I would like the opinion of members from the forum on the following scenario.
Buying stock from a non-VAT vendor into your company which is a VAT-vendor, where you sell the Stock. The Stock/Inventory Items in the system are all VATable items, so when you sell these VAT will be raised. (This implies that a full inventory module in present in the system being used)
But now how would one approach the entries (GRVing) of these items when you process it to a computerised system, and where you are working with a latest cost scenario.
Indicating on the GRV processing that the line item purchased is non-VATable is fine to balance your source document to the system at the point of processing, but what effect should this have on the latest cost of the item you are purchasing (in the stock master)? Would you change the latest cost to the value you paid the non-vat vendor and therefor if you look at the stock master your cost inclusive would be whatever you paid plus the 14%/VAT rate at that point in time?
This scenario is based on any system where you process the Supplier invoice, not using direct journal entries.
Any comments/suggestion/opinions welcome.