FIFO & Default Cost Treatment

How it works

For Default Cost Treatment the expected Landed Costs (Stevedore) is posted directly to the Transfer Variance Account (P&L) at the time of receipt. This is because Business Central's posting functionality does not support expected costs for Transfer Receipts, so the cost is treat as an actual expense immediately.

The Landed Cost Accrual Account setup against the Landed Cost Type holds the liability until the stevedore invoice arrives and any difference between expected and actual cost is posted to the same Transfer Variance Account used at the point of receipt.

Stage 1 - Transfer Receipt

Business Central posts the standard transfer (movement between Locations) transactions and then the Stevedore cost is posted using the following accounts.

Balances: Landed Cost Transfer Variance Account 5.00 Dr ~ Landed Cost Accrual Account 5.00 Cr

Stage 2 - Landed Cost Invoice

When you set the Landed Cost Type Code on the purchase line, the Type is set to G/L Account using the Accrual Account defined against the "Landed Cost Type". Business Central posts the invoice against this account. A variance is then posted to clear any accrual for any difference between the expected and actual cost using the Transfer Variance Account. No impact on inventory cost entries.

Final Position

The full Stevedore cost is held within the Transfer Variance Account on the P&L. Item's inventory cost is not affected and no updates for Cost of Goods Sold are applied when the item is sold.