Item cost adjustments ( Need to run this before revaluation Journal)

  1. Inventory Setup to automatically adjust item cost

 

Inventory Setup Analysis & Recommendations:

Automatic Cost Adjustment → "Always" or "Day/Week/Month"

Cost Adjustment Logging → All

✅ Settings 

Setting

        Current

          Status

Automatic Cost Posting

ON

✅ Good — GL stays in sync with inventory

Default Costing Method

FIFO

✅ Appropriate for most businesses

Location Mandatory

ON

✅ Good — enforces location on all transactions

Allow Inventory Adjustment

ON

✅ Required for cost adjustments to work

Prevent Negative Inventory

OFF

⚠️ Consider enabling if stock accuracy is critical

 

 

  1. Monthly manual process to update item costs (Good Practice)

 

 

 

Correct Item Costs in Business Central (BC) via Item Revaluation Journal

You have item cost on your item card, and you need to update the cost using revaluation journal is general practice.  

Steps

  1. Search for Item Revaluation Journals
  2. Check on Calculate inventory Value.

  1. Pop up to continue the Revaluation Journals.

  1. Update the document date and select the calculate per

 

1. Item Ledger Entry

This calculates inventory value at the individual transaction level.

Use when:

  • You need a detailed, granular revaluation — each ledger entry gets its own revaluation line
  • Items use FIFO, LIFO, or Specific costing methods (where individual lots/layers matter)
  • You want to revalue specific receipts or batches selectively
  • Auditors require entry-level traceability
  • You're correcting costs on specific past transactions

 

Note: Produces more lines in the revaluation journal — one per ILE

 

2. Item

This calculates inventory value at the item summary level (net quantity × cost).

Use when:

  • Items use the Average costing method (average cost is calculated across all entries anyway)
  • You want a quick overall revaluation for the whole item stock
  • You're doing a standard cost update (toggle "Update Standard Cost" is ON)
  • You need fewer journal lines and a cleaner, summarized journal
  • Performing period-end inventory adjustments broadly

Note: Produces fewer lines — one per item (or per item/location/variant combination)

Quick Decision Guide

Scenario

Use

FIFO / LIFO / Specific costing

Item Ledger Entry

Average costing

Item

Standard cost rollup

Item

Revalue a specific receipt

Item Ledger Entry

Period-end bulk revaluation

Item

Full audit trail needed

Item Ledger Entry