Re: [SL] Accounting for fuel inventory in a small power generator

[Michael H. <mh...@it...>]

Speaking to this a little further, some of our products are =20
"whiteboxes", which are PCs assembled by us from components purchased =20=

wholesale.  Our assemblies include a line item for the typical total =20
shipping cost of the components and also a figure for the calculated =20
labor cost of purchasing, assembling, etc.  In this case of course =20
we're going the other direction, taking an intangible and making it =20
part of a tangible.
     The problem I could see with flipping it around for your =20
scenario is that you may end up in a cycle of constantly adjusting =20
the figure to match reality since your production rate will never be =20
perfectly even so no matter what conversion factor you decide to use =20
you'll always be a few MW (or more!) high or low at the end of a =20
billing cycle.  That said, I'm not sure that's really something that =20
can be handled by any accounting system except those specifically =20
designed for the power generating industry and those tend to run into =20=

the hundreds of thousands of dollars!
    If you're in the United States though there is a group called =20
EPRI, (Electric Power Research Institute), which you may even be a =20
member of already, who probably won't have the answer specifically =20
but could probably point you in the right direction to see what your =20
accounting options are.  Even if you're not in the US they might =20
still be able to help as they operate globally.  Their website is:
	http://www.epri.com/


Thanks,

Michael


On Nov 10, 2006, at 5:03 AM, Jeff Vian wrote:

> On Thu, 2006-11-09 at 22:12 -0600, Oscar A. Valdez wrote:
>> El jue, 09-11-2006 a las 21:49 -0600, Jeff Vian escribi=F3:
>>> On Thu, 2006-11-09 at 09:00 -0600, Oscar A. Valdez wrote:
>>>> We are a small power generator that purchases fuel and converts =20
>>>> it into
>>>> electrical and heat energy for sale.
>>>>
>>>> I've looked at the manual's section on Inventory, and it doesn't =20=

>>>> seem
>>>> like I can have a fuel inventory and periodically consume it to =20
>>>> produce
>>>> energy for immediate sale (can't be inventoried). That would =20
>>>> seem like a
>>>> Job Costing or WIP functionality that doesn't seem to be there in
>>>> SQL-Ledger.
>>>>
>>>> Am I wrong?
>>>>
>>> Just a thought from a layman. IANAA
>>>
>>> Fuel used in operations is an expense item.  You may buy it, and =20
>>> have
>>> some quantity on hand, but it is consumed as overhead in the =20
>>> production
>>> of energy.  It should not be treated as inventory for this purpose.
>>>
>>> Energy can be treated as a service, since it is not tangible =20
>>> inventory.
>>> It can be sold by the unit, similar to service hours, and cannot be
>>> stored. Invoicing goes to AR.
>>
>> But what we do is transform fuel into electricity and heat. It's an
>> industrial transformation. So fuel is our raw material, and =20
>> electricity
>> and heat our end products.
>
> Deiter made the comment that it can be used as part of an assembly,
> which would be the units of energy produced and sold.  As such, you =20=

> buy
> it, it goes into inventory, and as you sell the energy/heat it gets
> consumed and the cost becomes part of the COGS.
>
> I have a slight problem with that in that energy is not physical  and
> cannot be stocked even though the fuel is physical.  However, the
> concept seems proper. Cost of fuel is part of the cost of producing =20=

> the
> energy you sell.
>
>
> ----------------------------------------------------------------------=20=

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