Conversion of fixed assets into stock in trade

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shiv kumar kharva (Querist)
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27 August 2017 Dear friends/professionals, if a company converted its fixed assets into inventory then on which value accounting entry to be made (f m v or cost) whether in the books of account of the company provision for capital gain shall be made. whether differed tax assets/liability to be made....

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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27 August 2017 Accounting to be done on FMV.

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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27 August 2017 No Capital Gain arise now so no need to made any provision.

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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27 August 2017 But if you want you can create DTL.

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shiv kumar kharva

shiv kumar kharva (Querist)
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28 August 2017 thanks Rashmi ji. IND AS-2 is silent on above query but it provide that inventory shall be disclosed at lower of cost and NRV. IND AS -2 gives the definition of cost and in that definition cost means actual cost incurred by company to making inventory in current location. On the other hand if we take FMV that we have to create capital reserve to enhance the cost to FMV whether it is allowed by IND-AS.

shiv kumar kharva

shiv kumar kharva (Querist)
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28 August 2017 IND AS-12 does not allowed to made DTL on this particular transaction because it does not effects over book profit and profit for income tax purpose.

shiv kumar kharva

shiv kumar kharva (Querist)
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28 August 2017 IND AS-12 does not allowed to made DTL on this particular transaction because it does not effects over book profit and profit for income tax purpose.

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