Accounting of stock during consolidation of accounts

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Sandeep Aggarwal (Querist)
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02 February 2013 I am Working in Manufacturing Company at Uttar Pradesh. It has a branch in Delhi. U.P Branch engages in production and transfer stock after charging Excise on goods. Delhi Branch has a Sales Unit. We are facing the problem during consolidation of accounts if closing stock still in delhi branch. Please suggest the accounting treatment of Excise charged during stock transfer on the closing stock when we consolidated the accounts of Company

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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02 February 2013 According to the Accounting standard -2 "Valuation of inventories" value of closing stock should not include refundable/adjustable taxes or duties if any. As well as according to the Accounting standard -21 "Accounting for consolidation of financial statements" any unrealized profits if any should be written-off while consolidation.

Now come to your case, In your case your one of your branch producing products and the same has been sending to another branch for sale along with value of excise duty payable and you are the manufacturer so you didn't get any refund/adjustment of such excise duty so AS-2 allowed to make the valuation of stock along with excise duty(non-refundable or adjustable to you) as well as there is no profit in the transfer of goods to sale branch as no question of unrealized profits arises(AS-21). So may consider value of stock along with excise duty payable.

OM SAI SRI SAI JAI JAI SAI

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