Setting Up an Inventory Valuation Report in

Dynamics AX Part 1
June 3, 2016
By Frank Hamelly
http://ibisinc.com/blog/inventory-valuation-report-setup-for-dynamics-ax-part-1/

We will deep dive into Inventory Reconciliation in Microsoft Dynamics® AX,

and will use AX 2012 R3 for screenshots and examples.
Depending on the inventory valuation method or methods you are using, it
may be important to do an inventory close at the end of the month before
you actually run the inventory valuation report do to your reconciliation. If you
use a strictly standard cost for inventory valuation, then the inventory close
process is not required. If you’re using any other valuation method or a
combination of valuation methods in your business, then you need to perform
that inventory close before we start a reconciliation process. Inventory close is
what updates the cost records from a financial perspective or settles those
costs records at the end of the month so that we have an up to date cost of
goods sold and inventory valuation value after that inventory close is
processed.
Setting up the Inventory Valuation Report
The key to inventory reconciliation is the inventory valuation report and
getting it set up properly. Because there are so many options in Dynamics AX
as it pertains to inventory valuation, posting accounts and item posting
profiles, your item model group and your item groups it’s critically important
that we have an understanding of what each of those settings does, is, and
how it affects our inventory valuation and subsequently the inventory
valuation report. We’ll also take a brief look at a couple of other reports in the
application that can assist you in reconciliation when you find that your GL
and sub ledgers don’t tie. The inventory valuation report is really the core tool
that we want to look at setting up and using.
Here are the steps to get to the inventory valuation report setup:

1. Navigate to: Inventory management > Setup > Inventory > Inventory

value reports
2. Click ‘New’ and type in a unique ID and descriptive name

This is 2012 R3, so if you’re navigating in previous versions, it will look a little
bit different.
Let’s jump into Dynamics AX so we can walk through each of the fields and
what they mean. Here you are looking at the Inventory Valuation set-up
screen:
1. The first thing we do is give the report an ID and a name.
2. Then, select date interval. Set this if you want your report to default to
a pre-defined date interval every time it is run (ex: this year, last year,
current period, etc.…). This date interval can be overridden when the
report is run. Typically, I like to run this report at month end right after
I’ve done inventory close report.
3. When you go to run the report, you’ll see that you have the ability to
enter a specific date or specific date range that you use to include or
exclude date-based transactions in the report. Usually people use
posting date as the range. I’ve never seen anyone use transaction time
as the range in this report, but if you wanted to get that finite with
transaction time you could do so.
4. The dimension set allows you to choose which financial dimension set
you want to use or to compare to this report to. For example, you can
run the data by Main Account, or by Main Account + Business Unit. For
 this paper, I’m going to use just my main account dimension set as the
example.
5. Under the columns fast tab which is what you see above, we want to see
the Financial positions.
1. Let’s look at inventory. What this really means is anything other
than work in process inventory and deferred cost of goods sold
cost of goods sold because we want to look at inventory, and will
see in a minute that were going to be looking at raw material and
finished goods inventory simultaneously because typically we will
review the information, or we could just look at raw material, or
finished goods individually. Typically, we look at raw material and
finished goods separately from work in process. Let’s take a quick
look at few more associated definitions:
1. Inventory: Financial Quantity = physical quantity of on
hand inventory that has been financially updated (i.e.
invoiced or production ended)
2. Inventory: Financial Amount = dollar value of on hand
inventory that has been financially updated
3. Inventory: Physical quantity posted = physical quantity of
on hand inventory that has been physically updated but not
financially updated (i.e. PO Receipt, SO Packing Slip, or
Report as Finished MO posted to ledger)
4. Inventory: Physical amount posted = dollar value of on
hand inventory that has been physically updated but not
financially updated
2. WIP: If checked, report displays physical quantities and dollar
value of inventory in WIP status – WIP is anything that has been
picked for a production order or reported as finished for a
production order, but not yet ended.
3. Deferred COGS and COGS: If ticked, report displays physical
quantities and amounts of inventory that should post to Deferred
COGS and financial quantities and amounts that should post to
COGS. Deferred COGS are physical quantities and amounts
 because they offset picking list quantities and amounts whereas
COGS are financial quantities because they offset invoice
quantities and amounts.
4. P&L: Displays the financial amount posted to P&L for inventory.
6. I want to be able to compare my on hand inventory values, and what
that’s really saying is at the bottom of my report I want to see my GL
account balances so I don’t have to refer back to my trial balance to see
what my GL account balances are when I’m printing initial report and
going through my reconciliation process. When I checked this box, it
tells the report that to go ahead and print my accounting balances, my
GL account balances, at the bottom of the report for comparison
purposes.
7. 1500 is the inventory account that I’m going to use. If we look at the
details (click on 1500 and select View Details) on this account, we see
that this is a total main account type, which means that I have two or
more accounts that I’m rolling up to this total account value.

If I click on the totals button, what we’re looking at here is a chart of

main account setup. If we look at the totals button, you can see that I’m
totaling two accounts.
 The first, 1510 account happens to be my raw material account. 1530 is
my finished goods account. I’m telling the report through the use of a
total main account that when you print this report I want to see the sum
total of those two accounts on the report.
8. Next, let’s look at inventory dimensions.
If we have different types of dimensions set up that we want to see broken
down in a report we can do so. I happen to want to see on my report size and
color so that if a printer report in detail I’ll be able to see my items listed by
size and color in the report. (Of course, we could choose any of the
dimensions that we might have set up in the system to further stratify the
results in the report by any of those dimensions.) I’m saying with this setup
that I want to see those values individually by dimension, but I don’t
necessarily need a total, so I have my total check boxes unmarked. I just want
to be able to see that level of detail without totaling them.
Setting Up an Inventory Valuation Report in
Dynamics AX Part 2
June 9, 2016
By Frank Hamelly
http://ibisinc.com/blog/setting-up-an-inventory-valuation-report-in-dynamics-ax-part-2/

Last week, I shared part one of this post on Inventory Valuation Report set-up
inDynamics AX which can be found here. I’d like to continue on here with the
remaining steps to finish setting up the report.

1. In my report, I do not want to see my physical and financial values

summarize. I want to see those separately.
2. I don’t want to see inventory transactions that are not posted to
the general ledger, because for purposes of reconciliations in my
general ledger it wouldn’t make sense to include those values that
are not yet posted to GL. You might ask why I would have
inventory transactions that aren’t posted to the GL. That depends
on how you have your posting set up, whether it’s asynchronous
or synchronous. Some companies using asynchronous posting set
up in their in AX which means that before my inventory
transactions get posted to the GL there’s a batch process that has
 to run or a periodic process test run to update my GL. Most
companies have that posting set to synchronous so that whenever
there’s an inventory transaction posted on the inventory side it
automatically post to GL, but there may be a scenario where the
posting is asynchronous. I wouldn’t want to not see anything that
hadn’t been posted to the GL get.

1. Averaging of costs, I have an option to calculate the average unit

cost on the report. That may or may not be of value to you
because what this is it strictly takes the total physical quantity and
divides that into the total financial value and provides an average
unit cost column on the report. May it may not be valuable
 depending on what inventory valuation method or methods you
are using.
2. I do want to see total quantity and value (Print Total) on my
report, so I have that box checked.
3. And I want the availability to see the resource ID and
my resource group. Resource ID is the item number. Resource
group is the item group. Why’d they don’t call them item ID and
item group here I’m not sure, but that’s the definition.

1. Here’s where I define my rows, in this section, in the rows section. We’ve
just defined the columns. Now I want to define my rows.
2. We have the ability to have a role for material which by default you’re
forced to have a role for material, and why would we not want to. We
can have a row for labor. We can have a role for indirect costs, and
for outsourced costs associated with our product.
3. With detailed level, I can see here the totals or transactions. I really only
want to see totals because if I set my detailed level to transactions that
means that the report is going to print every transaction, every
 inventory transaction, included in my date range and that could be an
extremely long report. When you get to finding unreconciled differences
running the report at the transaction but maybe by a certain model
group or resource group that might make sense so that you can drill
into more detail in the report. For initial report generation, I want to
improve just a totals level.
4. I don’t want to include beginning balance. You get a warning when you
select the transaction detail level.

 
We recommend that you don’t set the transaction detail level for a large range
of items. This includes beginning balances, which are only available if we’ve
selected the transactions level in the detail.
The report is set up!! One thing that I’ll mention before we look at the report,
is that we can setup multiple diversions multiple report IDs depending on who
the consumer of the report is.

 For instance, if you have someone on your finance team, maybe a CFO,
who just wants a high level overview of the total value of your inventory
for each resource group you might set up an inventory value ID that
only shows totals by resource group.
 Maybe your inventory cost controller wants to see the totals for each
resource or item that includes that inclusive values of inventory work in
process, so we’d set up a separate inventory report, inventory value
report ID that includes totals for each of these items and has columns
for the value of the inventory.
  Perhaps the inventory cost controller has a clerical person working
for them and they are really the person that’s going to drill into the
details of any unreconciled differences between the higher inventory
and the GL values. That person might actually want to be able to see a
report maybe by resource group that shows the inventory down to
transaction level so that they can dig into the details to find those
unreconciled differences.

The application gives us the ability to set up unlimited number of valuation

report IDs to customize these reports for the user, for the consumer.
Now that the report is set up, we’ll want to run it. I have more tips and tricks
on that topic next week, so check back in for an outline on running
the valuation report.
Running an Inventory Valuation Report in
Dynamics AX
June 16, 2016
By Frank Hamelly
http://ibisinc.com/blog/running-inventory-valuation-report-dynamics-ax/

Recently, I shared a couple posts on How-to Set Up an Inventory Valuation

Report in Microsoft Dynamics AX. In case you missed those, here are the links
to Part 1 and Part 2. I’d recommend reading those posts prior to running your
inventory valuation report if you are not familiar with this process.
We want to see what that report looks like. So, how do we run our inventory
valuation report? Here are the details on how to run the report.

1. Navigate to Inventory reports > Status > Inventory value, Inventory

value. Click on Inventory value, and our Inventory value parameters
window pops open.
1. In the ID dropdown field, I identify which report I want to run. I might
have a list of the half a dozen or more reports here depending on the
consumer of the report. Highlighted in blue, is the inventory
valuation report that we just looked at the set up for.
2. If you’d like to use a date interval code, we’ll take a look at the
setup of that real quickly. I would define my date interval in in this
window, and then I could use that code to pull into the report.
Typically, I’m going to run the report at month end unless I’m really
ambitious and want to run the report on a weekly basis so that I can
make sure that my sub ledger to GL account balances are running
true throughout the period. I can’t even run the report on a daily
basis if I wanted to. When we run the report at month end it’s going
to give us a report of all of the previous month’s activity.
1. Note here, that I’ve selected to where my FG or finished goods resource
group. I’m only going to run this report for one warehouse as an
example for this whitepaper (AFG).
2. My print destination is screen. If I wanted to select a particular
dimension code to run on this the dimension code it might be cover
style size, so forth. I could filter my report based on that dimension or
those dimensions cold values. Of course, with any report in AX we can
set it to run in batch mode if we want to report to run overnight for us,
for instance, it takes a long time to generate the report we could do so.
3. Now that we have the report parameters set will go ahead and run this
report and see what it is showing us. Now I have to warn you, that this is
test data. Unfortunately, our test data is not going to tie out to the
 general ledger balances, but we can see the form that our report is
going to take.

This is our inventory value report dated 11.30.2015. We’re running it just for
material in this case. Take a look through the columns and you’ll notice:

 Resource group is finished goods.

 Resource is my item number.
 The breakdown of item numbers is by color and size.
Remember, back in the inventory valuation set up screen we
defined that we want to see color and size dimensions but
not to total them. If total was selected, then there would be
a break between each color and size with a total line and
that would make the report longer, and take longer to
generate.
 References ending balance.
 

 Financial quantity, which is the quantity that’s been

financially updated.
 Financial amount which is the value that’s been financially
updated.
 Physical quantity posted, physical amount posted, and
theninventory quantity and inventory amount.
 Lastly, is the average unit cost column. Whether this is of
any value to you or not is your choice. For this particular
example we are running FIFO inventory, so the average unit
costs might for reference purposes be valuable to us. That
would be about it, just a quick reference to what the non-
weighted average unit cost value would be for the items on
this report.
In total, this report happens to be only two pages long, which is by design for
this whitepaper. At the end of the resource group is a resource group total,
and also a report summary.

The sum inventory amount is really what I want to be able to tie back to my

GL totals. Now because I only ran this for one resource group, my inventory
sum amount is not going to tie back to my GL totals. We need to include all
resource groups in this report so that it ties back, to the GL balance. We get a
sum of thefinancial quantity, the financial amount, physical quantity
posted, physical amount posted, quantity and sum, total inventory value
on this report.
The second page of this report shows me, by account, my raw materials
inventory balance at 11.30.15 and my finished goods inventory balance at
11.30.15. If I run this report wide open to give me everything in my raw
materials and finished inventory on this report, hopefully, it would come close.
What happens if it doesn’t?  I’ll be sharing another post next week take a
brief look at a couple of other reports in the application that can assist you in
reconciliation when you find that, your GL and sub ledgers don’t tie.