4th of 5 posts related to item cost in Business Central

Costs move. Your books should, too. Revaluation in Business Central is the sanctioned way to correct item cost layers and ripple those changes to COGS and consumption without hand-editing history. Here’s a clean, repeatable path—framed as a problem/solution you can actually run with links to the Microsoft source documents for additional detail if you need. This topic can get complicated!

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Problem

Inventory was posted at the wrong cost (vendor price change, landed cost oversight, standard cost update, currency hiccup). You need to fix on-hand value and ensure any related shipments/consumptions pick up the correction—ideally without mangling closed periods.

Solution

1. Open the Revaluation Journal → run Calculate Inventory Value (filter by item/variant/location/date). Enter either Unit Cost (Revalued) or Inventory Value (Revalued), then Post. (Microsoft Learn)
2. Push costs to outbound: run Adjust Cost – Item Entries (manually, scheduled, or via the Inventory Cost Adjustment workspace introduced recently). This forwards cost changes from the corrected inbound layers to applied shipments/consumptions. (Microsoft Learn, Dynamics 365 Lab)
3. Hit the G/L: if Automatic Cost Posting isn’t enabled, run Post Inventory Cost to G/L so the G/L reflects the value entries (you can run it as a test first). (Microsoft Learn)

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What’s actually happening

• What can be revalued
  BC computes a revaluable quantity for the date you pick: the remaining quantity from fully invoiced inbound entries on/before that date. (Standard Cost is special; see below.) (Microsoft Learn)
• Back-dating & COGS
  Revaluation can be back-dated. Whether earlier shipments/consumptions get adjusted on their original dates depends on allowed posting ranges and inventory periods. If those windows are closed, BC moves the adjustment to the first allowed posting date—so the financial impact lands later. Plan your posting-date ranges before you post. (Microsoft Learn)
• Average Cost specifics
  You can’t revalue per receipt. Set Calculate Per = Item and only revalue at the end of the Average Cost Period (e.g., Month). Negative transactions in the current month and fully applied inbound entries aren’t affected. (Microsoft Learn)
• Standard Cost specifics
  Use the Standard Cost Worksheet → Implement Standard Cost Changes. That process updates item Standard Cost and creates Revaluation Journal lines for on-hand inventory at your effective date. Note: SKUs aren’t supported by the worksheet. (Microsoft Learn)
• Manufacturing (WIP) guardrails
  You can revalue WIP components only if the revaluation date is before the consumption date and the production order isn’t invoiced yet. (Microsoft Learn)

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Limitations & gotchas

• Inbound only (with remaining qty)
  You revalue positive item ledger entries that still have quantity on hand. Outbound entries are adjusted indirectly by cost adjustment. Purchases must be invoiced to count—except Standard Cost, which temporarily includes expected entries. (Microsoft Learn)
• Expected costs nuance (Standard Cost)
  For Standard Cost, expected entries are revalued now; when you later invoice, BC creates Direct Cost, Revaluation (reversal), and Variance value entries to true-up. (Microsoft Learn)
• Average Cost constraints
  Per-item only, at period end. If the revaluable quantity is 0 for your date, nothing posts. This won’t fix current-month negatives. (Microsoft Learn)
• Closed periods
  If you back-date but G/L posting periods or Inventory Periods are closed (or user allowed dates are restricted), BC shifts the adjustment’s posting date forward to the first allowed date. Historical reports stay as-was; the correction lands in the open period. (Microsoft Learn)

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The Righter Way™ checklist

1. Pick an effective date and confirm Allow Posting From/To windows (and Inventory Periods) are open to where you want the entries to land. (Microsoft Learn)
2. Revaluation Journal → Calculate Inventory Value.
   • FIFO/Specific: set Calculate Per = Item Ledger Entry.
   • Average: set Calculate Per = Item and use the period-end date. Enter the revised unit cost or total. Post. (Microsoft Learn)
3. Adjust Cost – Item Entries: run/schedule to propagate to COGS and consumption. (New Inventory Cost Adjustment page gives a cockpit to monitor runs and logging.) (Microsoft Learn, Dynamics 365 Lab)
4. Post Inventory Cost to G/L (if not automatic). Use Test first if you want a preview. (Microsoft Learn)
5. Validate results: review Item/Value Entries and inventory valuation. If you back-dated into closed windows, verify the posting date used on the adjustment. (Microsoft Learn)

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Field notes & further reading

• Microsoft Learn: Revalue inventory (how-to) and the deeper Design Details: Revaluation article cover revaluable quantity, expected costs, WIP rules, and average cost revaluation timing. (Microsoft Learn)
• Post to G/L: how/when and “test” option. (Microsoft Learn)
• Standard Cost: worksheet mechanics + SKU limitation. (Microsoft Learn)
• Adjust Cost mechanics: how BC forwards costs to outbound. (Microsoft Learn)
• MVP voices: Yun ZHU’s walkthrough of the Inventory Cost Adjustment workspace (BC24) is a handy cockpit for scheduling and diagnostics. (Dynamics 365 Lab)

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Wrap

Revaluation isn’t a sledgehammer—it’s a scalpel. Set the right date, honor average/standard rules, run Adjust Cost, and post to G/L with intention. That’s how you correct cost, keep COGS honest, and respect period controls—the Righter Way™.