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documents are created, one at the time of issue and one at the time of receipt.
The material document created during the fi rst step includes two line items
for each material moved, one for the issue and one for receipt into in-transit
status. The material document created at the time of the second step has only
one line item for each material moved because the movement (from in transit
to unrestricted use) occurs only at the receiving location.
Whether there is a fi nancial accounting impact (and, therefore, FI doc-
uments are created) depends on the organizational levels involved in the
movement. Three combinations of organization levels are possible: storage
location-to-storage location, plant-to-plant, and company code-to-company
code. We discuss these next.

Storage Location-to-Storage Location Transfer

A stock transfer between two storage locations within the same plant is
referred to as a storage location-to-storage location transfer. There are
several reasons for moving materials within the same plant. In some cases,
materials received from a vendor or from production are initially stored in
a temporary staging area and then moved to a more permanent location at a
later date. The staging area is designated as a storage location, so the move-
ment from this location to the permanent location is accomplished via a stock
transfer. Another possible scenario is when all materials received from a ven-
dor must be inspected for quality before being placed in their permanent loca-
tions. These materials are initially placed in the location where the inspection
is performed. Like the staging area just discussed, this inspection area is des-
ignated as a storage location. When the inspection is completed, the company
uses a stock transfer to move the materials to the more permanent location.
A transfer within a plant can be accomplished via a one-step or a two-
step procedure, as illustrated in Figure 7-3. The numbers on the arrows indicate
specifi c movement types. Note that in the one-step procedure, the materials
can be in any stock status in the supplying location and can be moved into
any stock status in the receiving location. In contrast, a two-step procedure
is possible only when the materials are in unrestricted use at the supplying
location. Moreover, the materials can be received only into unrestricted use.
Finally, as explained earlier, when the fi rst step (issue) is posted, the quantity
in unrestricted use in the supplying location is reduced, and a corresponding
increase is noted in the receiving location. However, the stock at the receiving
location has a status of in transit. When the materials are physically received,
their status is changed to unrestricted use.
Because materials are typically valued at the plant level rather than the
storage location level, a transfer between storage locations in the same plant
does not affect valuation. Therefore, no FI document is created. This observa-
tion is true when all quantities of the same materials are valued in the same
way. In some cases, however, different quantities of the same material are valued
differently. For example, materials purchased from different vendors are val-
ued differently, and materials produced in house are valued differently than
those purchased externally. When materials are valued differently, through a
practice known as split valuation, the company maintains different material
accounts for each valuation type. If the material being moved is split-valued
and the valuation type changes as a result of the transfer, then the transfer has
a fi nancial accounting impact, and an FI document is created.

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