As we usually prefer to deal with FIFO for inventory valuation and Straight Line Method for depreciation and amortization, I would be glad to see these facilities too soon.
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- FIFO and LIFO cannot be implemented because you can have several inventory transactions on the same day with different purchase price and Manager would not be able to sort them within the day as it doesn’t store time of the transaction. And for most transactions, time of transaction is not even known nor relevant. Perpetual weighted average method elegantly solves this problem as it doesn’t rely on time of transaction, just a date.
- Straight-line and other depreciation methods are going to be implemented.
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Thanks for the clear reply @lubos. Depreciation solution is the most important as it gives a competitive advantage too.
no way to use any other method except average costing method??
Corrct, Manager only supports average cost method
You could keep track of your inventory values outside of Manager and enter the closing value each reporting period
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why do they use it only ?
has
has it more advantages ?
I think it is because it is simpler to program than FIFO or LIFO
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Read the post (2nd in this topic) by @Lubos where he explains why and what. For food industry especially restaurant business and supermarkets when dealing with fresh products FIFO is preferred and we use separate POS sales with inventory systems to deal with these and only enter totals in Manager as we use that for accounting.
The goal of cost flow methods isn’t to physically track which inventory items are the newest or oldest in stores. It is concerned with calculating inventory cost (Cost of Sales) when there are price/inventory cost differences over the reporting period. If inventory prices remain constant, regardless of the costing method used, profit will remain constant (FIFO or Perpetual weighted average method PWAM). You can use the freshest vegetables in the store first, regardless of the cost flow required by tax law or company policy.
I support the addition of FIFO because:
1 IFRS and US GAAP permit FIFO, PWAM, and Specific identification (no LIFO).
2. I don’t think any tax jurisdiction uses LIFO or requires taxpayers to use it in their returns.
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@Abeiku you are right that FIFO for inventory management as related to freshness of products does not equate to cash flow methods. However, as in many cases where inflation and price fluctuations are rapid then FIFO fits better and serves both needs.
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thanks
FIFO inventory cost is really important, we have tens of purchase transactions over the years for the same items with prices all over the place, with current weighted average cost method; inventory cost (which is the core value Manager calculates profitability based on) is way off real values.
What could be the problem if all inventory cost-related transactions be designed to capture time as well as date of transaction?
No, it is not. It is accurate for perpetual moving average costing. You may not prefer it, but that is a common and widely used inventory costing method. Manager calculates average cost correctly.
That is not the issue. FIFO accounting requires recalculating the cost of inventory based on specific units of inventory for each transaction. Average cost accounting uses a moving average that requires only a couple steps. Manager’s entire inventory capability is based on the assumption that every unit of an inventory item is identical and interchangeable. FIFO would require tracking each unit through its entire life within your system. That would require a total restructuring of all inventory-related functions of the program, not just recording transaction times.
If you need FIFO accounting, you need to find another program.