Please Help: as 2
Posted Date : 30-Sep-2011 , 09:07:23 am | Posted By anu jain
An omega limited company manufacturing fancy bed sheets had valued its closing stock of inventories of finished goods at the realizable value, inclusive of profit and the export cash incentives. Firm contracts had been received and goods were packed for export, but the ownership in these good had not been transferred to the foreign buyers.
Comment on the valuation of the stock of co….
Comment on the valuation of the stock of co….
Category : Accounts | Answers : 1 | Comments : 1 | Hits : 303
Answers
Answer By: Ashish Karundia
Dear Anu,
As per AS-2 'Valuation of Inventories' closing stock should always be valued at lower of cost and NRV. Thus, in the instant case the bedsheets has to be valued at the lower of cost NRV.
As i answered a similar query of yours earlier, you will appreciate, this is also a similar one. Whether the company has a order for the same makes only a difference where my nrv is less than my cost and i have order to supply the same at a price over the NRV or even cost. Even in such cases, the same needs to be valued at Cost.
In nutshell, the stock is to be valued at lower of cost and NRV.
Hope this suffice.
As per AS-2 'Valuation of Inventories' closing stock should always be valued at lower of cost and NRV. Thus, in the instant case the bedsheets has to be valued at the lower of cost NRV.
As i answered a similar query of yours earlier, you will appreciate, this is also a similar one. Whether the company has a order for the same makes only a difference where my nrv is less than my cost and i have order to supply the same at a price over the NRV or even cost. Even in such cases, the same needs to be valued at Cost.
In nutshell, the stock is to be valued at lower of cost and NRV.
Hope this suffice.
Comments
anu jain
30-Sep-2011 , 07:14:53 pmwhy they ve mentioned here inclusive of profit and export cash incentive. is it of relevance or they ve mentioned just to confuse..in valuation we don't consider this things.... thanks sir for the ans i didn't ve way to solve my queries i ve posted 4 more just give the ans of them also... itni hi hai or nai hai..