stock valuation

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Madhukarbhansali (Querist)
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26 March 2010 Hello Everyone,
i m in a retail business and we are processing cumin seed. now what happen is we get diff. grades as FG with diff Mkt value. for eg. Grade 1 - 135 rs Grade 2 - 125 rs.

problems is we are not selling grade 1 at the moment it is in our stock. as per normal method we are valuating it on cost but now in year end prob. is my books is showing loss bec i have huge grade 1 stock and other grades which we have sold their sales price is below cost.

now can anyone let me know how can i do the valution on grade basis so i can get correct valuation

M Prabhakar Menon

M Prabhakar Menon (Expert)
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26 March 2010 First take the inventory on a particular day and time or at any suitable cut off time.Next take the value of those goods as per the market rate compare this with the cost of those goods inclusive of expenses incurred thereon if any, arrive at the values on both basis.Then u should take the lower of cost or market value as the value of the stocks/inventory. since you are in the trade your opinion of the market value will be accepted unless there is available a contrary opinion from an identical source or published market data.

CA Ashok Kumar Sahu

CA Ashok Kumar Sahu (Expert)
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27 March 2010 agreed

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