diff --git a/erpnext/manufacturing/doctype/bom/test_bom.py b/erpnext/manufacturing/doctype/bom/test_bom.py
index c89f7d6..e61bb52 100644
--- a/erpnext/manufacturing/doctype/bom/test_bom.py
+++ b/erpnext/manufacturing/doctype/bom/test_bom.py
@@ -280,6 +280,38 @@
 			self.assertEqual(reqd_item.qty, created_item.qty)
 			self.assertEqual(reqd_item.exploded_qty, created_item.exploded_qty)
 
+	def test_bom_with_process_loss_item(self):
+		fg_item_non_whole, fg_item_whole, bom_item = create_process_loss_bom_items()
+
+		if frappe.db.exists("BOM", f"BOM-{fg_item_non_whole.item_code}-001") is None:
+			bom_doc = create_bom_with_process_loss_item(
+				fg_item_non_whole, bom_item, 0.25, 0, 1
+			)
+			bom_doc.submit()
+
+		bom_doc = create_bom_with_process_loss_item(
+			fg_item_non_whole, bom_item, 2, 0
+		)
+		#  PL Item qty can't be >= FG Item qty
+		self.assertRaises(frappe.ValidationError, bom_doc.submit)
+
+		bom_doc = create_bom_with_process_loss_item(
+			fg_item_non_whole, bom_item, 1, 100
+		)
+		# PL Item rate has to be 0
+		self.assertRaises(frappe.ValidationError, bom_doc.submit)
+
+		bom_doc = create_bom_with_process_loss_item(
+			fg_item_whole, bom_item, 0.25, 0
+		)
+		#  Items with whole UOMs can't be PL Items
+		self.assertRaises(frappe.ValidationError, bom_doc.submit)
+
+		bom_doc = create_bom_with_process_loss_item(
+			fg_item_non_whole, bom_item, 0.25, 0, is_process_loss=0
+		)
+		# FG Items in Scrap/Loss Table should have Is Process Loss set
+		self.assertRaises(frappe.ValidationError, bom_doc.submit)
 
 def get_default_bom(item_code="_Test FG Item 2"):
 	return frappe.db.get_value("BOM", {"item": item_code, "is_active": 1, "is_default": 1})
@@ -353,3 +385,44 @@
 
 	for warehouse in warehouse_list:
 		create_stock_reconciliation(item_code=item_code, warehouse=warehouse, qty=qty, rate=rate)
+
+def create_bom_with_process_loss_item(
+		fg_item, bom_item, scrap_qty, scrap_rate, fg_qty=2, is_process_loss=1):
+	bom_doc = frappe.new_doc("BOM")
+	bom_doc.item = fg_item.item_code
+	bom_doc.quantity = fg_qty
+	bom_doc.append("items", {
+		"item_code": bom_item.item_code,
+		"qty": 1,
+		"uom": bom_item.stock_uom,
+		"stock_uom": bom_item.stock_uom,
+		"rate": 100.0
+	})
+	bom_doc.append("scrap_items", {
+		"item_code": fg_item.item_code,
+		"qty": scrap_qty,
+		"stock_qty": scrap_qty,
+		"uom": fg_item.stock_uom,
+		"stock_uom": fg_item.stock_uom,
+		"rate": scrap_rate,
+		"is_process_loss": is_process_loss
+	})
+	return bom_doc
+
+def create_process_loss_bom_items():
+	item_list = [
+		("_Test Item - Non Whole UOM", "Kg"),
+		("_Test Item - Whole UOM", "Unit"),
+		( "_Test PL BOM Item", "Unit")
+	]
+	return [create_process_loss_bom_item(it) for it in item_list]
+
+def create_process_loss_bom_item(item_tuple):
+	item_code, stock_uom = item_tuple
+	if frappe.db.exists("Item", item_code) is None:
+		return make_item(
+			item_code,
+			{'stock_uom':stock_uom, 'valuation_rate':100}
+		)
+	else:
+		return frappe.get_doc("Item", item_code)
diff --git a/erpnext/stock/doctype/stock_entry/tests/test_stock_entry_for_manufacture.js b/erpnext/stock/doctype/stock_entry/tests/test_stock_entry_for_manufacture.js
new file mode 100644
index 0000000..d74f316
--- /dev/null
+++ b/erpnext/stock/doctype/stock_entry/tests/test_stock_entry_for_manufacture.js
@@ -0,0 +1,27 @@
+QUnit.module('Stock');
+
+QUnit.test("test manufacture from bom", function(assert) {
+	assert.expect(2);
+	let done = assert.async();
+	frappe.run_serially([
+		() => {
+			return frappe.tests.make("Stock Entry", [
+				{purpose:"Manufacture"},
+				{from_bom:1},
+				{bom_no:"BOM-_Test Item - Non Whole UOM-001"},
+				{fg_completed_qty:2}
+			]);
+		},
+		() => cur_frm.save(),
+		() => frappe.click_button("Update Rate and Availability"),
+		() => {
+			assert.ok(cur_frm.doc.items[1] === 0.75, " Finished Item Qty correct");
+			assert.ok(cur_frm.doc.items[2] === 0.25, " Process Loss Item Qty correct");
+		},
+		() => frappe.tests.click_button('Submit'),
+		() => frappe.tests.click_button('Yes'),
+		() => frappe.timeout(0.3),
+		() => done()
+	]);
+});
+