Valuation of Inventory
This query is : Resolved
10 August 2010
Sirs,
i am auditing a company and the main business of the company is software development. Company also charges VAT on sales of the software whether there will be inventory or not?
i am auditing a company and the main business of the company is software development. Company also charges VAT on sales of the software whether there will be inventory or not?
10 August 2010
In software companies mainly softwares are prepared after receiving a contract with the contractor and sometimes advance is also received. According to me there can not be software in inventory as software designing and other are considered consultancy services.
10 August 2010
Thanks for reply. But if VAT is charged then what?
The company has valued inventory by measuring personnel cost incurred till 31st march to develop software.
Whether this tratment is correct
The company has valued inventory by measuring personnel cost incurred till 31st march to develop software.
Whether this tratment is correct
10 August 2010
Charging VAT is a seprate case as VAT is applicable on sale of a product. You must be knowing that actual software is always one and then it is sold to different customers and updated from time to time.
Most of the companies follow the same method which is followed by your company. In IT companies upto 80% cost is related to employees. It means main cost is man power. It takes years to prepare one software and hence till the actual software is prepared they usually transfer all the expenses in software development a/c and when software is sold then they set off it with the sales receipt.
Most of the companies follow the same method which is followed by your company. In IT companies upto 80% cost is related to employees. It means main cost is man power. It takes years to prepare one software and hence till the actual software is prepared they usually transfer all the expenses in software development a/c and when software is sold then they set off it with the sales receipt.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- STCG....................................................
- AMOUNT RECEIVED UNDER COMPULOSRY ACQUISITION OF AGRICULTURAL LAND
- TAN for Partnership
- Sales return eway bill
- Taxation on LTCG for property sold after 24JUL2024
- GST Registration Horse racing
- Section 43B(h) – MSME Invoice Paid Before Year End but After 45 Days
- LTCG for Assmt year 26-27
- Tax liability on income of freelancer
- Plot of land. Cost of Acquisition
- Section 54F - Exemption on LTCG in 2026 for HP purchased in 2023
- Sales amount in Gstr1
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
- Nomination of Bank for refund in itr 2
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
