Valuation of Stock
This query is : Resolved
24 March 2008
The closing stock of traders is valued at cost or market price, whichever is lower. I want to know that what is the meaning of “cost price” for any item which remains unsold in the second consecutive year. Is it same the price at which it was valued at the end on the preceding year (as it is the input cost for the current year), or the actual cost incurred in the preceding year.
Kindly suggest that which is the cost price of share of a company XYZ.
(A) Actual cost in Financial Year 2005-06 : Rs. 10,000/-
(B) Market price on 31-3-06 : Rs.6,000/- (considered as the value of closing stock and brought forwards in the Fin Yr 2006-07).
The item remains unsold in Fin Yr 2006-07.
(C) Market price on 31-3-07 : Rs.8,000/-.
What should be considered as Cost Price while valuation of closing stock as on 31-3-2007 : (A) Rs.10,000/- or (B) Rs.6,000/-.
Kindly suggest that which is the cost price of share of a company XYZ.
(A) Actual cost in Financial Year 2005-06 : Rs. 10,000/-
(B) Market price on 31-3-06 : Rs.6,000/- (considered as the value of closing stock and brought forwards in the Fin Yr 2006-07).
The item remains unsold in Fin Yr 2006-07.
(C) Market price on 31-3-07 : Rs.8,000/-.
What should be considered as Cost Price while valuation of closing stock as on 31-3-2007 : (A) Rs.10,000/- or (B) Rs.6,000/-.
24 March 2008
Rs. 8000/- if you are valuing at the cost or market price whichever is lower.
24 March 2008
You mean that the actual cost two or three years ago shall be considered as cost and not the value of opening stock.
24 March 2008
Mr.pushpendra is correct.Valuation of closing stock is to made independently each year.
24 March 2008
Thanks. Wonn't it cause cumbersome practice of checking the vouchers of earlier years.
25 March 2008
In the era of computer accounting this is not a problem.
25 March 2008
Actual cost or market price whichever is lower that means it is to be valued on 8000
25 March 2008
Stock is to be valued at Rs 8000/-. So as all other people have told u. Lower of cost price or market value.
25 March 2008
Cost will be always 10000/- compare with MP which ever less will be Closing Stock
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