12’900 SERVICE NOT YET INVOICED
Service -products, sold service hours and according spare parts, which have already been provided but are not yet
invoiced. Goods delivered but not yet invoiced are not included in this account, remain in inventory as finished goods
(valued at landed costs) until invoiced.
4.1.1.5.1 Demo Equipment:
Inventory used for hands-on live demos for customers and prospects (= demo equipment) that shall be reclassified from
inventory to tangible asset after not being sold within 1 year. If a demo equipment that was already re-categorized as
“tangible assets” is going to be sold, first re-categorize demo equipment again from a tangible asset to a good as
inventory on stock at current value. After sale, please recognize according cost of sales in P&L (cost of sales amounting
the value this demo equipment has had when it was a tangible asset). In case consumables (e.g. columns, electrodes) are
in use by demo equipment after not being sold within 1 year they are written-off 100% to Cost of Sales account.
Demo equipment provided free of charge needs to be entered in your financial system / accounts as a tangible asset
with zero or symbolic value and must be shown in the fixed assets movement schedule.
4.1.1.5.2 Assignment of goods
· Goods in transit are goods in transit and must be included in stock to the company that legally owns the
inventory or bears the risk of loss. These are for example goods delivered but not yet invoiced which remain in
the inventory (valued at landed costs, historical currency rate) until they are invoiced.
· Goods sent on approval basis are goods sent on a conditional approval basis and must be included in stock if the
customer has not yet approved the items.
· Goods sent on consignment basis definition: Sometimes goods are sent on consignment basis to a 3rd party,
who sells the goods for a commission. In such cases even though the goods may be physically with the agent
they legally belong to the company. Hence they should be included in the stock until they are invoiced.
4.1.1.5.3 Perpetual method of inventory (AX) and periodic inventory system.
Perpetual inventory systems reflect real time all changes in inventory in the respective stock-accounts. They are updated
continuously during the period as inventory transactions occur and are (perpetually) changing. Therefore, there is no
need to do a year-end inventory adjustment. In addition, a separate cost of goods sold calculation is unnecessary since
cost of goods sold is recorded whenever inventory is sold.
Two transactions are recorded when goods get sold: (1) the sales amount is debited to Accounts Receivables or Cash and
is credited to Sales, and (2) the cost of the goods sold are debited to Cost of Goods Sold and are credited to Inventory.
Sale Transaction is recorded via two journal entries. One of them records the sale value of inventory whereas the other
records cost of goods sold.
· If you are using a periodic inventory system in which there is not a permanent inventory record for each individual
item in stock, you can credit the inventory asset account by the amount to be reduced, and debit a loss on write
down of inventory account (which is an expense that appears in the income statement). Under the periodic inventory
system, purchases of merchandise are recorded in one or more Purchases accounts. At the end of the year the
Purchases account(s) are expensed and closed and the Inventory account is adjusted to equal the cost of the