diff --git a/erpnext/stock/report/serial_no_and_batch_traceability/test_serial_no_and_batch_traceability.py b/erpnext/stock/report/serial_no_and_batch_traceability/test_serial_no_and_batch_traceability.py
new file mode 100644
index 00000000000..09e68e7ab0a
--- /dev/null
+++ b/erpnext/stock/report/serial_no_and_batch_traceability/test_serial_no_and_batch_traceability.py
@@ -0,0 +1,98 @@
+# Copyright (c) 2026, Frappe Technologies Pvt. Ltd. and Contributors
+# See license.txt
+
+import frappe
+
+from erpnext.stock.doctype.delivery_note.test_delivery_note import create_delivery_note
+from erpnext.stock.doctype.stock_entry.stock_entry_utils import make_stock_entry
+from erpnext.stock.report.serial_no_and_batch_traceability.serial_no_and_batch_traceability import (
+	execute,
+)
+from erpnext.tests.utils import ERPNextTestSuite
+
+SERIAL_ITEM = "_Test Serialized Item With Series"
+
+
+class TestSerialNoAndBatchTraceability(ERPNextTestSuite):
+	def run_report(self, **extra):
+		filters = frappe._dict({"company": "_Test Company"})
+		filters.update(extra)
+		return execute(filters)[1]
+
+	def get_received_serial_no(self, receipt):
+		bundle = frappe.db.get_value(
+			"Stock Entry Detail",
+			{"parent": receipt.name, "item_code": SERIAL_ITEM},
+			"serial_and_batch_bundle",
+		)
+		return frappe.db.get_value("Serial and Batch Entry", {"parent": bundle}, "serial_no")
+
+	def test_serial_movements_traced(self):
+		"""Backward trace should surface the receipt voucher the serial came in through."""
+		receipt = make_stock_entry(
+			item_code=SERIAL_ITEM,
+			to_warehouse="Stores - _TC",
+			qty=2,
+			rate=100,
+			posting_date="2026-06-01",
+			company="_Test Company",
+		)
+		serial_no = self.get_received_serial_no(receipt)
+
+		rows = self.run_report(
+			item_code=SERIAL_ITEM,
+			serial_nos=[serial_no],
+			traceability_direction="Backward",
+		)
+
+		traced = {row["reference_name"]: row for row in rows if row.get("reference_name")}
+		self.assertIn(receipt.name, traced)
+
+		receipt_row = traced[receipt.name]
+		self.assertEqual(receipt_row["serial_no"], serial_no)
+		self.assertEqual(receipt_row["item_code"], SERIAL_ITEM)
+		self.assertEqual(receipt_row["reference_doctype"], "Stock Entry")
+		self.assertEqual(receipt_row["warehouse"], "Stores - _TC")
+		self.assertEqual(receipt_row["direction"], "Backward")
+		self.assertGreater(receipt_row["qty"], 0)
+
+	def test_forward_and_backward_directions(self):
+		"""'Both' should trace backward to the receipt and forward to the outward delivery."""
+		receipt = make_stock_entry(
+			item_code=SERIAL_ITEM,
+			to_warehouse="Stores - _TC",
+			qty=2,
+			rate=100,
+			posting_date="2026-06-01",
+			company="_Test Company",
+		)
+		serial_no = self.get_received_serial_no(receipt)
+
+		delivery_note = create_delivery_note(
+			item_code=SERIAL_ITEM,
+			qty=1,
+			serial_no=[serial_no],
+			warehouse="Stores - _TC",
+			customer="_Test Customer",
+			posting_date="2026-06-03",
+			company="_Test Company",
+		)
+
+		rows = self.run_report(
+			item_code=SERIAL_ITEM,
+			serial_nos=[serial_no],
+			traceability_direction="Both",
+		)
+
+		traced = {row["reference_name"]: row for row in rows if row.get("reference_name")}
+
+		self.assertIn(receipt.name, traced)
+		self.assertEqual(traced[receipt.name]["direction"], "Backward")
+
+		self.assertIn(delivery_note.name, traced)
+		forward_row = traced[delivery_note.name]
+		self.assertEqual(forward_row["reference_doctype"], "Delivery Note")
+		self.assertEqual(forward_row["serial_no"], serial_no)
+		self.assertEqual(forward_row["direction"], "Forward")
+		self.assertEqual(forward_row["customer"], delivery_note.customer)
+		self.assertLess(forward_row["qty"], 0)