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Chapter 3: WIP Concepts
3-1
CHAPTER 3: WIP CONCEPTS
Objectives
The objectives are:
Examine WIP concepts in Microsoft Dynamics NAV® 2009.
Calculate WIP and recognition.
Post WIP and recognition to G/L.
Finalize a job.
Exclude a task from WIP calculation.
Introduction
This chapter examines the concepts and the process of calculating and posting
Work In Progress in Microsoft Dynamics NAV 2009. Demonstrations in this
chapter show how to calculate and post WIP to G/L, how to close the job that has
WIP posted to G/L, and how to exclude a job task from WIP calculation.
Excluding a job task with a poor result from WIP calculation will contribute to
presenting a true and fair view of the company’s financial situation.
WIP Concepts in Microsoft Dynamics NAV 2009
Work In Progress (WIP) is the way to estimate the financial value of jobs in the
General Ledger during the progress of the job. WIP is represented by a temporary
transit account that shows the intermediate stage of costing, in other words,
contains the accumulated costs that will be allocated to the G/L accounts when
the job is completed. When a user does not post WIP, it means that the General
Ledger will show expenses and revenue when they occur. In many cases, there is
a time span between posting of the job expenses and the job’s revenue
(invoicing). During a job’s progress, where only expenses have been posted, the
financial statement of the company will be inaccurate. Calculating and posting
Work In Progress can help eliminate such inaccuracy.
In the course of a job, WIP and recognition are calculated and posted to G/L in
between posting usage and invoicing the job to the customer. If this is a long
term project, WIP and recognition can be calculated and posted to G/L more than
once. After the job receives the status Completed, the accountant must calculate
and post WIP and recognition for the completed job to G/L again. It is necessary
to reverse the last recognition posting for the job and post the final recognized
profit for the job (invoiced sales value less the total usage cost). But the job can
still be reopened to redo calculations if necessary.
The marked section in the following diagram depicts how WIP is calculated and
posted in the general job workflow.
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FIGURE 3.1 WIP CALCULATED AND POSTED AS WIP ENTRIES AND AFTERWARDS POSTED TO G/L
There are five methods of calculating WIP in Microsoft Dynamics NAV 2009.
The program manager fills in the method of WIP calculation in the WIP
Calculation field on the job card when a new job is set up. The calculation of
WIP can be based on one of the following:
Cost Value
Sales Value
Cost of Sales
Percentage of Completion
Completed Contract
Cost Value
The Cost Value method calculates the WIP amount as the contract value of the
posted usage costs less than an estimate of the invoiced contract costs. Using this
method means that a job’s revenue and profit (or loss) will be recognized when
the job is invoiced to the customer.
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If the WIP amount is positive, the WIP will be posted to an asset account. If the
WIP amount is negative, the amount will be posted to a liability account as an
accrued expense.
The WIP amounts for the Cost Value method are calculated with the following
formulae:
WIP amount = usage (total cost) * contract (total price) ÷ schedule
(total price) - schedule (total cost) ÷ schedule (total price) * contract
(invoiced price)
WIP cost amount =
o usage (Total Cost) if the WIP amount is positive
o usage (Total Cost) - WIP amount if the WIP amount is negative
recognized costs = usage (total cost) - WIP amount
accrued cost amount = WIP amount if the WIP amount is negative
WIP sales amount = contract (invoiced price)
recognized sales amount = contract (invoiced price)
Sales Value
The Sales Value method calculates the WIP as the contract value of the price of
job usage. Using this method means that the revenue and profit (or loss) of the
job will be recognized as the job usage is posted and recognized. The WIP Sales
amount is always posted to a liability (unearned revenue) account. If the WIP
amount is positive, the WIP amount will be registered in an asset account as
accrued revenue.
The WIP amounts for the Sales Value method are calculated with the following
formulae:
WIP amount = usage (total price) * contract (total price) ÷ schedule
(total Price) - contract (invoiced)
WIP sales amount =
o contract (invoiced price) if the WIP amount is negative
o contract (invoiced price) + WIP Amount if the WIP amount is
positive
recognized sales amount = contract (invoiced price) + WIP amount
accrued sales amount = WIP amount if the WIP amount is positive
WIP cost amount = usage (total cost)
recognized costs = usage (total cost)
NOTE: Recognized sales amount for a job is actually revenue for the job
registered in the program. Recognized amount is the amount of capital gain/loss
that must be reported on the taxpayer's tax return in any given year. The amount
recognized refers to the tax implications of the sale of an asset or investment and
will take into account any selling or brokerage fees. The amount recognized may
Chapter 3: WIP Concepts
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differ from the amount realized, since the amount realized is not typically used in
a taxable situation.
Accrued sales amount represents recognized expenses that have been incurred
during the period of the job but for which no document has yet been created.
Accrual represents the accounting method known as accrual basis; revenues and
expenses are recognized when they are accrued, that is, accumulated (earned or
incurred), regardless when the actual cash is received or paid out.
Cost of Sales
The Cost of Sales method calculates the WIP amount as the cost value of posted
consumption (job ledger entries) less the job’s estimated cost value of
consumption, based on the invoiced percentage of the contract. Using this
method means that the job’s revenue and profit (or loss) will be recognized when
the job is invoiced to the customer. The WIP cost amount is always posted to an
asset account. If the WIP amount is negative, the WIP amount will be accrued to
a liability account as an accrued expense.
The WIP amounts for the Cost of Sales method are calculated with the following
formulae:
WIP Amount = usage (total cost) - contract (invoiced price) ÷
contract (total price) * schedule (total cost)
WIP cost amount =
o usage (total cost) if the WIP amount is positive
o usage (total cost) – WIP Amount if the WIP amount is negative
recognized costs = contract (invoiced price) ÷ contract (total price) *
schedule (total cost)
accrued cost amount = WIP amount if the WIP amount is negative
WIP sales amount = contract (invoiced price)
recognized sales amount = contract (invoiced price)
Percentage of Completion
The Percentage of Completion method calculates the WIP as the contractual
value (sales value) of actual usage cost value (job ledger entries), measured by
cost value of expected usage (your budget). Using this method means that the
job’s revenue and profit (or loss) will be recognized as the job costs are incurred
and recognized. This method of WIP calculation can be used when the whole job
is sold as a total project split into several parts. The Percentage of Completion
method is recommended by some international accounting standards.
For this method, the WIP amount is always posted to the WIP accrued sales
account (an asset account), while the value of the contract (invoiced price) will
be posted to the WIP invoiced sales (contra asset or liability account).
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The WIP amounts for the Percentage of Completion method are calculated with
the following formulae:
WIP amount = WIP amount in job task - invoiced sales amount in
job task
WIP amount in job task = usage (total cost) ÷ schedule (total cost)
* contract (total price)
invoiced sales amount = contract (invoiced price)
WIP sales amount = WIP amount
recognized sales amount = WIP amount
WIP cost amount = usage (total cost)
recognized costs = usage (total cost)
Completed Contract
With the Completed Contract method, revenue and costs are not recognized until
the job is finished. Users may choose to do this when there is high uncertainty
around the estimate of costs and revenue for the job. The Completed Contract
method is an alternative recommended by some international accounting
standards. This method can be applicable, for example, when a job is sold as a
one-off project; that is, nothing is finalized or treated as finished until the whole
project is finished.
All usage is posted to the WIP costs account (asset) and all invoiced sales are
posted to the WIP invoiced sales account (liability) until the job is completed.
The WIP amounts for the Completed Contract method are calculated with the
following formulae:
WIP Amount = WIP Cost Amount = usage (total cost) until the job
is completed. When the job is complete, the WIP cost amount is 0
and the recognized cost amount becomes the usage (total cost).
WIP sales amount = contract (invoiced price) until the job is
completed. When the job is complete, the invoiced sales amount is 0
and the recognized sales amount becomes the contract (invoiced
price).
Scenario: Calculate and Post WIP to G/L
The company has hired a new employee to perform consultancy services. At the
beginning of each month, the salary of 2000 LCY is paid. The average working
time is 135 hours for each month. Therefore, the equivalent cost is (2000 ÷ 135)
= 14.81 LCY for each hour. A customer needs the new consultant service and a
job is set up to keep track of the work.
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Demonstration: Calculate and Post WIP to G/L
Prior to calculation and posting WIP to G/L, the following precondition steps are
to be performed for the given scenario:
1. Create a resource card.
2. Post the monthly salary in the general journal
3. Set up a job to keep track of the resource’s work.
4. Post consumption in the job journal.
Creating a Resource Card
The procedure of setting up a resource card is as follows:
1. Go to Home > Resources and click New in the Action Pane to create
a new resource card.
2. Fill in the fields as shown in the following table.
Field Value
General FastTab
No. SARA
Name Sara Johnson
Type Person
Base Unit of Measure HOUR
Invoicing FastTab
Direct Unit Cost 14.81
Unit Price 25
Gen. Prod. Posting Group Service
3. Click OK to close the Resource Card window.
Posting the Monthly Salary
The new employee Sara Johnson has now received her monthly salary of 2000
LCY and it has to be posted. The accountant follows the steps below to post the
monthly salary:
1. Go to Departments > Financial Management > General Ledger >
General Journals.
2. In the CASH journal batch, set up a line as shown in the following
table.
Field Value
Posting Date 3/11/2009
Accounting Type G/L Account
Account No. 8720
Description Salaries
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Amount 2,000.00
3. In the Action Pane, click Post to post the general journal.
4. Click Yes on the confirmation message that appears.
At this point, there has been a loss of 2000 LCY in the chart of account, but
nothing is invoiced yet.
Setting Up a Job Card
The manager agrees with the customer that Sara can work up to 75 hours each
month on an hourly basis. Set up a job card to keep track of the work Sara will
perform for the customer.
1. Go to Home > Jobs and click New in the Action Pane.
2. Press Enter to receive a new job number.
3. Fill in the fields as shown in the following table.
Field Value
General FastTab
Description Consultant Service
Bill-to Customer No. 30000
Bill-to Name John Haddock Insurance Co.
Posting FastTab
Job Posting Group Setting up
To post the usage to the job, set up at least one job task line of the type Posting.
In this case, set up two job task lines, one of the Posting type and the other of the
Total type.
1. In the Action Pane of the job card, click Job Task Lines.
2. Set up two job task lines filling in the fields as shown in the
following table.
Field Value
Line 1
Job Task No. 1000
Description Consulting Service
Job Task Type Posting
Line 2
Job Task No. 2000
Description Consulting Service Total
WIP-Total Total
Totaling 1000
3. Select the posting job task line and click Edit Planning Lines in the
Action Pane.
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4. Set up planning lines as shown in the following table.
Field Value
Line Type Schedule
Planning Date 3/11/2009
Type Resource
No. SARA
Quantity 75
FIGURE 3.2 JOB TASK LINES WITH SCHEDULED AMOUNTS
5. Click OK to close the window.
Posting Consumption
In the first week of the month, Sara worked 25 hours for the customer. In the
second week, Sara worked 10 hours, and in the third week Sara worked 32 hours
for the customer. This consumption has to be posted in a job journal.
The project team member follows these steps to post the consumption to a job
journal:
1. Go to Departments > Jobs > Job Journals to open the Job Journal
window.
2. Select the JOBJURNL batch.
3. Set up three journal lines filling in the fields as shown in the
following table.
Field Value
Line 1
Line Type Contract
Posting Date 3/11/2009
Job No. J00050
Job Task No. 1000
Type Resource
Chapter 3: WIP Concepts
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No. SARA
Quantity 25
Line 2
Line Type Contract
Posting Date 3/11/2009
Job No. J00050
Job Task No. 1000
Type Resource
No. SARA
Quantity 10
Line Type Contract
Posting Date 3/11/2009
Job No. J00050
Job Task No. 1000
Type Resource
No. SARA
Quantity 32
FIGURE 3.3 JOB JOURNAL BEFORE POSTING CONSUMPTION
4. In the Action Pane, click Post to post the job journal.
5. Click OK to close the Job Journal window.
Calculating WIP and Recognition
As a job progresses, there is consumption of materials and resources, and in the
time span between consumption and invoicing of the job, there is no track of the
Chapter 3: WIP Concepts
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value in the G/L. For a user to track the value, he or she can calculate the value of
WIP (Work In Progress) and post the value to the G/L.
The accountant follows these steps to calculate WIP and recognition:
1. Go to Departments > Jobs > Jobs and open the job card for job
J00050.
2. In the WIP Method field on the Posting FastTab, select the method
of WIP calculation. In this case, set the field to Sales Value.
FIGURE 3.4 WIP METHOD ON THE JOB CARD
NOTE: For a detailed description of the five methods of WIP calculation, refer
to the “WIP Concepts in Microsoft Dynamics NAV 2009” section in this chapter.
3. In the Action Pane, click Calculate WIP to open the Job Calculate
WIP batch job request window.
Chapter 3: WIP Concepts
3-11
FIGURE 3.5 JOB CALCULATE WIP BATCH JOB REQUEST WINDOW
4. Fill in the fields as shown in the following table.
Field Value
Options FastTab
Document No. 1
Job FastTab
No. J00050
5. Click OK to calculate WIP and recognition.
6. Expand the WIP and Recognition FastTab in the Job Card window
to view the results of calculation.
Chapter 3: WIP Concepts
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FIGURE 3.6 CALCULATED WIP AMOUNTS DISPLAYED ON THE JOB CARD
In the Calc. WIP Method Used field, you can view the method that was used to
calculate WIP and recognition. In Microsoft Dynamics NAV 2009, users can
recalculate WIP an unlimited number of times. If the calculation result is
unsatisfying, users can change the method and calculate WIP and recognition
again.
For the sake of demonstration purposes, change the WIP method to Cost Value
and recalculate WIP to observe how it will affect the result of WIP calculation.
NOTE: It is not common practice in accounting to change posting routine or
methods within one accounting year.
The accountant follows these steps to change the WIP method and recalculate the
WIP and recognition on the job:
1. On the Posting FastTab, set the WIP Method field to Cost Value.
2. In the Action Pane, click Calculate WIP to open the Job Calculate
WIP batch job request window.
3. Fill in the fields as shown in the following table.
Field Value
Options FastTab
Posting Date 3/11/2009
Chapter 3: WIP Concepts
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Document No. 1
Job FastTab
No. J00050
4. Click OK to calculate WIP and recognition.
5. Expand the WIP and Recognition FastTab in the Job Card window
to view the results of calculation.
FIGURE 3.7 WIP AMOUNTS CALCULATED WITH THE COST VALUE METHOD
The calculated WIP and recognition is only visible on the job card. To make the
value visible in the G/L, the user must post it to G/L.
Posting WIP and Recognition to G/L
The procedure of posting WIP and recognition to G/L is as follows:
1. In the Action Pane of the Job Card window, click Post WIP to G/L
to open the Job Post WIP to G/L batch job request window.
Chapter 3: WIP Concepts
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FIGURE 3.8 JOB POST WIP TO G/L BATCH JOB REQUEST WINDOW
The Job Post WIP to G/L batch job is used to post to G/L the WIP and
recognition you calculated using the Job Calculate WIP batch job.
2. Fill in the fields as shown in the following table.
Field Value
Options FastTab
Reversal Document No. 2
Job FastTab
No. J00050
The Reverse Only check box is used to reverse previous posted WIP, but not to
post new WIP to G/L. This may be useful, for example, when you have
calculated and posted WIP for a job with an incorrect date error and want to
reverse the incorrect postings without posting new WIP postings. In this case,
leave this check box cleared.
Insert a check mark in the Use Reversal Date field if you want to use the
reversal date as the posting date for both the reversal of the previous WIP
calculation and the posting date for the new WIP calculation. This is useful when
you want to calculate and post the historical WIP backdated. You can reverse the
old postings and post the new calculation in an open period by choosing a
reversal date in the open period. In this case, leave this check box cleared, which
Chapter 3: WIP Concepts
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means that the program will use the WIP posting date in the job WIP entries as
the posting date for the WIP G/L entries.
3. Click OK.
The results of posting are displayed in the right column of the WIP and
Recognition FastTab in the Job Card window.
FIGURE 3.9 WIP AMOUNTS POSTED TO G/L
As the job progresses–mainly on large jobs lasting over a long period–the user
may have to calculate and post WIP (and recognition) to the G/L more than once.
Every time that WIP and recognition are posted to the G/L, all entries from
previous postings are reversed before the program posts the new amounts.
Finalizing a Job
When the actual work for the job is completed, the job must be finalized in the
program. If no WIP and recognition have been posted, the finalization only
consists of invoicing the remaining contract lines, as shown on the example of
the Computer in for service job in chapter 1, ―Jobs Overview and Setup‖, of this
course. But if WIP and recognition have been posted to the G/L, it is necessary to
reverse the posted WIP amounts because WIP is only a temporary registration of
value in the time span between consumption and final invoicing. This section
finalizes a job for which WIP and recognition have been posted to G/L.
Chapter 3: WIP Concepts
3-16
Demonstration: Finalize a Job that has WIP Posted to G/L
The Consultant Service job previously created in this chapter has come to an end.
The resource consumption has been posted, and WIP and recognition have been
calculated and posted to G/L. The project manager is to perform the following
steps to finalize this job:
1. Invoice the job to the customer.
2. Change the job status to Completed.
NOTE: For jobs with the WIP method Completed Contract, changing the job
status to Completed will now allow you to post the recognition of revenue and
costs for the job. For jobs with all other WIP methods, it will allow you to
reverse the last recognition postings for the job and post the final recognized
profit for the job (the invoiced sales value less the total usage cost).
3. Calculate the job completion using the Job Calculate WIP batch
job.
4. Post the job completion using the Job Post WIP to G/L batch job.
Invoicing the Consultant Service job
The procedure of invoicing the job to the customer is as follows:
1. Open the job card for the Consultant Service job.
2. Click Related Information Job > Job Planning Lines.
3. Select the three lines of the Contract type and click Create Sales
Invoice.
NOTE: Only lines of type Contract or Both Schedule and Contract can be
invoiced.
4. In the Job Transfer to Sales Invoice window that appears, enter the
posting date in the Posting Date field and click OK.
5. In the Action Pane, click Get Sales/Credit Memo.
Chapter 3: WIP Concepts
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FIGURE 3.10 CONTRACT JOB PLANNING LINES TRANSFERRED TO THE SALES INVOICE
6. In the Action Pane, click Post to post the invoice.
7. Click Yes on the confirmation message that appears.
NOTE: The Sales Invoice window is closed automatically.
8. Click Close to close the Job Planning Lines window.
Changing the Job Status
To complete the job, change the job status in the Status field on the job card to
Completed. The message, shown in the following figure, appears reminding you
about the necessity to reverse the WIP posted to G/L and posts the final revenue
and cost recognition entries for the job.
Chapter 3: WIP Concepts
3-18
FIGURE 3.11 A REMINDER AFTER CHANGING THE JOB STATUS TO COMPLETED
Calculating the Job Completion
To calculate the WIP that is to be reversed after invoicing the job, follow the
steps below:
1. In the Action Pane of the job card, click Calculate WIP to open the
Job Calculate WIP batch job request form.
2. On the Options FastTab enter the posting date and the document
number.
3. Click OK.
Posting the Job Completion
To reverse the WIP for the job, you need to post the calculated WIP to G/L.
Follow the steps below to reverse the WIP:
1. In the Action Pane of the job card, click Post WIP to G/L to open
the Job Post WIP to G/L batch job request form.
2. On the Options FastTab, enter the date of the job completion in the
Reversal Posting Date field.
3. In the Reversal Document No. field, enter the document number for
the G/L entries that will be posted by this batch job.
NOTE: The Reverse Only check box is only used to reverse posted WIP from the
G/L when the job has the status Order.
4. Click OK.
To prevent users from unintentionally posting to the job, the account manager
can set the Blocked field on the job card to All after you have calculated and
posted the completion entries. The Blocked field value can at any time be
changed and the job reopened.
NOTE: The scenario from the demonstration in this section had only a resource
involved. The procedure of creating handling a job is similar for items. In that
case, you will create planning lines and post usage for items. The calculated
Total WIP Cost amount includes the cost of each item used.
Chapter 3: WIP Concepts
3-19
Excluding a Task from WIP Calculation
When a user runs large jobs over a long period of time, it can be useful to
exclude some of the job tasks from the WIP calculation. For example, one of the
early tasks went out of budget, and the company and customer make a
compromise on who will pay for the excess. The user can exclude this task from
the WIP calculation to avoid carrying the task’s unexpected result through the
whole job.
Scenario: Exclude a Task from WIP Calculation
In this scenario, Guildford Water Department has asked the Cronus Company to
build a new water pump station. Because of last minute changes to the
construction of the walls and roof, this task consumed more time than scheduled.
Therefore, Cronus has made an agreement that Guilford water department will
only pay half of the excess time. To prevent this poor result from interfering with
the whole project, it is suitable to exclude this task from the WIP calculation. The
prerequisites to this demonstration are to set up a new job for Guilford Water
Department and to set up job task lines.
Demonstration: Exclude a Task from WIP Calculation
The procedure of excluding a task from WIP calculation is as follows:
1. Go to Home > Jobs and click New in the Action Pane.
2. Press Enter to receive the next job number.
3. Fill in the fields on the job card as shown in the following table.
Field Value
General FastTab
Posting Date New water pump station
Bill-to Customer No. 50000
Bill-to Name Guildford Water Department
Posting FastTab
Job Posting Group SETTING UP
4. In the Action Pane, click Job Task Lines.
5. Set up job task lines as shown in the following table.
Field Value
Line 1
Job Task No. 1000
Description New water pump station
Job Task Type Begin-Total
Line 2
Job Task No. 1100
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Description Building
Job Task Type Begin-Total
Line 3
Job Task No. 1110
Description Foundation
Job Task Type Begin-Total
Line 4
Job Task No. 1111
Description Foundation posting
Job Task Type Posting
Line 5
Job Task No. 1120
Description Foundation total
Job Task Type End-Total
WIP-Total Total
Line 6
Job Task No. 1130
Description Walls and roof
Job Task Type Begin-Total
Line 7
Job Task No. 1131
Description Walls and roof posting
Job Task Type Posting
Line 8
Job Task No. 1140
Description Walls and roof total
Job Task Type End-Total
WIP-Total Total
Line 9
Job Task No. 1200
Description Building-Total
Job Task Type End-Total
Line 10
Job Task No. 1300
Description Pumps and pipes
Job Task Type Begin-total
Line 11
Chapter 3: WIP Concepts
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Job Task No. 1311
Description Pumps and pipes posting
Job Task Type Posting
Line 12
Job Task No. 1400
Description Pumps and pipes total
Job Task Type End-Total
WIP-Total Total
Line 13
Job Task No. 2000
Description New water pump station total
Job Task Type End-Total
WIP-Total Total
NOTE: The Job Task No. field allows you to enter alphanumeric values, which
means that after you use the Indent Job Tasks function in the next step, the
program sorts the tasks according to the rules that apply to text but not to
numbers. That is, the program takes into account numbers and letters one by one
rather than the whole entity. For example, if you have job tasks numbered 1000,
2000, and 13000, the number 13000 will come before 2000, because the first
digit 1 in 13000 is less than the first digit 2 in 2000.
6. Click Actions > Functions > Indent Job Tasks.
Chapter 3: WIP Concepts
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FIGURE 3.12 JOB TASK LINES AFTER INDENTATION
7. Select job task line 1111 and then click Edit Planning Lines.
8. Set up a job planning line as shown in the following table.
Field Value
Line Type Both Schedule and Contract
Planning Date 3/12/2009
Type Resource
No. Mark
Quantity 30
9. Click OK to close the Job Planning Lines window.
10. Select job task line 1131 and then click Edit Planning Lines.
11. Set up a job planning line as shown in the following table.
Field Value
Line Type Both Schedule and Contract
Planning Date 3/12/2009
Type Resource
No. Mark
Quantity 40
12. Click OK to close the Job Planning Lines window.
Chapter 3: WIP Concepts
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13. Select job task line 1311 and then click Edit Planning Lines.
14. Set up a job planning line as shown in the following table.
Field Value
Line Type Both Schedule and Contract
Planning Date 3/12/2009
Type Resource
No. Mark
Quantity 20
15. Click OK to close the Job Planning Lines window.
16. Click OK to close the Job Task Lines window.
17. Go to Departments > Jobs > Job Journals to open the job journal.
18. Select the JOBJURNL batch in the Batch Name field.
19. Create three journal lines to post the job usage as shown in the
following table.
Field Value
Line 1
Line Type <Blank>
Posting Date 3/12/2009
Job No. J00060
Job Task No. 1111
Type Resource
No. MARK
Quantity 20
Line 2
Line Type <Blank>
Posting Date 3/12/2009
Job No. J00060
Job Task No. 1131
Type Resource
No. MARK
Quantity 50
Line 3
Line Type <Blank>
Posting Date 3/12/2009
Job No. J00060
Job Task No. 1311
Type Resource
No. MARK
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Quantity 5
FIGURE 3.13 JOB JOURNAL BEFORE POSTING
20. In the Action Pane, click Post to post the job journal.
21. Click Yes on the confirmation message that appears.
22. Click OK on the information message that appears.
23. Click OK to close the Job Journal window.
24. Open the job card for job J00060.
25. In the Action Pane, click Calculate WIP.
26. In the Job Calculate WIP batch job request window, enter the
document number and click OK.
27. Click OK on the message that appears.
28. In the Action Pane, click Job Task Lines.
29. Select job task line 1131, click Related Information > Job Task >
Job Task Card, and examine the WIP amounts that have just been
calculated.
Chapter 3: WIP Concepts
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FIGURE 3.14 WIP AMOUNTS IN THE JOB TASK CARD
30. Click OK to close the Job Task Card window.
31. Repeat steps 29-30 for job tasks 1111 and 1311. The following table
shows the WIP amounts you will retrieve.
Job Task WIP Amount
1111 Foundation posting 638.00
1131 Walls and roof posting 1595.00
1311 Pumps and pipes posting 159.50
32. Expand the WIP and Recognition FastTab on the job card to
examine the total WIP amount for the whole job.
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FIGURE 3.15 WIP AMOUNT FOR THE WHOLE JOB
Because of last minute changes, the walls and roof task is behind schedule.
Therefore, Cronus has agreed with Guilford Water Department that they only
need to pay for five hours of work.
33. In the Action Pane, click Job Task Lines.
34. Select job task line 1131 and then click Edit Planning Lines.
35. Create a new planning line as follows:
Field Value
Line Type Contract
Planning Date 3/12/2009
Type Resource
No. MARK
Quantity 5
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FIGURE 3.16 JOB PLANNING LINES BEFORE TRANSFERRING TO AN INVOICE
36. Select both lines and click Actions > Functions > Create Sales
Invoice and click OK.
37. Click Actions > Functions > Get Sales Invoice/Credit Memo to
retrieve the invoice.
FIGURE 3.17 RETRIEVED SALES INVOICE
38. In the Action Pane, click Post to post the invoice.
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39. Click Yes on the confirmation message that appears.
40. Click OK to close the Job Planning Lines window.
41. Click OK to close the Job Task Lines window.
42. In the Action Pane, click Calculate WIP to recalculate the WIP.
43. Enter the document number and click OK.
44. In the Action Pane, click Job Task Lines.
45. Select job task line 1131 and then click Related Information > Job
Task > Job Task Card.
46. On the WIP FastTab, examine the value in the WIP Amount field.
The overdue amount has already been resolved with the customer,
and the WIP amount will not be calculated for this job task.
FIGURE 3.18 CALCULATED WIP AMOUNTS IN THE JOB TASK CARD
If you examine WIP amounts for other job tasks and the total WIP amount, you
will retrieve the values shown in the following table.
Job Task WIP Amount
1111 Foundation posting 638.00
1131 Walls and roof posting 358.88
1311 Pumps and pipes posting 159.50
Job Total WIP 1156.38
47. Click OK to close the job task card.
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48. In the Job Task Lines window set the WIP-Total field for job task
1140 to Closed.
FIGURE 3.19 WIP-TOTAL SET TO CLOSED FOR JOB TASK 1140
NOTE: WIP will not be calculated for job task lines between the closed job task
line and a previous job task line with the WIP-Total field set to Total.
49. Click OK to close the Job Task Lines window.
50. In the Action Pane, click Calculate WIP.
51. Enter the document number and click OK.
52. In the Action Pane, click Job Task Lines.
53. Select job task line 1131 and click Related Information > Job Task
> Job Task Card.
54. Expand the WIP FastTab to verify that no WIP has been calculated.
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FIGURE 3.20 WIP AMOUNTS FOR JOB TASK 1131
55. Examine the WIP amounts for the rest of the job tasks and the total
WIP for the job. You will retrieve the values shown in the following
table.
Job Task WIP Amount
1111 Foundation posting 638.00
1131 Walls and roof posting
1311 Pumps and pipes posting 159.50
Job Total WIP 797.50
56. Click OK to close the job task card.
To illustrate the effect of grouping job tasks related to calculating WIP and
recognition by changing the value in the WIP-Total field in the Job Task Lines
window, follow the steps below:
1. Set the WIP-Total field for job task line 1120 to <Blank> and for
job task line 1140 to Total.
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FIGURE 3.21 WIP-TOTAL SET TO <BLANK> FOR JOB TASK LINE 1120 AND TO TOTAL FOR JOB TASK LINE 1140
2. Click Related Information > WIP > Calculate WIP.
3. Enter the document number and click OK.
4. Select job task line 1111 and then click Related Information > Job
Task > Job Task Card.
5. Examine the value in the WIP Amount field on the WIP FastTab.
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FIGURE 3.22 MODIFIED WIP AMOUNT FOR JOB TASK 1111
If you examine the WIP amounts for the job, you will retrieve the values shown
in the following table.
Job Task WIP Amount
1111 Foundation posting 273.43
1131 Walls and roof posting 638.57
1311 Pumps and pipes posting 159.50
Job Total WIP 1276.00
The WIP amount for job task1111 has now changed from 638.00 to 273.43
because job task 1131 and job task 1111 are placed in the same WIP calculation.
6. Click OK to close the job task card.
7. Set the WIP-Total field for job task line 1140 to Closed and
calculate WIP again.
8. Select the job task line 1111 and click Related Information > Job
Task > Job Task Card.
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FIGURE 3.23 WIP AMOUNTS FOR JOB TASK 1111
The job card shows that no WIP has been calculated for this task. The WIP
amounts for other tasks and for the whole job will look as shown in the following
table.
Job Task WIP Amount
1111 Foundation posting
1131 Walls and roof posting
1311 Pumps and pipes posting 159.50
Job Total WIP 159.50
9. Click OK to close the job task card window.
10. Set the WIP-Total field for job task line 1120 to Total and for job
task line 1140 to Closed, recalculate WIP, and the WIP amounts will
be correct again.
The following table illustrates how the WIP amount will look like.
Job Task WIP Amount
1111 Foundation posting 638.00
1131 Walls and roof posting
1311 Pumps and pipes posting 159.50
Job Total WIP 797.50
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Lab 3.1 – Calculating WIP and Finalizing the Job
In this lab, you will practice calculating and posting WIP to G/L, in addition to
finalizing a job that has WIP posted to G/L.
Scenario
You are the account manager at Cronus. Before the annual accounts, you have to
calculate and post the WIP of a job. The WIP calculation must be based on sales
value. Afterward, you must finalize the job.
Challenge Yourself
You need to calculate WIP and post to G/L. After the final invoicing has been
made, you need to finalize the job.
Need a Little Help?
1. Open a job card for a job with posted usage of items, resources,
and/or G/L expenses.
2. Calculate WIP and recognition.
3. Post WIP and recognition to G/L.
4. Invoice the job to the customer.
5. Change the job status to Completed.
6. Recalculate WIP and recognition.
7. Post WIP and recognition to G/L again.
Step by Step
Calculating WIP and recognition
1. Go to Departments > Jobs > Jobs and open the job card for the job
you need to calculate WIP and recognition for.
2. In the WIP Method field on the Posting FastTab, set the method of
WIP calculation to Sales Value.
3. In the Action Pane, click Calculate WIP to open the Job Calculate
WIP batch job request window.
4. Enter the document number in the Document No. field and click
OK.
Posting WIP and recognition to G/L
1. In the Action Pane of the Job Card window, click Post WIP to G/L
to open the Job Post WIP to G/L batch job request window.
2. Enter the document number in the Document No. field and click
OK.
Invoicing the job
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1. In the Job Card window, click Related Information Job > Job
Planning Lines.
2. Select the lines of the Contract type and click Create Sales Invoice.
3. In the Job Transfer to Sales Invoice window, click OK.
4. In the Action Pane, click Get Sales/Credit Memo.
5. In the Action Pane, click Post to post the invoice.
6. Click Yes on the confirmation message that appears.
7. Click Close to close the Job Planning Lines window.
Finalizing the job
1. In the Job Card window, set the Status field to Completed.
2. In the Action Pane of the job card, click Calculate WIP to open the
Job Calculate WIP batch job request form.
3. Click Ok.
4. In the Action Pane of the job card, click Post WIP to G/L to open
the Job Post WIP to G/L batch job request form.
5. On the Options FastTab, enter the date of the job completion in the
Reversal Posting Date field.
6. In the Reversal Document No. field, enter the document number for
the G/L entries that will be posted by this batch job.
7. Click OK.
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Lab 3.2 – Excluding a Job Task from WIP Calculation
In this lab, you will practice excluding a task from WIP calculation.
Scenario
You are the project manager at Cronus. The Fairway Sound Company has asked
the Cronus Company to perform the repair works in one of the music stores. In
the course of works, one of the tasks—replacing the furniture—has gone
completely out of schedule. Cronus and Fairway Sound make an agreement to
pay only half price for that task. To prevent the poor result from interfering with
the results of WIP calculation for the whole project, you need to exclude this task
from the WIP calculation.
Challenge Yourself
Set up a complex job with multiple job task lines.
Post the consumption of items and resources.
Exclude a task from WIP calculation.
Calculate WIP.
Need a Little Help?
1. Create a new job card.
2. Create job task lines.
3. Create job planning lines for posting job task lines.
4. Post the consumption of items and resources in the job journal.
5. Calculate WIP using the Job Calculate WIP batch job.
6. Create a contract planning line for the off-schedule task and specify
the agreed price.
7. Invoice the off-schedule task.
8. Close the WIP-Total for the off-schedule task.
9. Recalculate WIP.
Step by Step
Setting a up a new job
1. Go to Home > Jobs and click New in the Action Pane.
2. Press Enter to receive the next job number.
3. Enter the posting date in the Posting Date field.
4. Set the Bill-to Customer No. field to 61000.
5. Set the Job Posting Group field to SETTING UP.
6. In the Action Pane, click Job Task Lines.
7. Set up job tasks lines and click Actions > Functions > Indent Job
Tasks.
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8. For each job task line of the Posting type, click Actions > Functions
> Indent Job Tasks and set up job planning lines of the Both
Schedule and Contract type.
Posting Consumption
1. Go to Departments > Jobs > Job Journals to open the job journal.
2. Select the JOBJURNL batch in the Batch Name field.
3. Create journal lines for each posting job task.
4. In the Action Pane, click Post to post the job journal.
5. Click Yes on the confirmation message that appears.
6. Click OK on the information message that appears.
Calculating WIP
1. In the Action Pane of the Job Card window, click Calculate WIP.
2. Enter the document number in the Document No. field and click
OK.
Excluding a task from WIP calculation
1. In the Job Card window, click Job Task Lines.
2. Select the posting job task line for the off-schedule task Replacing
the furniture.
3. In the Action Pane, click Edit Planning Lines.
4. Create a new planning line(s) of the Contract type and specify the
agreed price.
5. Select all the lines and click Actions > Functions > Create Sales
Invoice and click OK.
6. Click Actions > Functions > Get Sales Invoice/Credit Memo to
retrieve the invoice.
7. In the Action Pane, click Post to post the invoice.
8. Click Yes on the confirmation message that appears.
9. Click OK to close the Job Planning Lines window.
10. In the Job Task Lines window, set the WIP-Total field for the off-
schedule job task line of the End-Total type to Closed:
Calculating WIP
1. In the Job Task Lines window, click Related Information > WIP
> Calculate WIP.
2. Click OK.
Summary
This chapter examined the concepts of WIP that are relevant when calculating
and posting WIP, along with recognition, to G/L. There are five methods of
Chapter 3: WIP Concepts
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calculating WIP in Microsoft Dynamics NAV 2009. The WIP calculation can be
based on cost value, sales value, cost of sales, percentage of completion, or
completed contract.
After the job receives the status Completed, the WIP and recognition must be
recalculated and posted to G/L again to reverse the last recognition posting and
for the final recognized profit for the job to post. Most of jobs lasting for a
medium or long period of time generally include the process of calculating and
posting WIP. The WIP functionality helps businesses eliminate inaccuracy in the
financial statement and present a true and fair view of the financial situation
when jobs are lasting over a long period of time.
Finally, this chapter described the process of excluding a task from WIP
calculation. Excluding job tasks from WIP calculation may help to avoid carrying
a task’s poor result through the whole job.
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Test Your Knowledge
1. If there is WIP calculated for a job, but the job has not been finalized yet,
where can one view the interim expenses?
2. True or False:
The Reverse Only check box on the Job Post WIP to G/L batch job request
form is only used to reverse posted WIP from the G/L when the job has the
status Order.
3. Complete the following sentence:
After the job receives the status _______, the accountant must calculate and
post WIP and recognition to G/L again to finalize the job.
4. With which of the following methods of WIP calculation revenues and costs
are not recognized until the job is finished?
( ) Cost Value
( ) Sales Value
( ) Cost of Sales
( ) Percentage of Completion
( ) Completed Contract
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Quick Interaction: Lessons Learned
Take a moment and write down three Key Points you have learned from this
chapter
1.
2.
3.
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Solutions
Test Your Knowledge
1. If there is WIP calculated for a job, but the job has not been finalized yet,
where can one view the interim expenses?
In the WIP entries for the job..
2. True or False:
True. The Reverse Only check box on the Job Post WIP to G/L batch job
request form is only used to reverse posted WIP from the G/L when the job
has the status Order.
True. Insert a check mark in this check box if you want to reverse previous
posted WIP, but not to post new WIP to G/L.
3. Complete the following sentence:
After the job receives the status _______, the accountant must calculate and
post WIP and recognition to G/L again to finalize the job.
After the job receives the status Completed, the accountant must calculate and
post WIP and recognition to G/L again to finalize the job.
4. With which of the following methods of WIP calculation revenues and costs
are not recognized until the job is finished?
( ) Cost Value
( ) Sales Value
( ) Cost of Sales
( ) Percentage of Completion
(√) Completed Contract
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