Insurance claim-abnormal goods-ipcc

This query is : Resolved

Guest

Guest (Querist)

03 February 2012 during the valuation of abnormal goods,in Trading account it will be recorded at BOOK VALUE but in MEMORANDUM trading account,it will be recorded at ORIGINAL COST..what is the reason for such valuation?

Guest

Guest (Expert)

04 February 2012 Purpose of trading account is to give the clear picture of the business, where book value of abnormal goods is after providing for the obsolete value.

Memorandum trading account is prepared to discharge any liability like VAT, CST etc... which can be taken at original cost. It is normally made at branch level where we take notional figures or OC if available.

There is no hard and fast rule to give the treatment in memorandum trading account as mentioned by you.

When we compile the figures, chances are there that we may provide provision twice for the same goods had we provide it in the memorandum trading account. So the absolute goods shall be provided in trading account only and not in Memorandum account

Message likes : 1 times

Guest

Guest (Querist)

05 February 2012 thank you:)..i need clarification regarding one more doubt...
DURING JAN TO MAY 2011,GOODS OF THE COST PRICE OF 40000 WERE SENT TO CUSTOMERS ON SALE OR RETURN BASIS. ON THE DATE OF FIRE,CUSTOMERS HAD APPROVED HALF THE VALUE OF GOODS SENT.
how should the above information be treated if the trading account period is 1/4/2010 to 31/3/2011 and fire occured on 31/5/2011?