Cost Management supports retroactive price changes in Oracle Purchasing. Over the life of purchasing documents, prices can change. The Retroactive Price Update on Purchasing Documents concurrent program automatically updates standard purchase orders against global agreements and blanket releases retroactively with price changes. When this occurs, the accounting is adjusted:

• For purchase orders with a destination type of Inventory/Shopfloor, the adjustment account is posted to the Retroactive Price Adjustment account. This account is defined at the organization level in the Receiving Options window in Oracle Purchasing. The following accounts and costs are not adjusted:

  • Inventory and Work in Process valuation accounts

  • Average and LIFO/FIF0 cost organizations (costs are not recalculated)

  • Purchase price variance

    When a price change is approved, adjustments for prior receipts are created:

    Account	Debit	Credit
    Retroactive Price Adjustment	XX	-
    Inventory AP Accrual	-	XX

• For purchase orders with a destination type of Expense, the adjustment amount is posted to the Charge account specified on the purchase order.

  When a price change is approved, adjustments are created in the following accounts:

  Account	Debit	Credit
  Charge	XX	-
  Inventory AP Accrual	-	XX

• For periodic costing, the adjustment is posted to the Periodic Retroactive Adjustment account. This account is defined at the Legal Entity and Organization Cost Group level, in the Periodic Account Assignments window.

• Transfer of ownership transactions, created for consigned goods, are also adjusted when the price on the associated blanket agreement is changed and approved.