Dear Sir,
How we can enter or show the Goods Damage Entry in our books of accounts.
What will be the entry... as we have lost lots of goods due to melting issue.
As we are in Jaggery Trading Business.
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Goods Damage Entry
Replies (5)
All right, I can help you because AS, Indas has the same treatments for inventory.
There are two aspects here like costing and AS which I have to confirm. Will get back to you soon.
With respect to gst.. Reverese itc if u have taken on such goods
As per the Costing principles, waste/spoilage must be identified between Normal and abnormal.
Normal waste is included into the finished goods cost or inflate the purchase price/unit to meet the waste cost.
Abnormal waste/ spoilage is expensed.
If it is an agricultural product, the measurement is like 'fair value of the produce' and the biological assets standard does not mention waste treatment and however all inventory principles can be applied incase of no prescribed treatment. When this damage occurred in the warehouse, your lucky that you dont have to do inventory under/overvaluation because there is no diminution in price but complete loss. Just write it off like
Dr. Inventory loss
Cr. Inventory
This is because you are saying its abnormal spoilage. If you want to consider it as normal waste then
Dr. Inventory
Dr. Waste capitalised or spread evenly over inventory or batch
Cr. Closing inventory P&L
But if your just a trader in a shop only and not the farmer, according cost CIMA, evaporation is a normal waste and you must charge this cost on other products. But, If the loss appears abnormal then write it off.
Simple!!
Agreed
These are all normal losses to be absorbed by good units.
This is what the principles of costing says.
let's come to the accounting entries:
1. inventory loss there is no nomenclature on the same.
2. Goods lost in transit account dr.
cr.. stock account.
There are legal issues with the same.
This is what the principles of costing says.
let's come to the accounting entries:
1. inventory loss there is no nomenclature on the same.
2. Goods lost in transit account dr.
cr.. stock account.
There are legal issues with the same.
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