banner_ad

Inventory Valuation

This query is : Resolved 
Profile Image

Profile Image

(Querist)
15 October 2009 Suppose, I have a contract to sell 10000 units of goods @ Rs.40/- p.u. and at the year end I have 6000 units in hand. Now at what price I will value the inventory at the year end if its Cost is Rs.45 and its market NRV is Rs.44.
What will be your answer if contract price becomes Rs.46/-?
Profile Image

CA Anisha Ray

Profile Image

CA Anisha Ray (Expert)
16 October 2009 The valuation of the inventory will have to be done on the principle of Cost or Market value whichever is lower.

So , in the above case U will have to value it at Rs.44/- ( which is the lower of the two).But since the contract price is 40, U will have to value it at 40, since there is no reason to show it at 44 as Sales price is already fixed and U will not get anything more than 40.

However, if the contract price escalates to 46/- U will value it at Rs. 44 taking the above rule.

In short, Principle of Conservatism to be followed, do not account for Profit but account for losses.
Profile Image

Navin

Profile Image

Navin (Querist)
16 October 2009 Thnks 4 ur reply
the treatment also seems 2 b prudent as per AS 1
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now


CCI Pro
Join CAclubindia WhatsApp Finance Community & stay updated with the latest TAX news, compliance alerts and important updates all in one place!


Similar Resolved Queries


loading


Unanswered Queries


banner

Trending Online Classes

view all classess

CCI Pro
Meet our CAclubindia PRO Members
Subscribe Now

Follow us
add to google news



Answer Query



Quick Links



Browse by Category




Latest Job Openings

View all
Company
26 May 2026
Audit executive

vdsr & co LLP

Chennai

CA Inter

View Details
Company
11 May 2026
CA Dropout

Patron Accounting LLP

Pune

CA Inter

View Details
Company
26 May 2026
CA / MBA (Finance) / CMA / M.Com (Finance)

Sri Aurobindo Gnostic Centre of Education

New Delhi

CA

View Details
Company
Featured 26 May 2026
Account Executive

SMJ global advisors pvt ltd

New Delhi

B.Com

View Details
Company
14 May 2026
Senior Associate

ABHISHEK SHANKAR AGARWAL & ASSOCIATES

Kolkata

CA

View Details
Company
19 May 2026
Fundraising Expert

MentorsWorld Ventures Private Limited

Ahmedabad

Others

View Details
Company
16 May 2026
Account & Audit Asst

RAHUL KHANDEBHARAD & ASSOCIATES

Nashik

B.Com

View Details
Company
22 May 2026
Audit assistant

Displayandbeyond

Mumbai

CA

View Details