You can view negative inventory balances and modify the Inventory Value and Average Costs calculations.
When doing a receipt against an item or node that has a negative on-hand balance, Inventory Value and Average Cost calculations are modified as follows:
Old Inventory Value + Change in Inventory Value – New Final Inventory Value
For example:
A product currently has an average cost of $3.50. The on-hand quantity in the system is -20 and the inventory value is -$70. When a receipt is created for 15 units of this item with a loaded cost of new receipt as $4.00, Sterling Selling and Fulfillment Foundation updates inventory as:
Average cost = $4.00 – loaded cost from the receipt
On hand quantity = -5
Inventory value = -$20.00
The standard inventory event publishes an increase of $60.00 to the inventory value of the item. This increase includes the loaded cost of $4.00 * 15 (the number of units received).
An additional inventory write-off event publishes the write-off amount as $10.00 calculated as (Old Inventory value + Change in inventory value due to the receipt – New final inventory value) or (-$70 + $60 – (-$20) = $10.00. In this instance, an entry to the financial application is created with a debit to an adjustment account and a credit to an inventory account. If the result were a negative amount, the entry would be credit to an adjustment account and debit to an inventory account. Sterling Selling and Fulfillment Foundation ensures that this is represented as such to the financial application.