Na2009 enus jc_03

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.


3-2

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.


3-3

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


3-4

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).


3-5

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.


3-6

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


3-7

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.


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.


3-8

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


Job No. J00050

Job Task No. 1000

Type Resource


3-9

No. SARA

Quantity 25

Line 2

Line Type Contract


Job No. J00050

Job Task No. 1000

Type Resource

No. SARA

Quantity 10

Line Type Contract


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


3-10

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.


3-11

FIGURE 3.5 JOB CALCULATE WIP BATCH JOB REQUEST WINDOW


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.


3-12

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.




Field Value

Options FastTab



3-13

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.


3-14

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.


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


3-15

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.


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.


3-17

FIGURE 3.10 CONTRACT JOB PLANNING LINES TRANSFERRED TO THE SALES INVOICE

6. In the Action Pane, click Post to post the invoice.


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.


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.


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:


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


3-20

Description Building


Line 3

Job Task No. 1110

Description Foundation


Line 4

Job Task No. 1111

Description Foundation 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


Line 7

Job Task No. 1131

Description Walls and roof posting


Line 8

Job Task No. 1140

Description Walls and roof total


WIP-Total Total

Line 9

Job Task No. 1200

Description Building-Total


Line 10

Job Task No. 1300

Description Pumps and pipes

Job Task Type Begin-total

Line 11


3-21

Job Task No. 1311

Description Pumps and pipes posting


Line 12

Job Task No. 1400

Description Pumps and pipes total


WIP-Total Total

Line 13

Job Task No. 2000

Description New water pump station 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.


3-22

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


Type Resource

No. Mark

Quantity 30

9. Click OK to close the Job Planning Lines window.



Field Value



Type Resource

No. Mark

Quantity 40



3-23



Field Value



Type Resource

No. Mark

Quantity 20


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>


Job No. J00060

Job Task No. 1111

Type Resource

No. MARK

Quantity 20

Line 2

Line Type <Blank>


Job No. J00060

Job Task No. 1131

Type Resource

No. MARK

Quantity 50

Line 3

Line Type <Blank>


Job No. J00060

Job Task No. 1311

Type Resource

No. MARK


3-24

Quantity 5

FIGURE 3.13 JOB JOURNAL BEFORE POSTING



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.


29. Select job task line 1131, click Related Information > Job Task >

Job Task Card, and examine the WIP amounts that have just been

calculated.


3-25

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.


3-26

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.



35. Create a new planning line as follows:

Field Value

Line Type Contract


Type Resource

No. MARK

Quantity 5


3-27

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



3-28




42. In the Action Pane, click Calculate WIP to recalculate the WIP.

43. Enter the document number and click OK.


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




Job Total WIP 1156.38

47. Click OK to close the job task card.


3-29

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.


50. In the Action Pane, click Calculate WIP.



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.


3-30

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


1131 Walls and roof posting




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.


3-31

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.


4. Select job task line 1111 and then click Related Information > Job


5. Examine the value in the WIP Amount field on the WIP FastTab.


3-32

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





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.


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



3-33

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




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






3-34

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.



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.


OK.

Invoicing the job


3-35

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.



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.


3-36

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


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.


7. Set up job tasks lines and click Actions > Functions > Indent Job

Tasks.


3-37

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.



6. Click OK on the information message that appears.

Calculating WIP

1. In the Action Pane of the Job Card window, click Calculate WIP.


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.




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


3-38

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.


3-39

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


3-40

Quick Interaction: Lessons Learned

Take a moment and write down three Key Points you have learned from this

chapter

1.

2.

3.


3-41

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


After the job receives the status Completed, the accountant must calculate and


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

Na2009 enus jc_03

Technology

Transcript of Na2009 enus jc_03