ANS-0997 · INVENTORY & ITEM MANAGEMENT
Why Do Inventory Items with Zero Quantity Still Show Valuation in NetSuite?
Learn how uncosted landed cost adjustments on item receipts for cleared inventory can result in residual inventory values when using FIFO costing in NetSuite.
Short answer
Residual inventory values for zero-quantity items often stem from uncosted landed cost adjustments made to item receipts after items have been fulfilled. The resolution requires re-opening the affected period, reverting the landed cost changes, verifying the inventory valuation returns to zero, and then re-closing the period, ensuring inventory costing is handled appropriately.
Scenario
A common issue arises when inventory items with a zero quantity at a specific location continue to display a non-zero inventory valuation, particularly for clients utilizing FIFO costing. This discrepancy typically occurs when changes are made to landed costs on item receipts after the associated items have already been cleared from inventory through fulfillments. If the period is subsequently closed without running inventory costing and warnings about unprocessed transactions are ignored, the impact of these updated landed costs remains in the inventory account, leading to the observed valuation imbalance.
Solution
Correcting residual inventory values for zero-quantity items necessitates re-opening the period where the landed cost adjustments were made.For erroneous landed cost adjustments:
Re-open the period.
Revert the incorrect landed cost change on the item receipt.
Validate that the inventory valuation for the impacted items and location has returned to $0.
Re-close the period *without running inventory costing*. This is crucial because no COGS adjustments were generated during the original close; running costing now would simply reverse the sign on the discrepancies instead of eliminating them.For valid landed cost changes:The period must still be re-opened, the change reverted, and the period re-closed after verifying the inventory values have been corrected to $
Because the original change was valid, the client will then need to perform one of the following actions to properly clear the landed cost account:
Re-open the period again, update the landed cost to the correct value, then re-close the period.
Create a manual journal entry to clear the landed cost account to a variance account.
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