Please Help: as2

Posted Date : 30-Sep-2011 , 07:02:50 pm | Posted By anu jain

x ltd co purchased good at a cost of RS 40 lakhs in October, 2007. Till March, 2008, 75% of the stock were sold. The company wants to disclose closing stock at RS 10lakhs. The expected sales value is RS 11 lakhs and a commission at 10% on sale is payable to the agent. Advice, what is the correct closing stock to be disclosed as at 31.3.2008.

Category : Accounts | Answers : 2 | Comments : 2 | Hits : 297

Answers

Answer By: Ashish Karundia

Dear Anu,

You have to understand one thing that stock is always valued at lower of cost and NRV. Thus, in the instant case, the closing stock will be valued not at Rs. 10 lakhs (i.e. 40*25%) but at 9.90 lakhs ( i.e. 11 lakhs - 1.10 lakhs).

Please read the definition of NRV as contained in As-2 'Valuation of Inventories'.Hope the above answers your query

Answer By: Ashish Karundia

Dear Anu,

Its good that you too solved and got the same answer. Further, thanks for reminding me that I still have to give answer for rest of the two questions :).

In respect of those two questions, I have already send message to you (please check your PM) as the same were not very clear. So I would request you to see the PM and revert.