diff --git a/erpnext/manufacturing/doctype/bom/bom.py b/erpnext/manufacturing/doctype/bom/bom.py
index 0ba8507..6bd2a98 100644
--- a/erpnext/manufacturing/doctype/bom/bom.py
+++ b/erpnext/manufacturing/doctype/bom/bom.py
@@ -808,8 +808,11 @@
 
 		items = frappe.db.sql(query, { "parent": bom, "qty": qty, "bom": bom, "company": company }, as_dict=True)
 	elif fetch_scrap_items:
-		query = query.format(table="BOM Scrap Item", where_conditions="",
-			select_columns=", bom_item.idx, item.description", is_stock_item=is_stock_item, qty_field="stock_qty")
+		query = query.format(
+			table="BOM Scrap Item", where_conditions="",
+			select_columns=", bom_item.idx, item.description, is_process_loss",
+			is_stock_item=is_stock_item, qty_field="stock_qty"
+		)
 
 		items = frappe.db.sql(query, { "qty": qty, "bom": bom, "company": company }, as_dict=True)
 	else:
diff --git a/erpnext/manufacturing/doctype/bom_scrap_item/bom_scrap_item.json b/erpnext/manufacturing/doctype/bom_scrap_item/bom_scrap_item.json
index 9f7091d..7018082 100644
--- a/erpnext/manufacturing/doctype/bom_scrap_item/bom_scrap_item.json
+++ b/erpnext/manufacturing/doctype/bom_scrap_item/bom_scrap_item.json
@@ -1,345 +1,112 @@
 {
- "allow_copy": 0, 
- "allow_guest_to_view": 0, 
- "allow_import": 0, 
- "allow_rename": 0, 
- "beta": 0, 
- "creation": "2016-09-26 02:19:21.642081", 
- "custom": 0, 
- "docstatus": 0, 
- "doctype": "DocType", 
- "document_type": "", 
- "editable_grid": 1, 
+ "actions": [],
+ "creation": "2016-09-26 02:19:21.642081",
+ "doctype": "DocType",
+ "editable_grid": 1,
+ "engine": "InnoDB",
+ "field_order": [
+  "item_code",
+  "column_break_2",
+  "item_name",
+  "is_process_loss",
+  "quantity_and_rate",
+  "stock_qty",
+  "rate",
+  "amount",
+  "column_break_6",
+  "stock_uom",
+  "base_rate",
+  "base_amount"
+ ],
  "fields": [
   {
-   "allow_bulk_edit": 0, 
-   "allow_on_submit": 0, 
-   "bold": 0, 
-   "collapsible": 0, 
-   "columns": 0, 
-   "fieldname": "item_code", 
-   "fieldtype": "Link", 
-   "hidden": 0, 
-   "ignore_user_permissions": 0, 
-   "ignore_xss_filter": 0, 
-   "in_filter": 0, 
-   "in_global_search": 0, 
-   "in_list_view": 1, 
-   "in_standard_filter": 0, 
-   "label": "Item Code", 
-   "length": 0, 
-   "no_copy": 0, 
-   "options": "Item", 
-   "permlevel": 0, 
-   "precision": "", 
-   "print_hide": 0, 
-   "print_hide_if_no_value": 0, 
-   "read_only": 0, 
-   "remember_last_selected_value": 0, 
-   "report_hide": 0, 
-   "reqd": 1, 
-   "search_index": 0, 
-   "set_only_once": 0, 
-   "unique": 0
-  }, 
+   "fieldname": "item_code",
+   "fieldtype": "Link",
+   "in_list_view": 1,
+   "label": "Item Code",
+   "options": "Item",
+   "reqd": 1
+  },
   {
-   "allow_bulk_edit": 0, 
-   "allow_on_submit": 0, 
-   "bold": 0, 
-   "collapsible": 0, 
-   "columns": 0, 
-   "fieldname": "item_name", 
-   "fieldtype": "Data", 
-   "hidden": 0, 
-   "ignore_user_permissions": 0, 
-   "ignore_xss_filter": 0, 
-   "in_filter": 0, 
-   "in_global_search": 0, 
-   "in_list_view": 1, 
-   "in_standard_filter": 0, 
-   "label": "Item Name", 
-   "length": 0, 
-   "no_copy": 0, 
-   "permlevel": 0, 
-   "precision": "", 
-   "print_hide": 0, 
-   "print_hide_if_no_value": 0, 
-   "read_only": 0, 
-   "remember_last_selected_value": 0, 
-   "report_hide": 0, 
-   "reqd": 0, 
-   "search_index": 0, 
-   "set_only_once": 0, 
-   "unique": 0
-  }, 
+   "fieldname": "item_name",
+   "fieldtype": "Data",
+   "in_list_view": 1,
+   "label": "Item Name"
+  },
   {
-   "allow_bulk_edit": 0, 
-   "allow_on_submit": 0, 
-   "bold": 0, 
-   "collapsible": 0, 
-   "columns": 0, 
-   "fieldname": "quantity_and_rate", 
-   "fieldtype": "Section Break", 
-   "hidden": 0, 
-   "ignore_user_permissions": 0, 
-   "ignore_xss_filter": 0, 
-   "in_filter": 0, 
-   "in_global_search": 0, 
-   "in_list_view": 0, 
-   "in_standard_filter": 0, 
-   "label": "Quantity and Rate", 
-   "length": 0, 
-   "no_copy": 0, 
-   "permlevel": 0, 
-   "precision": "", 
-   "print_hide": 0, 
-   "print_hide_if_no_value": 0, 
-   "read_only": 0, 
-   "remember_last_selected_value": 0, 
-   "report_hide": 0, 
-   "reqd": 0, 
-   "search_index": 0, 
-   "set_only_once": 0, 
-   "unique": 0
-  }, 
+   "fieldname": "quantity_and_rate",
+   "fieldtype": "Section Break",
+   "label": "Quantity and Rate"
+  },
   {
-   "allow_bulk_edit": 0, 
-   "allow_on_submit": 0, 
-   "bold": 0, 
-   "collapsible": 0, 
-   "columns": 0, 
-   "fieldname": "stock_qty", 
-   "fieldtype": "Float", 
-   "hidden": 0, 
-   "ignore_user_permissions": 0, 
-   "ignore_xss_filter": 0, 
-   "in_filter": 0, 
-   "in_global_search": 0, 
-   "in_list_view": 1, 
-   "in_standard_filter": 0, 
-   "label": "Qty", 
-   "length": 0, 
-   "no_copy": 0, 
-   "permlevel": 0, 
-   "precision": "", 
-   "print_hide": 0, 
-   "print_hide_if_no_value": 0, 
-   "read_only": 0, 
-   "remember_last_selected_value": 0, 
-   "report_hide": 0, 
-   "reqd": 1, 
-   "search_index": 0, 
-   "set_only_once": 0, 
-   "unique": 0
-  }, 
+   "fieldname": "stock_qty",
+   "fieldtype": "Float",
+   "in_list_view": 1,
+   "label": "Qty",
+   "reqd": 1
+  },
   {
-   "allow_bulk_edit": 0, 
-   "allow_on_submit": 0, 
-   "bold": 0, 
-   "collapsible": 0, 
-   "columns": 0, 
-   "fieldname": "rate", 
-   "fieldtype": "Currency", 
-   "hidden": 0, 
-   "ignore_user_permissions": 0, 
-   "ignore_xss_filter": 0, 
-   "in_filter": 0, 
-   "in_global_search": 0, 
-   "in_list_view": 1, 
-   "in_standard_filter": 0, 
-   "label": "Rate", 
-   "length": 0, 
-   "no_copy": 0, 
-   "options": "currency", 
-   "permlevel": 0, 
-   "precision": "", 
-   "print_hide": 0, 
-   "print_hide_if_no_value": 0, 
-   "read_only": 0, 
-   "remember_last_selected_value": 0, 
-   "report_hide": 0, 
-   "reqd": 0, 
-   "search_index": 0, 
-   "set_only_once": 0, 
-   "unique": 0
-  }, 
+   "fieldname": "rate",
+   "fieldtype": "Currency",
+   "in_list_view": 1,
+   "label": "Rate",
+   "options": "currency"
+  },
   {
-   "allow_bulk_edit": 0, 
-   "allow_on_submit": 0, 
-   "bold": 0, 
-   "collapsible": 0, 
-   "columns": 0, 
-   "fieldname": "amount", 
-   "fieldtype": "Currency", 
-   "hidden": 0, 
-   "ignore_user_permissions": 0, 
-   "ignore_xss_filter": 0, 
-   "in_filter": 0, 
-   "in_global_search": 0, 
-   "in_list_view": 0, 
-   "in_standard_filter": 0, 
-   "label": "Amount", 
-   "length": 0, 
-   "no_copy": 0, 
-   "options": "currency", 
-   "permlevel": 0, 
-   "precision": "", 
-   "print_hide": 0, 
-   "print_hide_if_no_value": 0, 
-   "read_only": 1, 
-   "remember_last_selected_value": 0, 
-   "report_hide": 0, 
-   "reqd": 0, 
-   "search_index": 0, 
-   "set_only_once": 0, 
-   "unique": 0
-  }, 
+   "fieldname": "amount",
+   "fieldtype": "Currency",
+   "label": "Amount",
+   "options": "currency",
+   "read_only": 1
+  },
   {
-   "allow_bulk_edit": 0, 
-   "allow_on_submit": 0, 
-   "bold": 0, 
-   "collapsible": 0, 
-   "columns": 0, 
-   "fieldname": "column_break_6", 
-   "fieldtype": "Column Break", 
-   "hidden": 0, 
-   "ignore_user_permissions": 0, 
-   "ignore_xss_filter": 0, 
-   "in_filter": 0, 
-   "in_global_search": 0, 
-   "in_list_view": 0, 
-   "in_standard_filter": 0, 
-   "length": 0, 
-   "no_copy": 0, 
-   "permlevel": 0, 
-   "precision": "", 
-   "print_hide": 0, 
-   "print_hide_if_no_value": 0, 
-   "read_only": 0, 
-   "remember_last_selected_value": 0, 
-   "report_hide": 0, 
-   "reqd": 0, 
-   "search_index": 0, 
-   "set_only_once": 0, 
-   "unique": 0
-  }, 
+   "fieldname": "column_break_6",
+   "fieldtype": "Column Break"
+  },
   {
-   "allow_bulk_edit": 0, 
-   "allow_on_submit": 0, 
-   "bold": 0, 
-   "collapsible": 0, 
-   "columns": 0, 
-   "fieldname": "stock_uom", 
-   "fieldtype": "Link", 
-   "hidden": 0, 
-   "ignore_user_permissions": 0, 
-   "ignore_xss_filter": 0, 
-   "in_filter": 0, 
-   "in_global_search": 0, 
-   "in_list_view": 0, 
-   "in_standard_filter": 0, 
-   "label": "Stock UOM", 
-   "length": 0, 
-   "no_copy": 0, 
-   "options": "UOM", 
-   "permlevel": 0, 
-   "precision": "", 
-   "print_hide": 0, 
-   "print_hide_if_no_value": 0, 
-   "read_only": 1, 
-   "remember_last_selected_value": 0, 
-   "report_hide": 0, 
-   "reqd": 0, 
-   "search_index": 0, 
-   "set_only_once": 0, 
-   "unique": 0
-  }, 
+   "fieldname": "stock_uom",
+   "fieldtype": "Link",
+   "label": "Stock UOM",
+   "options": "UOM",
+   "read_only": 1
+  },
   {
-   "allow_bulk_edit": 0, 
-   "allow_on_submit": 0, 
-   "bold": 0, 
-   "collapsible": 0, 
-   "columns": 0, 
-   "fieldname": "base_rate", 
-   "fieldtype": "Currency", 
-   "hidden": 0, 
-   "ignore_user_permissions": 0, 
-   "ignore_xss_filter": 0, 
-   "in_filter": 0, 
-   "in_global_search": 0, 
-   "in_list_view": 0, 
-   "in_standard_filter": 0, 
-   "label": "Basic Rate (Company Currency)", 
-   "length": 0, 
-   "no_copy": 0, 
-   "options": "Company:company:default_currency", 
-   "permlevel": 0, 
-   "precision": "", 
-   "print_hide": 1, 
-   "print_hide_if_no_value": 0, 
-   "read_only": 1, 
-   "remember_last_selected_value": 0, 
-   "report_hide": 0, 
-   "reqd": 0, 
-   "search_index": 0, 
-   "set_only_once": 0, 
-   "unique": 0
-  }, 
+   "fieldname": "base_rate",
+   "fieldtype": "Currency",
+   "label": "Basic Rate (Company Currency)",
+   "options": "Company:company:default_currency",
+   "print_hide": 1,
+   "read_only": 1
+  },
   {
-   "allow_bulk_edit": 0, 
-   "allow_on_submit": 0, 
-   "bold": 0, 
-   "collapsible": 0, 
-   "columns": 0, 
-   "fieldname": "base_amount", 
-   "fieldtype": "Currency", 
-   "hidden": 0, 
-   "ignore_user_permissions": 0, 
-   "ignore_xss_filter": 0, 
-   "in_filter": 0, 
-   "in_global_search": 0, 
-   "in_list_view": 0, 
-   "in_standard_filter": 0, 
-   "label": "Basic Amount (Company Currency)", 
-   "length": 0, 
-   "no_copy": 0, 
-   "options": "Company:company:default_currency", 
-   "permlevel": 0, 
-   "precision": "", 
-   "print_hide": 1, 
-   "print_hide_if_no_value": 0, 
-   "read_only": 1, 
-   "remember_last_selected_value": 0, 
-   "report_hide": 0, 
-   "reqd": 0, 
-   "search_index": 0, 
-   "set_only_once": 0, 
-   "unique": 0
+   "fieldname": "base_amount",
+   "fieldtype": "Currency",
+   "label": "Basic Amount (Company Currency)",
+   "options": "Company:company:default_currency",
+   "print_hide": 1,
+   "read_only": 1
+  },
+  {
+   "fieldname": "column_break_2",
+   "fieldtype": "Column Break"
+  },
+  {
+   "default": "0",
+   "fieldname": "is_process_loss",
+   "fieldtype": "Check",
+   "label": "Is Process Loss"
   }
- ], 
- "has_web_view": 0, 
- "hide_heading": 0, 
- "hide_toolbar": 0, 
- "idx": 0, 
- "image_view": 0, 
- "in_create": 0, 
- "is_submittable": 0, 
- "issingle": 0, 
- "istable": 1, 
- "max_attachments": 0, 
- "modified": "2017-07-04 16:04:32.442287", 
- "modified_by": "Administrator", 
- "module": "Manufacturing", 
- "name": "BOM Scrap Item", 
- "name_case": "", 
- "owner": "Administrator", 
- "permissions": [], 
- "quick_entry": 1, 
- "read_only": 0, 
- "read_only_onload": 0, 
- "show_name_in_global_search": 0, 
- "sort_field": "modified", 
- "sort_order": "DESC", 
- "track_changes": 1, 
- "track_seen": 0
+ ],
+ "istable": 1,
+ "links": [],
+ "modified": "2021-06-22 16:46:12.153311",
+ "modified_by": "Administrator",
+ "module": "Manufacturing",
+ "name": "BOM Scrap Item",
+ "owner": "Administrator",
+ "permissions": [],
+ "quick_entry": 1,
+ "sort_field": "modified",
+ "sort_order": "DESC",
+ "track_changes": 1
 }
\ No newline at end of file
diff --git a/erpnext/stock/doctype/stock_entry/stock_entry.py b/erpnext/stock/doctype/stock_entry/stock_entry.py
index 7b31d2f..478d5b2 100644
--- a/erpnext/stock/doctype/stock_entry/stock_entry.py
+++ b/erpnext/stock/doctype/stock_entry/stock_entry.py
@@ -463,7 +463,7 @@
 		"""
 		# Set rate for outgoing items
 		outgoing_items_cost = self.set_rate_for_outgoing_items(reset_outgoing_rate, raise_error_if_no_rate)
-		finished_item_qty = sum(d.transfer_qty for d in self.items if d.is_finished_item)
+		finished_item_qty = sum(d.transfer_qty for d in self.items if d.is_finished_item or d.is_process_loss)
 
 		# Set basic rate for incoming items
 		for d in self.get('items'):
@@ -484,6 +484,8 @@
 					raise_error_if_no_rate=raise_error_if_no_rate)
 
 			d.basic_rate = flt(d.basic_rate, d.precision("basic_rate"))
+			if d.is_process_loss:
+				d.basic_rate = flt(0.)
 			d.basic_amount = flt(flt(d.transfer_qty) * flt(d.basic_rate), d.precision("basic_amount"))
 
 	def set_rate_for_outgoing_items(self, reset_outgoing_rate=True, raise_error_if_no_rate=True):
@@ -1041,6 +1043,7 @@
 
 		self.set_scrap_items()
 		self.set_actual_qty()
+		self.adjust_qty_for_process_loss()
 		self.validate_customer_provided_item()
 		self.calculate_rate_and_amount()
 
@@ -1398,6 +1401,7 @@
 				get_default_cost_center(item_dict[d], company = self.company))
 			se_child.is_finished_item = item_dict[d].get("is_finished_item", 0)
 			se_child.is_scrap_item = item_dict[d].get("is_scrap_item", 0)
+			se_child.is_process_loss = item_dict[d].get("is_process_loss", 0)
 
 			for field in ["idx", "po_detail", "original_item",
 				"expense_account", "description", "item_name", "serial_no", "batch_no"]:
@@ -1576,6 +1580,23 @@
 			if material_request and material_request not in material_requests:
 				material_requests.append(material_request)
 				frappe.db.set_value('Material Request', material_request, 'transfer_status', status)
+				
+	def adjust_qty_for_process_loss(self):
+		process_loss_dict = {}
+		for d in self.get("items"):
+			if not d.is_process_loss:
+				continue
+			if d.item_code not in process_loss_dict:
+				process_loss_dict[d.item_code] = [flt(0), flt(0)]
+			process_loss_dict[d.item_code][0] += flt(d.transfer_qty)
+			process_loss_dict[d.item_code][1] += flt(d.qty)
+
+		for d in self.get("items"):
+			if not d.is_finished_item or d.item_code not in process_loss_dict:
+				continue
+			# Assumption: 1 FG has 1 row.
+			d.transfer_qty -= process_loss_dict[d.item_code][0]
+			d.qty -= process_loss_dict[d.item_code][1]
 
 	def set_serial_no_batch_for_finished_good(self):
 		args = {}
diff --git a/erpnext/stock/doctype/stock_entry_detail/stock_entry_detail.json b/erpnext/stock/doctype/stock_entry_detail/stock_entry_detail.json
index 22f412a..df65706 100644
--- a/erpnext/stock/doctype/stock_entry_detail/stock_entry_detail.json
+++ b/erpnext/stock/doctype/stock_entry_detail/stock_entry_detail.json
@@ -19,6 +19,7 @@
   "is_finished_item",
   "is_scrap_item",
   "quality_inspection",
+  "is_process_loss",
   "subcontracted_item",
   "section_break_8",
   "description",
@@ -543,13 +544,19 @@
    "no_copy": 1,
    "print_hide": 1,
    "read_only": 1
+  },
+  {
+   "default": "0",
+   "fieldname": "is_process_loss",
+   "fieldtype": "Check",
+   "label": "Is Process Loss"
   }
  ],
  "idx": 1,
  "index_web_pages_for_search": 1,
  "istable": 1,
  "links": [],
- "modified": "2021-06-21 16:03:18.834880",
+ "modified": "2021-06-22 16:47:11.268975",
  "modified_by": "Administrator",
  "module": "Stock",
  "name": "Stock Entry Detail",