Cuurent and non current assets (Audit)

This query is : Resolved

( Author )
11 May 2012

kindly define current and noncurrent assets/ inventory in accordance to the revised requirement of the sch vi of the company act

bibek

CA CS Amit S. Kedia

( Expert )
11 May 2012

Dear Mr. Bibek,

An asset shall be classified as current when it satisfies any of the
following criteria:-
(a) it is expected to be realized in, or is intended for sale or consumption
in, the company’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realized within twelve months after the reporting
date; or
(d) it is Cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least twelve months after
the reporting date.
All other assets shall be classified as non-current.”

Accrodingly, If you expect to consume or sale the inventory in normal operating cycle of your company then it would be classified as current asset.

CA CS Amit S. Kedia

( Expert )
11 May 2012

Further the inventory is held primarily for the purpose of being traded.