Item values are in negative excess and end up as a discrepancy.

To prevent values from becoming a negative excess and becoming a discrepancy, you must do a negative total cost adjustment correctly.

Before doing a negative total cost adjustment, run Periodic Costing calculation first. Review the results of the item and determine how much value the item will have at the end of the month, then make your negative adjustment less than that value. If you do not do this, any remaining value, which is in negative excess, goes to discrepancy