From 1da28f2278982cb630a4d206193148f724e2222f Mon Sep 17 00:00:00 2001
From: "mergify[bot]" <37929162+mergify[bot]@users.noreply.github.com>
Date: Fri, 3 Jul 2026 22:48:35 +0530
Subject: [PATCH] fix: use live source warehouse valuation for internal
 transfer purchase receipts (backport #56431) (#56677)

fix: use live source warehouse valuation for internal transfer purchase receipts (#56431)

fix: anchor incoming SLE rate to DN rate for intra-company PR transfers
(cherry picked from commit 35de9deb0a4b598b9df9e4761f11a4b34f6378ea)

Co-authored-by: Shllokkk <140623894+Shllokkk@users.noreply.github.com>
---
 .../purchase_receipt/test_purchase_receipt.py | 86 +++++++++++++++++++
 erpnext/stock/stock_ledger.py                 | 10 ++-
 2 files changed, 94 insertions(+), 2 deletions(-)

diff --git a/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py b/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py
index 52e3b8cf4f0..f5aedd15de2 100644
--- a/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py
+++ b/erpnext/stock/doctype/purchase_receipt/test_purchase_receipt.py
@@ -1976,6 +1976,92 @@ class TestPurchaseReceipt(ERPNextTestSuite):
 
 		self.assertEqual(query[0].value, 0)
 
+	def test_internal_transfer_pr_incoming_sle_anchored_to_dn_rate(self):
+		"""Internal-transfer PR's inward SLE must use DN.incoming_rate even when
+		PR.item.valuation_rate was wrong at submit, so divisional_loss does not
+		leak to COGS."""
+		from erpnext.stock.doctype.delivery_note.delivery_note import make_inter_company_purchase_receipt
+		from erpnext.stock.doctype.delivery_note.test_delivery_note import create_delivery_note
+		from erpnext.stock.stock_ledger import update_entries_after
+
+		prepare_data_for_internal_transfer()
+		customer = "_Test Internal Customer 2"
+		company = "_Test Company with perpetual inventory"
+
+		from_warehouse = create_warehouse("_Test Drift From", company=company)
+		transit_warehouse = create_warehouse("_Test Drift Transit", company=company)
+		to_warehouse = create_warehouse("_Test Drift Receiver", company=company)
+		item_doc = create_item("Test Internal Drift Item")
+
+		make_purchase_receipt(
+			item_code=item_doc.name,
+			company=company,
+			posting_date=add_days(today(), -1),
+			warehouse=from_warehouse,
+			qty=10,
+			rate=100,
+		)
+
+		dn = create_delivery_note(
+			item_code=item_doc.name,
+			company=company,
+			customer=customer,
+			cost_center="Main - TCP1",
+			expense_account="Cost of Goods Sold - TCP1",
+			qty=1,
+			rate=100,
+			warehouse=from_warehouse,
+			target_warehouse=transit_warehouse,
+		)
+		self.assertEqual(flt(dn.items[0].incoming_rate), 100.0)
+
+		pr = make_inter_company_purchase_receipt(dn.name)
+		pr.items[0].warehouse = to_warehouse
+		pr.submit()
+
+		# Simulate the failure path
+		frappe.db.set_value(
+			"Purchase Receipt Item",
+			pr.items[0].name,
+			{"sales_incoming_rate": 0, "valuation_rate": 80},
+		)
+		inward_sle = frappe.db.get_value(
+			"Stock Ledger Entry",
+			{
+				"voucher_type": "Purchase Receipt",
+				"voucher_no": pr.name,
+				"warehouse": to_warehouse,
+				"is_cancelled": 0,
+			},
+			["name", "item_code", "warehouse", "posting_date", "posting_time", "creation"],
+			as_dict=True,
+		)
+		frappe.db.set_value(
+			"Stock Ledger Entry",
+			inward_sle.name,
+			{"incoming_rate": 80, "stock_value_difference": 80},
+		)
+
+		update_entries_after(
+			{
+				"item_code": inward_sle.item_code,
+				"warehouse": inward_sle.warehouse,
+				"posting_date": inward_sle.posting_date,
+				"posting_time": inward_sle.posting_time,
+				"sle_id": inward_sle.name,
+				"creation": inward_sle.creation,
+			}
+		)
+
+		refreshed = frappe.db.get_value(
+			"Stock Ledger Entry",
+			inward_sle.name,
+			["incoming_rate", "stock_value_difference"],
+			as_dict=True,
+		)
+		self.assertEqual(flt(refreshed.incoming_rate), 100.0)
+		self.assertEqual(flt(refreshed.stock_value_difference), 100.0)
+
 	def test_backdated_transaction_for_internal_transfer_in_trasit_warehouse_for_purchase_invoice(
 		self,
 	):
diff --git a/erpnext/stock/stock_ledger.py b/erpnext/stock/stock_ledger.py
index 1da3940204c..749a329f6bb 100644
--- a/erpnext/stock/stock_ledger.py
+++ b/erpnext/stock/stock_ledger.py
@@ -877,10 +877,16 @@ class update_entries_after:
 		if (
 			sle.voucher_type in ["Purchase Receipt", "Purchase Invoice"]
 			and sle.voucher_detail_no
-			and sle.actual_qty < 0
 			and is_internal_transfer(sle)
 		):
-			sle.outgoing_rate = get_incoming_rate_for_inter_company_transfer(sle)
+			# Anchor both legs of an internal-transfer PR/PI to the DN/SI incoming_rate;
+			# otherwise an inward SLE that inherits a stale PR.valuation_rate leaks the
+			# gap to COGS via divisional_loss.
+			rate = get_incoming_rate_for_inter_company_transfer(sle)
+			if sle.actual_qty < 0:
+				sle.outgoing_rate = rate
+			elif rate:
+				sle.incoming_rate = rate
 
 		dimensions = get_inventory_dimensions()
 		has_dimensions = False