Accounting Standards

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 April 2010
Sir,

Will someone guide me in the following:

What does the AS say in respect of Stock-in-Transit.Whether raw material in transit on 31st March should be booked as purchase on March itself and cenvat should be availved in March or the same be recorded as Stock-in Transit.

Thanks

CA CS CMA Srinivasan N

CA CS CMA Srinivasan N (Expert)
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10 April 2010 Hi,
As per the revenue recognition principle, the Purchases/Sales are valued based on the transfer of right of ownership in the property involved.
There are various commercial terms used to denote this like :

FOB - Free on Board - it means suppliers responsibility stops once the goods are loaded on ship,

C&F - Carriage and Freight - It means the supplier is responsible till the consignment reaches the Customer Port but Insurance to be borne by customer

CIF - Carriage, Insurance and Freight - here the responsibility of all expenses are with supplier till the goods reach Customer Port

Now for Stock in transit you have to identify this Commercial Term with your supplier.

If the Supplier's responsibility is finished as on 31st March, then you have to account is as Stock in Transit and credit the supplier.

In case the responsibility is with supplier then no need t o provide for stock in transit..

Hope its clear..

In case of further queries please write to me

Thanks
Sri

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