Link an Inventory Control adjustment transaction

You can link Inventory Control adjustment transactions directly to specific source transactions to ensure the adjustment details for the items are tied back to the cost layers for the source transactions. For example, after you paid for a purchase, you might need to adjust the quantity, value, or both for items in the vendor invoice.

About linked Inventory Control adjustment transactions

Linking an adjustment enables you to ensure that the existing cost layer for a specific source transaction is updated with the amounts from the adjustment. You can link to purchasing transactions or inventory control transactions that aren't transfer outs or adjustments linked to other transactions. Multiple inventory adjustments can be linked to the same source transaction.

With linking, you get:

• More accurate costing results for FIFO and LIFO items—in fact, you must link value-only inventory adjustments for FIFO and LIFO
• A better audit trail for all cost methods—from the History tab of the source transaction, such as a vendor invoice for a purchase, you can see and drill down into the adjustments made to the items in the transaction

If you do not link an adjustment, we automatically select the cost layer of a source transaction to update or create a new cost layer. See costing logic for more details.

When you link an adjustment to a source transaction, the line items in the Entries table are populated with inventory items from the line items in the selected source transaction. The Quantity field defaults to 1 and the Cost field defaults to 0. Depending on the inventory effect of the inventory adjustment (Quantity & Value, Value,or Quantity), you can change the quantity and/or value for each line item, as needed.

Create a linked Inventory Control adjustment

Linked inventory transactions must be created as stand-alone transactions and cannot be converted from other transactions.

To create a linked adjustment transaction:

1. Consider the purpose of the inventory adjustment, the source transaction you want to adjust, and the items you want to adjust in the source transaction.
2. Go to Inventory Control > All > Transactions and select Add (circle) next to the applicable adjustment transaction.
3. Use the Link to existing transaction to adjust dropdown menu to select the source transaction to adjust. Only purchasing and inventory control transactions with a Value-only or Quantity & Value inventory effect are listed.

   The Date defaults to the date of the selected transaction. The line items in the Entries table are populated with inventory items from the line items in the selected transaction. The Quantity field defaults to 1 and the Cost field defaults to 0.

4. Make changes as needed to the Quantity and/or Cost fields for the applicable line items using positive values. For example, say you need to write down the value of an obsolete item. Enter the reduction in value in the Cost field. The system automatically calculates the Extended cost.
5. When you finish entering the adjustment information, select Post.
6. Run inventory valuation maintenance to re-sequence transactions in transaction-date order. The costs need to be updated so subsequent COGS journal entries are accurate. Ask your system administrator for assistance. Ideally, your organization has scheduled inventory maintenance to run on a regular basis so you do not have to run maintenance manually.

Costing logic - linked versus unlinked

Here's a summary of the costing logic Sage Intacct uses for inventory adjustments. In general, whether you link an inventory adjustment or not for Average and Standard cost items, the results are the same; however, you get a better audit trail when you link.

Cost method	Inventory effect		Unlinked	Linked
FIFO/LIFO	Quantity & Value	Increase	Creates a new cost layer.	Updates the linked cost layer with adjustment details.
		Decrease	Automatically selects the source cost layer to update.
	Value	Increase	Issues an error. You must link the inventory adjustment.	Updates the linked cost layer with value adjustment.
		Decrease
	Quantity	Increase	Creates a new cost layer with zero value.	Updates the linked cost layer with quantity adjustment. No effect on total valuation.
		Decrease	Automatically selects the source cost layer to update.
Average	Quantity & Value	Increase	Creates a new cost layer.	Updates the linked cost layer with adjustment details.
		Decrease	Automatically selects the source cost layer to update.
	Value	Increase	Updates total valuation and leaves quantity as is. Average unit cost changes. (Total valuation / Total quantity)	Same as unlinked, except the linked cost layer is updated with value adjustment.
		Decrease
	Quantity	Increase	Updates total quantity and leaves total valuation as is. Average unit cost changes. (Total valuation / Total quantity)	Same as unlinked, except linked cost layer is updated with quantity adjustment.
		Decrease
Standard	Quantity & Value	Increase	Updates total quantity. Total valuation changes (Total quantity * Standard cost)	Same as unlinked, except linked cost layer is updated with quantity adjustment.
		Decrease
	Value	Increase	Creates a journal entry for the increase without any effect on the subledger.	Creates a journal entry for the increase without any effect on the subledger.
		Decrease
	Quantity	Increase	Updates total quantity. Total valuation changes (Total quantity * Standard cost)	Same as unlinked, except linked cost layer is updated with quantity adjustment.
		Decrease