Accouting treatment for free items gift to employee

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This query is : Resolved

bhoop (Querist)

03 July 2012 Dear All

We have a stock item in our invetory as on 31/03/2012 of value Rs. 10000/- but due to bad condition that can not be sold to any one. so we have given that to our one of employee without any money consideration. so could you plese how can we treat it in our account. what account need to be debit to charge P & L?

please suggest.

thanks
bhoop singh

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)

03 July 2012 First off all, while finalising March 31, 12, you will have to value the inventory at cost or NRV, whihc ever is lower. Hence most of the down side will come as impairment.

Balance value will come as a debit in next years P&L in the form of decrease in inventory with no correspinding revenue.

bhoop

bhoop (Querist)

03 July 2012 Thanks Mr. Sanjay
Could you suggest an account head name for debit to p & l

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)

03 July 2012 In March it will be "inventory written off".

In next year it will be in "Change in inventory".

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