doubt needd attention.....trying for long

how do you value stock under following situation?

closing stock conists of 4800units purchased @ RS 5 each .at the end,the firm realises thar the closing stock is not that it would choose to acquire the market place .an eqiuvalent product is avilable in the market which can be acquired @ RS 4 each.in the effect the firm has to reduce the selling price of the product from RS 6.25 to RS 4.75.the closing stock in its present physical form can be sold in hte market at 2.25RS each. if the firm wants to replace the existing stock by the new equivalent stock by the new equivalent product ,it has to pay an additional amount of rs 1.50 per unit?
sir isma valuation 4800(rs 4 - rs 1.50)=rs 12000 kaisa kiya please help

Replies (2)

hie,

i think the following concept can be applied...

As per AS-2, in case the final goods for whose production  the stock is being is sold at less than cost then the net realisable value of the stock is equal to its replacement value....

now here the replacement value of the stock can be taken as (4-1.5)=2.5 per unit.....4 is the present price of the stock in the market and it has to incur 1.5 rs to get it replaced. So, net realisation will be only 2.5 per unit....

As per AS-2 closing stock is valued at lower of cost and net realisable value...so cost is rs.5 and NRV is rs. 2.5 ....so stock valuation rs. 2.5 *4800= Rs 12000

agar aap us stock ko replace karoge market me to 4 Rs ke price pe bik raha hai wo saaman....but aapko replace karne ke liye 1.5 Rs pay karne padenge...to isiliye net replacement price Rs2.5 per unit hi hogi...

This was my take on it..would like others to give their input...is my treatment correct??

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