Learn with a practical example how the PMP method is applied and the calculations you must perform to value your stock using this system.
The valuation of inventories is contemplated in the General Accounting Plan, in its second part, within the registration and valuation standards. In the PGC it is determined that the valuation of goods and services will be carried out at their cost, whether it is the acquisition price or the production cost.
To value inventory, the lowest value between market value and cost value should be used.
Start of marked textLearn how to correctly value your warehouse stock! Discover the Weighted Average Price (WAP) method to calculate the average value of your stock.End of marked text
In Spain, there are two tax-accepted methods for calculating the cost value of stocks :
FIFO method.
Weighted average cost (WAC) method.
Good warehouse management and control and canadian colleges universities email list correct stock assessment are key factors for the success of your company. This is especially true if you have large inventories, as poor control can lead to losses, obsolescence, expiration dates or theft.
What is the PMP method of inventory valuation?
The PMP method is the warehouse stock valuation method most widely used by companies. It is used to obtain the average value of stocks , since during the financial year the units of a certain product that enter may do so at different prices.
In the General Accounting Plan, it is recommended to adopt this method to perform accounting calculations to assign value to specific assets that form part of an inventory of interchangeable assets.
A single value allocation method should be used for all inventories that have a similar nature and use.
With the PMP method, it is not necessary to take into account the order in which goods enter and leave, as is the case with the FIFO method.
