AS-2
This query is : Resolved
Punit Tibrewal
(Querist)
03 April 2010
let Realisable value = 10000/-
Cost of disposal = 2000/-
therefore, NRV = 10000 - 2000 = 8000/-
this NRV is shown as closing stock.
in next year when actual sale is done, how do we account for the cost of disposal in books of acounts..???
Cost of disposal = 2000/-
therefore, NRV = 10000 - 2000 = 8000/-
this NRV is shown as closing stock.
in next year when actual sale is done, how do we account for the cost of disposal in books of acounts..???
kartik_somu
(Expert)
03 April 2010
cost of disposal will be accounted as an expense when incurred
CMA Ramesh Krishnan
(Expert)
03 April 2010
cost of disposal can be accounted actually incurred
Punit Tibrewal
(Querist)
03 April 2010
what should be the sale value...???
10000/- or 8000/-..??
10000/- or 8000/-..??
CA Ravi Sisodia
(Expert)
03 April 2010
Rs.10000
Punit Tibrewal
(Querist)
04 April 2010
but showing sale value of 10000/- gives us profit as 2000/- which can't be.?????
shakuntala chhangani
(Expert)
07 April 2010
Hi everybody, stock is to be valued at cost or NRV whichever is less. In the abovementioned question cost is not given. Chalo let us assume that the cost is 9000 in which case stock will be valued at 8,000 (NRV being lower). Now when on the credit side of trading A/c stock is taken as 8,000, profit will get reduced by Rs. 1,000 (cost 9,000 dr. to trading A/c valuation 8,000). now this lower amount will become opening stock for the next year. Sales will be recorded at actual selling price. the difference will be profit or loss. If the sales takes place before finalisation of A/c then actual selling price will be taken for comparision of cost and NRV otherwise estimated amount of NRV will be taken for comparision. Further taking sales as 10,000 will not show a profit of 2,000 as at that time only you will recognise exp. of disposal of Rs. 2,000.
Regards, Ca Shakuntala Chhangani
Regards, Ca Shakuntala Chhangani
Punit Tibrewal
(Querist)
07 April 2010
bue expenses of disposal is shown in P/L A/C, wouldn't that give a profit of Rs. 2000/- in trading account...?????
shakuntala chhangani
(Expert)
07 April 2010
Of course yes. but when we talk about profitability, it is always net effect.
Punit Tibrewal
(Querist)
08 April 2010
okk...thanks for help
shakuntala chhangani
(Expert)
09 April 2010
you are most welcome. Happy to help
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