CLOSING STOCK CALCULATION IN GOLD JEWELLERY BUSINESS

Hi, sir/medam

 

CAN WE CHANGE CLOSING STOCK METHOD FROM LIFO TO WEIGHTED AVERAGE IN GOLD JEWELLERY BUSINESS??

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Quick Summary
This discussion explores the possibility of changing the closing stock calculation method in a gold jewellery business from LIFO to Weighted Average. While accounting standards may permit such a change, it's crucial to understand that any resulting increase in profit due to a higher closing stock valuation will likely be subject to tax in the current year. Retrospective adjustments for prior periods are generally not allowed.

Accounting standards dont mind doing that and we have to disclose it as prior period error standard or equivalent AS standard. 

Ok so we can change CLOSING STOCK CALCULATION METHOD RIGHT??

But if i am doing so profit is going too high around 8 times high, so will I have to pay tax on that or it can be adjust nd no more tax will be levied due to high closing value because of changing closing stock method.

A change in an accounting policy should be made only if the adoption of a different accounting policy is required by statute or for compliance with an accounting standard or if it is considered that the change would result in a more appropriate presentation of the financial statements of the enterprise. As5.29

 

these charges are made for the present year only and future periods. Retrospective change is not allowed. For the current year, you will have to bear the tax consequences. This is the same for IndAS, IFRS and AS
 

 

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