Estimated landed costs

Related information

Related topics

• Landed cost distribution methods
• Set up a landed costs workflow
• Transactions—Purchasing
• Transactions—Inventory Control

When you purchase inventory items, you can include estimates of the landed costs you expect to receive on the purchase transaction. Entering estimates on the purchase makes your inventory valuation for the purchased items more timely and the COGS The cost of the products that a retailer, distributor, or manufacturer has sold. more accurate when the purchased items are sold. Later, when you receive vendor invoices which contain the actual landed costs, you create a new transaction to match each actual landed cost to its estimate.

Estimates need to be entered in transactions that post to Accounts Payable or the General Ledger and increase the value of inventory (ONHAND Value or Value & Quantity). This topic assumes that the posting transaction is a vendor invoice.

Add an estimated landed cost

The transactions for transaction definitions enabled for estimated landed costs have a Landed cost estimates section. Use this section to enter each estimated landed cost, specifying a landed cost category for the estimate and entering the amount of the estimate.

1. In the appropriate Purchasing transaction list, do one of the following depending on your workflow:
   • Convert the previous transaction in the workflow to a vendor invoice
   • Create a new vendor invoice
   • Edit an existing vendor invoice
2. In the Landed cost estimates section, enter a line item for each landed cost you anticipate you'll eventually receive for the purchase of the items.
   1. Category. Select the landed cost category for the type of expense and with the distribution method that you want. This selection is used to apply the estimated cost proportionately to the applicable inventory items in the purchase.
      Considerations for selecting a category with an appropriate distribution method

      The types of items that your organization purchases and the types of landed costs you enter can help you decide which distribution method achieves the most realistic distribution of the estimated landed costs:

      • Value. Cost is distributed in proportion to the purchase price (Extended price) for the inventory items. You might choose Value for landed costs such as duties, which are typically charged on the total value of shipped items.
      • Count. Cost is distributed in proportion to the number of units that were purchased.
      • Volume. Cost is distributed in proportion to the volume that's recorded for each item. You might choose Volume if items differ in size and some take up much more space in a shipping container. Larger items are more likely to cost more to deliver.
      • Weight. Cost is distributed in proportion to the weight that's recorded for each item. You might choose Weight for landed costs that are based on weight, such as freight. Heavier items, like sacks of gravel versus sacks of moss, are more likely to cost more to deliver.

      For more information and examples of the calculations to distribute landed costs, see landed cost distribution methods.

      Later, if an actual cost is matched to the estimate, Intacct automatically uses the same category to distribute the actual cost to the items.

   2. Estimated amount. For example, enter $1,000.
   3. Description. Enter some identifying characteristics for the estimated landed cost, such as the name of the vendor you expect to receive the actual cost from.
3. Select Post.

   Intacct posts the vendor invoice for the purchase of the items and automatically creates an underlying inventory adjustment increase transaction (SYS-LC Estimates Adj Incr) for each estimated landed cost. Each adjustment increases the value of the items in the purchase by the amount of the estimate.

   Intacct distributes each landed cost to the inventory items that are enabled for landed costs and set up for the distribution method for the landed cost category. By default, all inventory items enabled for landed costs are automatically set up for distribution by Value. Items need to be set up for distribution by Count, Volume, and Weight.

Check the distribution of an estimated cost

After you've entered and posted the purchase transaction, Intacct links the transaction with the SYS-LC Estimates Adj Incr transactions that were created. An easy way to see how the estimated costs are distributed is to view these Inventory Control adjustment increase transactions. The links to the transactions are in the History tab of the purchase transaction.

1. If the transaction list with the purchase transaction is already open, go to Purchasing > All > and select the applicable transaction type to display the transaction list.
2. Find the purchase transaction, and select View.
3. Select the History tab.
4. In the Landed cost details section, select the desired SYS-LC Estimates Adj Incr transaction.
5. When the adjustment increase transaction displays, review the cost distribution information in the Entries section.

Troubleshoot estimated cost entries

The following table describes potential error conditions and provides possible solutions:

Edit an estimated cost

An estimated landed cost can be edited if an actual landed cost has not been linked to the original purchase transaction and nothing else prevents the transaction from being edited. For more information, see the rules about editing purchasing transactions.

1. Open the applicable purchase transaction list, find the purchase transaction with the estimated cost, and select Edit.
2. In the Landed cost estimates section, edit the estimate. Then, select Post.

When you post the transaction, Intacct deletes the existing SYS-LC Estimates Adj Incr transaction for the estimate and automatically generates a new SYS-LC Estimates Adj Incr transaction for the estimate. The inventory valuation for the purchase is updated accordingly.

Delete an estimated cost

An estimated cost can be deleted if an actual landed cost has not been linked to the original purchase transaction and nothing else prevents the transaction from being edited.

1. Open the applicable purchase transaction list, find the desired purchase transaction, and select Edit.
2. In the Landed costs estimate section, delete the desired estimate. Then, select Post.

The amount of the estimate is removed from the item valuation in the original purchase.