17 December 2007
what will be the criteria for making provisions for Non/Slow moving inventory for Finalisation of Accounts. Is there any legal requirement under any law/AS/AAS. Kindly reply ASAP.
17 December 2007
basic criterion involved in this regards are :
1.marketibility 2.order in hand 3.Futuure perception etc. that an auditor generally posses in mind , In my opinion it regulated through case to case basis.
17 December 2007
The crieria depends upon the movement. If the inventory is non-moving, then the problem is simpler. Make an assessment why it is non-moving. If the problem is of temporory nature, due to lack of order, but the market is likely to revive then it can be retained after a thorough review. But if the non-movement is due to obsolescence and total lack of market due to that then the stocks may be written off, disposed of at the realisable value. If the stock is just slow moving, then assess its market value periodically and provide only for dimunition in value.
The requirement is there as per the accounting standards to exhibit the stock at cost or realisable value.
CAclubindia
