Treatment of trial run cost
This query is : Resolved
09 September 2012
As per accounting standard asset is capitalised at cost including cost of trial run less sale value of goods generated during trial batch.
However what should be the treatment when goods produce during the trial batch are not sold till year end or upto the date of finalization of accounts for the year. Further the market value of the same is also not known as the same are not as good as final product but have demand in market i.e, saleable.
Should the same be inventorised at cost or capitalised with fixed assets i.e, not to deduct saleable value from trial run cost.
However what should be the treatment when goods produce during the trial batch are not sold till year end or upto the date of finalization of accounts for the year. Further the market value of the same is also not known as the same are not as good as final product but have demand in market i.e, saleable.
Should the same be inventorised at cost or capitalised with fixed assets i.e, not to deduct saleable value from trial run cost.
CA VISHNU GAVKARE
(Expert)
11 September 2012
it should be valued at cost and should be deducted from cost of asset.
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