Provision for obsolete stock
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
26 March 2012
Why do we need to create provision for obsolete stock? is it mandatory or management discretion? Many products are lying in stock for morethan 3 years but still it can be saleable and usable condition... If we make a provision for obsolete stock, what would be the actual effect on business?
Can anyone please explain the concept of provision for obsolete stock?
Can anyone please explain the concept of provision for obsolete stock?
26 March 2012
Dear Friend, Obsolete Stock , is a stock which in the decision of management is not saleble or marketable. Then management make a provision for Obsolete Stock.The provision made for Obsolete Stocks during previous year will be reversed if there will be any profit on sale of those stocks.
Anish George
(Expert)
22 September 2012
Suppose obsolete stock value is USD 1000 and 100% provision created.During the year the stock was sold for USD 400.How is the accounting treatment.
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