Valuatuion of goods given as gifts

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2013 Hello,
I want to know that if a company purchases goods from the market to be distributed free with its own finished product then at what value should we show it in our inventory?
According to me the NRV is zero so we should value it as zero.
What is your view please suggest..

Rupesh Jain

Rupesh Jain (Expert)

29 May 2013 gift items valuation on cost price and shown as consumption as when finished goods sold.

Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2013 Thank You for your advice.
But sir since the comapny has no intention to sell the product given as gift in the market then the NRV is lower than the cost.
How can we value it at cost in closing stock?
It would be of great help if you could give reference of any citing or Accounting Standard

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

29 May 2013 As per AS-2,NRV is, if you sold that goods outside what is the sale value is going to get by you and deduct the related expenses

You may keep the goods for distributing free,but there is some market value of such goods.

so as suggested by Rupesh, need to account cost value and show as consumption only for that value. consumption value can be debited as gift

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