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85.56 Inventories |
85.56.10May 1, 1999 |
Inventory management and control procedures are in Chapter 35 |
Agencies are to comply with the OFM prescribed inventory policies and procedures in Chapter 35 of this manual. |
85.56.20
June 1, 2014 |
Consumable inventories |
When the fiscal year-end balance of consumable inventories on-hand at an inventory control point is estimated to exceed $50,000 in value, agencies are to select, and consistently apply, one of the following two accounting alternatives. |
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85.56.20.a |
Periodic Inventory Method
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85.56.20.b |
Perpetual Inventory Method
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85.56.30
June 1, 2020 |
Merchandise inventories in proprietary fund type accounts |
Agencies are to select, and consistently apply, one of the following alternatives to account for merchandise inventories in proprietary fund type accounts. |
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85.56.30.a |
Periodic Inventory Method |
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85.56.30.b |
Perpetual Inventory Method |
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85.56.40
January 1, 2014 |
Donations of consumable inventories |
85.56.40.a |
Record the receipt of donated consumable inventories, other than federally donated consumable inventories, in GL Code 1415 “Donated Inventories” and recognize revenue in GL Code 3220 “Noncash revenue” with Revenue Source Code 0441 “Contributions and Grants.” In governmental fund type accounts, an additional entry is required to adjust the nonspendable portion of fund balance to indicate that the donated consumable inventories on hand are no longer available for appropriation. This entry is recorded by debiting the appropriate fund equity GL code and crediting GL Code 9120 "Nonspendable Consumable Inventories." To record the use or distribution of donated consumable inventories during the year, debit GL Code 6525 "Expenditure Adjustments/Eliminations (GAAP)," or if non-appropriated GL Code 6510 "Cash Expenditures/ Expenses," with an appropriate subobject and credit GL Code 1415 “Donated Inventories.” An additional entry in governmental funds is required to adjust the nonspendable portion of fund balance. |
85.56.40.b |
The following revenue and expenditure/expense examples illustrate the perpetual method approach for recording the receipt and use of federally donated consumable inventories. The end result of the entries is that the balance in GL Code 1415 "Donated Inventories," which represents the value of donated inventories on hand, is exactly offset by GL Code 5190 "Unearned Revenues." Also, the amount of donated inventory revenue recognized during the year, GL Code 3225 "Revenue Adjustment/Elimination (GAAP)," is exactly offset by GL Code 6525 "Expenditure/Expense Adjustment/Elimination (GAAP)," the amount of donated inventory used or distributed during the year. Revenue. The fair value of federally donated consumable inventories is recorded by debiting GL Code 1415 "Donated Inventories" and crediting GL Code 5190 "Unearned Revenue." If shipping costs were incurred by the state, they are to be recorded by debiting GL Code 1410 "Consumable Inventories,” offset by a credit to the appropriate cash or payable GL code. Refer to Subsection 85.65.46.a for an illustrative entry. Expenditures/expenses. To record the use or distribution of federally donated consumable inventories during the year, GL Code 6525 "Expenditure Adjustments/Eliminations (GAAP)" with an appropriate subobject is debited and GL Code 3225 “Revenue Adjustments/Eliminations (GAAP)" with an appropriate revenue source code is credited for the previously recorded fair value of the donated consumable inventories used or distributed. The amount of shipping costs, if any, applicable to the used or distributed donated consumable inventories is to be removed (credited) from GL Code 1410 "Consumable Inventories" and GL Code 6510 "Cash Expenditures/ Expenses" is to be debited. Refer to Subsection 85.65.46.b for an illustrative entry. Year-end adjustment. At year-end, an entry to GL Code 1415 is required to adjust its balance to the federally donated inventory on hand. The offsetting entry is recorded to GL Code 5190 "Unearned Revenues." Shipping costs (if applicable) of donated consumable inventories on hand at fiscal year-end is to be included in the ending balances of GL Code 1410 "Consumable Inventories." In governmental fund type accounts, an additional entry is required to adjust the nonspendable portion of fund balance to indicate that the shipping costs expended on donated consumable inventories on hand are no longer available for appropriation. This entry is recorded by debiting the appropriate fund equity GL code and crediting GL Code 9120 "Nonspendable Consumable Inventories" for the amount of the increase in shipping costs in GL Code 1410. This entry would be reversed for a decrease in shipping costs in GL Code 1410. Refer to Subsection 85.65.46.c for an illustrative entry. |
85.56.40.c |
Transfers between agencies. If donated inventory is transferred between agencies, the sending agency records the transfer by reversing the entry made when the inventory was received. Because the sending agency is not consuming the inventory, it does not record an expenditure for inventory transferred to other agencies. The receiving agency is to record the receipt and use of the donated inventory. |