Please Help: as 2
Posted Date : 29-Sep-2011 , 10:49:18 pm | Posted By anu jain
A has purchased 10000tv’s at the cost of Rs 8000/-. On balance sheet date there were 2000 TV’s in stock. Of this 500 were earmarked against a sales contract at a price of Rs 9000/- each. The general price of this brand has dropped to Rs 7500/-. Sale contract is committed by both parties. You are required to value stock…..
Category : Accounts | Answers : 1 | Comments : 1 | Hits : 305
Answers
Answer By: Ashish Karundia
Dear Anu,
As per AS-2 'Valuation of Inventories', stock is valued at lower of cost and net realizable value (NRV).
In the instant case, there is stock of 2000 TV on the balance sheet date. Out of 2000 TV, there is already sale contract in respect of 500 TV. Therefore, in the instant case 1500 TV will be valued at Rs. 7,500 (i.e. lower of cost or NRV) and 500 TV will be valued at cost of Rs. 8,000 (as there is already a sale contract and there is no point that they will be sold at loss).
Hope this answers your query.
As per AS-2 'Valuation of Inventories', stock is valued at lower of cost and net realizable value (NRV).
In the instant case, there is stock of 2000 TV on the balance sheet date. Out of 2000 TV, there is already sale contract in respect of 500 TV. Therefore, in the instant case 1500 TV will be valued at Rs. 7,500 (i.e. lower of cost or NRV) and 500 TV will be valued at cost of Rs. 8,000 (as there is already a sale contract and there is no point that they will be sold at loss).
Hope this answers your query.
Comments
anu jain
30-Sep-2011 , 09:00:40 amthank you so much i was dong a silly mistake.. i was takng 500 at its sales value i.e. 9000.. thanks for the ans...