Inventory valuation

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lovesh (Querist)

27 May 2013 Please can any body tell me that, what is the way of presentation of closing inventory if it is valued at NRV (as it is less than cost)

there are two views

1) show closing stock after subtracting the value in closing stock.

2) create provision of diminish in the value of closing stock and show it as deduction in the notes of Balance sheet.

Anil Sankar V

Anil Sankar V (Expert)

27 May 2013 which provides better view in books of account. second one is preferable.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)

14 July 2013 The basic principal of stock valuation is that you take the physical stock on the end of the financial year and then value the same at cost or market value whichever is lower. If the NRV is lower then the cost then it is to be taken at NRV. Once you value the stock and take into the accounts automatically the same will be shown at deduction in value as you are not taking cost and then deducting the lower value as comared to market. Hence this theory of cost or market is automatically taken into consideration.

The other methods are FIFO
LIFO
Cost +

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