Cost/Unit Credit Accounting

Sometimes, refunds will receive a Cost/Unit credit on the Refunds page for accounting purposes.

Refunds that are marked as Sellable will be given a Cost/Unit credit so the buy cost can be accounted for with the next sale without doubling it as an expense.

Refunds that are Unsellable, have a disposition reason, and are returned back to your inventory will receive a Cost/Unit credit. We will also add back in the quantity to your inventory until the item is removed to match what Amazon does with the inventory.

When you remove the item, you can change the disposition on the Accounting>Disposition Management page to control how the buy cost is accounted for once the removal order is complete.

Refunds that are Unsellable, have a disposition reason, but are not returned back to your inventory will not receive a Cost/Unit credit.

An example of this is when a customer returns a product that is damaged, and Amazon reimburses you in cash instead of adding the unit back to your inventory. In this case, the Cost/Unit remains captured as an expense with the original sales transaction.

Refunds that are Unsellable, without a disposition reason from Amazon, will not receive a Cost/Unit credit.

Typically this means that the item was not returned back to the fulfillment center, and so the buy cost remains with the original sale. If the item is later received, and Amazon updates the disposition reason, the buy cost will be updated and inventory adjust for refunds starting in 2020.

Sellable refunds in this range are given a Cost/Unit credit so the buy cost can be accounted for with the next sale without doubling it as an expense.

Unsellable refunds returned to inventory prior to January 1st, 2020 are not given Cost/Unit credit and the quantity is not added back to inventory. To properly account for these items, you'll need to remove them (which corrects the Inventory discrepancy) and account for the item as mentioned in the Disposition Management Prior to 2020 article.

In order to properly account for Refunds before July 1st, 2019, you'll need to manually mark the refunds as either Sellable or Defective based on the Amazon Disposition from your FBA customer returns report in Seller Central.

If a refund is not on the FBA customer returns report at all, you would mark it as Unsellable.

For more information on changing the disposition of your Refunds prior to July 1st, please see- When + Why to Change a Removal to Sellable or Unsellable

After you make the changes to the Refunds page, you will then navigate to the Accounting>Disposition Management page to make changes to any removals due to refunds in which you disagreed with the Amazon Disposition.

Please note that you may notice that the Remaining area in your Inventory>FBA Replenishments pages shows Sellable Refunds placed back in your inventory for a Refund when you previously marked that Refund as Unsellable. An example of this scenario can be seen below:

This is because, for your inventory, we use the Amazon disposition for the item to subtract the refund. This way, when the removal order is done where you disagree with the Amazon disposition, the inventory will then be removed again with the completion of the removal order. The removal order will offset the addition of the Sellable Refund to ensure the FIFO order of your remaining replenishments is most accurate.

You can view the Amazon-selected disposition of the Refund by clicking on the Order ID on the Refunds page and viewing the "Disposition Status" area. Items with an Unknown disposition are deemed Unsellable.

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