Departmental acc

Originally posted by : preity
	what is the formula for computing closing stock reserve in case of inter departmental transfers? does it change according to circumstances?

How to calculate stock reserve?

1) Stock of 1st department is always at actual cost, hence no stock reserve

2) Stock of 2nd department will always have stock reserve

Closing stock of 2nd department X content ratio

Or, Closing stock of 1st department at SP X GP ratio of 1st department = SR

3) Stock of 3rd department will also have stock reserve

Closing stock of 3rd department X content ratio

Or, Closing stock of 2nd department at SP X GP ratio of 2nd department = SR

Or, (Closing stock of 2nd department at SP – SR) X content ratio

Or, Closing stock of 1st department X GP ratio = SR

Note: a) Do not consider opening stock in content ratio

b) Opening stock reserve will also be calculated, if missing

If all variables are same, then stock reserve on opening and closing can be calculated on net basis

Closing stock – opening stock = “net stock”