available on-hand inventory of 24 pieces is presented with a total (Posted) value of USD 156, having a Unit cost of USD 6,50:

Based on this line adjustment to the on-hand values can be created. The needed values can be entered in the column 'Edit now' or 'Unit cost' or you can use one of the Adjustment options for getting the right values:

If you want more information about all these adjustment options you can read my earlier shared article about the 'on-hand' adjustments where the same list is used. To explain the revaluation for moving average I have entered a Unit cost of USD 5,- which automatically results in an 'Edit now' value of USD - 36,-:

To make this change definitive it is needed to click on 'Post'. When finished in the Closing and adjustment form a new line will be visible for the processed Revaluation for moving average:

The revaluation for moving average will be posted as of today's date.

Besides the change for the item value on inventory sub ledger level also the general ledger is updated with a voucher where the posting type 'Cost revaluation for moving average' is used and for the offset account the inventory value account:

The main account for the specific posting type 'Cost revaluation for moving average' comes from the Inventory posting profile where this posting type is specifically mentioned:

Based on this revaluation for moving average posting the on-hand value of my item is changed into USD 120,- for a quantity of 24, with a cost price of USD 5,- each:

In the item transactions the 'Cost amount' of the purchased items is changed based on the revaluation and the effect of already posted cost of goods sold values. Because the revaluation of moving average will not adjust issued financial transactions because of the moving average principle, the posted cost amount of USD 6,50 will stay on the Sales order transaction. The purchasing transactions are changed in a way that the total value of Received and Issued transactions has a sum of USD 120,- (the outcome of the revaluation):

This means that on each purchasing transaction proportionally a part of the revaluation is posted as an added Adjustment value:

Using moving average and a dimension with setting 'Financial inventory'

What happens if you have an item with inventory model 'moving average' and using a dimension where the setting 'Financial inventory' is enabled? Just like the used 'Site' at the previous article, it can be that you use additional dimensions as well. For example 'Serial number':

To show you I have created a new item where I have added this tracking dimension group 'Serial number' with values 'A' and 'B'. For this item I have created the same transaction as the item used before for each serial number:

If I open the revaluation for moving average form again and select items without enabling the serial number:

I only get the earlier used item from this LinkedIn article but not the new created item with serial numbers. This is because I haven't selected the serial number and because my new item is based on serial numbers it will not be presented if I don't select this level:

Therefore I have to select the 'Serial number' as well by creating the lines:

Now the two lines for the item will be presented with the values for both serial number 'A' and 'B':

Now it is possible to edit the on-hand value for each serial number: