test(accounts): cover the rejected quantity billed on an invoice

Both rejected material settings are written for the receipt flow: the
receipt books the material against Stock Received But Not Billed, and the
invoice mapped from it carries qty = received_qty with no rejected quantity
of its own, so the supplier pays for every unit.

An invoice that moves stock itself has no receipt to do that. It billed the
accepted quantity alone, which left its rejected material with no cost the
books could carry, so the previous commit valued it at zero.

Bill the received quantity instead when Set Valuation Rate For Rejected
Materials is on, spread the valuation over the same quantity, and debit the
rejected warehouse from the invoice composer. The supplier gl entry already
carries the cost, so the ledgers agree. The setting is off by default and
cannot be enabled without Bill For Rejected Quantity In Purchase Invoice, so
no existing document changes what it invoices unless both are asked for.

erpnext/accounts/doctype/purchase_invoice/services/gl_composer.py

@@ -10,6 +10,7 @@ from erpnext.accounts.general_ledger import get_round_off_account_and_cost_cente
 from erpnext.accounts.services.base_gl_composer import BaseGLComposer
 from erpnext.accounts.services.taxes import TaxService
 from erpnext.accounts.utils import get_account_currency
+from erpnext.buying.doctype.buying_settings.buying_settings import bills_rejected_quantity
 
 
 class PurchaseInvoiceGLComposer(BaseGLComposer):
@@ -251,6 +252,10 @@ class PurchaseInvoiceGLComposer(BaseGLComposer):
 							)
 
 					else:
+						self.make_rejected_warehouse_gl_entry(
+							gl_entries, item, voucher_wise_stock_value, inventory_account_map
+						)
+
 						if not doc.is_internal_transfer():
 							gl_entries.append(
 								self.get_gl_dict(
@@ -564,6 +569,41 @@ class PurchaseInvoiceGLComposer(BaseGLComposer):
 
 		return stock_asset_rbnb or item.expense_account
 
+	def make_rejected_warehouse_gl_entry(
+		self, gl_entries, item, voucher_wise_stock_value, inventory_account_map
+	) -> None:
+		"""Book the rejected material of an invoice that bills the received quantity, whose cost the
+		supplier gl entry already carries."""
+		doc = self.doc
+		if not (item.rejected_warehouse and bills_rejected_quantity(doc)):
+			return
+
+		rejected_amount = flt(
+			voucher_wise_stock_value.get((item.name, item.rejected_warehouse)),
+			item.precision("base_net_amount"),
+		)
+		if not rejected_amount:
+			return
+
+		rejected_account = doc.get_inventory_account_dict(item, inventory_account_map, "rejected_warehouse")
+		gl_entries.append(
+			self.get_gl_dict(
+				{
+					"account": rejected_account["account"],
+					"against": doc.supplier,
+					"cost_center": item.cost_center,
+					"project": item.project or doc.project,
+					"remarks": doc.get("remarks") or _("Accounting Entry for Stock"),
+					"debit": rejected_amount,
+					"debit_in_transaction_currency": flt(
+						rejected_amount / doc.conversion_rate, item.precision("net_amount")
+					),
+				},
+				rejected_account["account_currency"],
+				item=item,
+			)
+		)
+
 	def make_stock_adjustment_entry(self, gl_entries, item, voucher_wise_stock_value, account_currency):
 		doc = self.doc
 		net_amt_precision = item.precision("base_net_amount")

erpnext/accounts/doctype/purchase_invoice/test_purchase_invoice.py

@@ -2624,6 +2624,102 @@ class TestPurchaseInvoice(ERPNextTestSuite, StockTestMixin):
 		return_pi.submit()
 		self.assertEqual(return_pi.docstatus, 1)
 
+	def test_stock_updating_invoice_bills_the_rejected_quantity(self):
+		"""With the rejected quantity billed and valued, the invoice pays for every unit received and
+		the stock it moves matches the entries it books."""
+		from erpnext.stock.doctype.item.test_item import make_item
+		from erpnext.stock.doctype.warehouse.test_warehouse import create_warehouse
+
+		company = "_Test Company with perpetual inventory"
+		item = make_item(properties={"is_stock_item": 1, "valuation_method": "FIFO"}).name
+		rejected_warehouse = create_warehouse("_Test Invoice Billed Rejected Warehouse", company=company)
+
+		settings = frappe.get_doc("Buying Settings")
+		settings.bill_for_rejected_quantity_in_purchase_invoice = 1
+		settings.set_valuation_rate_for_rejected_materials = 1
+		settings.save()
+		self.addCleanup(
+			frappe.db.set_single_value, "Buying Settings", "set_valuation_rate_for_rejected_materials", 0
+		)
+
+		pi = make_purchase_invoice(
+			item_code=item,
+			company=company,
+			warehouse="Stores - TCP1",
+			rejected_warehouse=rejected_warehouse,
+			cost_center="Main - TCP1",
+			supplier_warehouse="Work In Progress - TCP1",
+			expense_account="_Test Account Cost for Goods Sold - TCP1",
+			update_stock=1,
+			received_qty=10,
+			qty=6,
+			rejected_qty=4,
+			rate=100,
+		)
+
+		self.assertEqual(pi.items[0].amount, 1000)
+		self.assertEqual(pi.items[0].valuation_rate, 100)
+
+		stock_value = frappe.get_all(
+			"Stock Ledger Entry",
+			filters={"voucher_no": pi.name, "is_cancelled": 0},
+			fields=["warehouse", "stock_value_difference"],
+		)
+		by_warehouse = {d.warehouse: d.stock_value_difference for d in stock_value}
+
+		self.assertEqual(by_warehouse["Stores - TCP1"], 600)
+		self.assertEqual(by_warehouse[rejected_warehouse], 400)
+
+		booked = frappe.get_all(
+			"GL Entry", filters={"voucher_no": pi.name, "is_cancelled": 0}, fields=["debit"]
+		)
+		self.assertEqual(sum(flt(d.debit) for d in booked), 1000)
+
+	def test_rejected_material_is_not_valued_on_a_stock_updating_invoice(self):
+		"""An invoice bills the accepted quantity alone, so its rejected material has no cost and the
+		stock it moves must match the entries it books."""
+		from erpnext.stock.doctype.item.test_item import make_item
+		from erpnext.stock.doctype.warehouse.test_warehouse import create_warehouse
+
+		company = "_Test Company with perpetual inventory"
+		item = make_item(properties={"is_stock_item": 1, "valuation_method": "FIFO"}).name
+		rejected_warehouse = create_warehouse("_Test Invoice Rejected Warehouse", company=company)
+
+		frappe.db.set_single_value("Buying Settings", "set_valuation_rate_for_rejected_materials", 1)
+		self.addCleanup(
+			frappe.db.set_single_value, "Buying Settings", "set_valuation_rate_for_rejected_materials", 0
+		)
+
+		pi = make_purchase_invoice(
+			item_code=item,
+			company=company,
+			warehouse="Stores - TCP1",
+			rejected_warehouse=rejected_warehouse,
+			cost_center="Main - TCP1",
+			supplier_warehouse="Work In Progress - TCP1",
+			expense_account="_Test Account Cost for Goods Sold - TCP1",
+			update_stock=1,
+			received_qty=10,
+			qty=6,
+			rejected_qty=4,
+			rate=100,
+		)
+
+		stock_value = frappe.get_all(
+			"Stock Ledger Entry",
+			filters={"voucher_no": pi.name, "is_cancelled": 0},
+			fields=["warehouse", "stock_value_difference"],
+		)
+		by_warehouse = {d.warehouse: d.stock_value_difference for d in stock_value}
+
+		self.assertEqual(by_warehouse["Stores - TCP1"], 600)
+		self.assertEqual(by_warehouse[rejected_warehouse], 0)
+
+		booked = frappe.get_all(
+			"GL Entry", filters={"voucher_no": pi.name, "is_cancelled": 0}, fields=["debit"]
+		)
+		self.assertEqual(sum(flt(d.debit) for d in booked), sum(by_warehouse.values()))
+
 	def test_purchase_invoice_with_use_serial_batch_field_for_rejected_qty(self):
 		from erpnext.stock.doctype.item.test_item import make_item
 		from erpnext.stock.doctype.warehouse.test_warehouse import create_warehouse

erpnext/accounts/doctype_settings_map/purchase_invoice.json

@@ -47,6 +47,10 @@
    "setting_field": "bill_for_rejected_quantity_in_purchase_invoice",
    "settings_doctype": "Buying Settings"
   },
+  {
+   "setting_field": "set_valuation_rate_for_rejected_materials",
+   "settings_doctype": "Buying Settings"
+  },
   {
    "setting_field": "unlink_payment_on_cancellation_of_invoice",
    "settings_doctype": "Accounts Settings"

erpnext/buying/doctype/buying_settings/buying_settings.py

@@ -77,3 +77,24 @@ class BuyingSettings(Document):
 	def check_maintain_same_rate(self):
 		if self.maintain_same_rate:
 			self.set_landed_cost_based_on_purchase_invoice_rate = 0
+
+
+def is_rejected_material_valued(voucher_type: str) -> bool:
+	"""Rejected material carries stock value only when something is going to pay for it. A Purchase
+	Receipt books it against Stock Received But Not Billed. A Purchase Invoice pays for it only when
+	it bills the received quantity, which is what the setting asks for."""
+	if not frappe.db.get_single_value("Buying Settings", "set_valuation_rate_for_rejected_materials"):
+		return False
+
+	return voucher_type != "Purchase Invoice" or bool(
+		frappe.db.get_single_value("Buying Settings", "bill_for_rejected_quantity_in_purchase_invoice")
+	)
+
+
+def bills_rejected_quantity(doc) -> bool:
+	"""An invoice that moves stock itself has no receipt to bill the rejected material for it, so it
+	bills the received quantity when the settings ask for the material to be valued."""
+	if doc.doctype != "Purchase Invoice" or not doc.get("update_stock"):
+		return False
+
+	return is_rejected_material_valued(doc.doctype)

erpnext/controllers/buying_controller.py

@@ -14,6 +14,10 @@ import erpnext
 from erpnext.accounts.doctype.accounting_dimension.accounting_dimension import get_dimensions
 from erpnext.accounts.doctype.budget.budget import validate_expense_against_budget
 from erpnext.accounts.party import _get_party_details
+from erpnext.buying.doctype.buying_settings.buying_settings import (
+	bills_rejected_quantity,
+	is_rejected_material_valued,
+)
 from erpnext.buying.utils import update_last_purchase_rate, validate_for_items
 from erpnext.controllers.accounts_controller import get_taxes_and_charges
 from erpnext.controllers.sales_and_purchase_return import get_rate_for_return
@@ -477,7 +481,7 @@ class BuyingController(SubcontractingController):
 				):
 					net_rate = item.rejected_qty * item.net_rate
 
-				qty_in_stock_uom = flt(item.qty * item.conversion_factor)
+				qty_in_stock_uom = flt(self.get_valued_qty(item) * item.conversion_factor)
 				if not qty_in_stock_uom and item.get("rejected_qty"):
 					qty_in_stock_uom = flt(item.rejected_qty * item.conversion_factor)
 
@@ -492,6 +496,14 @@ class BuyingController(SubcontractingController):
 
 		update_regional_item_valuation_rate(self)
 
+	def get_valued_qty(self, row):
+		"""Quantity the net amount of the row was billed for, which is what its valuation spreads
+		over."""
+		if not flt(row.get("rejected_qty")) or not bills_rejected_quantity(self):
+			return flt(row.qty)
+
+		return flt(row.qty) + flt(row.rejected_qty)
+
 	def get_tax_details(self):
 		tax_accounts = []
 		total_valuation_amount = 0.0
@@ -871,7 +883,7 @@ class BuyingController(SubcontractingController):
 
 			if flt(d.rejected_qty) != 0:
 				valuation_rate_for_rejected_item = 0.0
-				if frappe.db.get_single_value("Buying Settings", "set_valuation_rate_for_rejected_materials"):
+				if is_rejected_material_valued(self.doctype):
 					valuation_rate_for_rejected_item = d.valuation_rate
 
 				sl_entries.append(

erpnext/controllers/taxes_and_totals.py

@@ -13,6 +13,7 @@ from frappe.utils import cint, flt, round_based_on_smallest_currency_fraction
 import erpnext
 from erpnext.accounts.doctype.journal_entry.journal_entry import get_exchange_rate
 from erpnext.accounts.doctype.pricing_rule.utils import get_applied_pricing_rules
+from erpnext.buying.doctype.buying_settings.buying_settings import bills_rejected_quantity
 from erpnext.controllers.accounts_controller import (
 	validate_conversion_rate,
 	validate_inclusive_tax,
@@ -241,13 +242,19 @@ class calculate_taxes_and_totals:
 			elif not item.qty and self.doc.get("is_debit_note"):
 				item.amount = flt(item.rate, item.precision("amount"))
 			else:
-				item.amount = flt(item.rate * item.qty, item.precision("amount"))
+				item.amount = flt(item.rate * self.get_billed_qty(item), item.precision("amount"))
 			item.net_amount = item.amount
 			self._set_in_company_currency(
 				item, ["price_list_rate", "rate_with_margin", "rate", "net_rate", "amount", "net_amount"]
 			)
 			item.item_tax_amount = 0.0
 
+	def get_billed_qty(self, item):
+		if not flt(item.get("rejected_qty")) or not bills_rejected_quantity(self.doc):
+			return flt(item.qty)
+
+		return flt(item.qty) + flt(item.rejected_qty)
+
 	def _set_in_company_currency(self, doc, fields):
 		"""set values in base currency"""
 		for f in fields:

erpnext/public/js/controllers/taxes_and_totals.js

@@ -157,6 +157,20 @@ erpnext.taxes_and_totals = class TaxesAndTotals extends erpnext.payments {
 			.filter((fieldname) => !do_not_round_fields.includes(fieldname));
 	}
 
+	get_billed_qty(item) {
+		const bills_rejected_quantity =
+			this.frm.doc.doctype === "Purchase Invoice" &&
+			this.frm.doc.update_stock &&
+			this.frm.doc.set_valuation_rate_for_rejected_materials &&
+			this.frm.doc.bill_for_rejected_quantity_in_purchase_invoice;
+
+		if (!flt(item.rejected_qty) || !bills_rejected_quantity) {
+			return flt(item.qty);
+		}
+
+		return flt(item.qty) + flt(item.rejected_qty);
+	}
+
 	calculate_item_values() {
 		var me = this;
 		if (!this.discount_amount_applied) {
@@ -167,7 +181,10 @@ erpnext.taxes_and_totals = class TaxesAndTotals extends erpnext.payments {
 				item.qty = item.qty === undefined ? (me.frm.doc.is_return ? -1 : 1) : item.qty;
 
 				if (!(me.frm.doc.is_return || me.frm.doc.is_debit_note)) {
-					item.net_amount = item.amount = flt(item.rate * item.qty, precision("amount", item));
+					item.net_amount = item.amount = flt(
+						item.rate * me.get_billed_qty(item),
+						precision("amount", item)
+					);
 				} else {
 					// allow for '0' qty on Credit/Debit notes
 					let qty = flt(item.qty);

erpnext/stock/doctype/serial_and_batch_bundle/serial_and_batch_bundle.py

@@ -27,6 +27,9 @@ from frappe.utils import (
 )
 from frappe.utils.csvutils import build_csv_response
 
+from erpnext.buying.doctype.buying_settings.buying_settings import (
+	is_rejected_material_valued,
+)
 from erpnext.stock.doctype.purchase_receipt_item.purchase_receipt_item import PurchaseReceiptItem
 from erpnext.stock.serial_batch_bundle import (
 	BatchNoValuation,
@@ -899,9 +902,7 @@ class SerialandBatchBundle(Document):
 			if batches and valuation_method == "FIFO":
 				stock_queue = parse_json(prev_sle.stock_queue)
 
-		set_valuation_rate_for_rejected_materials = frappe.db.get_single_value(
-			"Buying Settings", "set_valuation_rate_for_rejected_materials"
-		)
+		set_valuation_rate_for_rejected_materials = is_rejected_material_valued(self.voucher_type)
 
 		precision = frappe.get_precision("Serial and Batch Entry", "incoming_rate")
 		for d in self.entries: