In valuing the stock for the Balance Sheet at 31st Dec. 2015 ` 4,600 had been written off
on certain stock which was a poor selling line having the cost ` 13,800. A portion of
these goods were sold in March, 2016 at a loss of ` 500 on original cost of ` 6,900. The
remainder of this stock was now estimated to be worth its original cost.
Will you revise the stock on 31.3.2015?
Or
If you revise the stock, then how much will you add to the stock?
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Insurance claim on loss of stock
Replies (9)
Stock value should not be revised upwards unless the same is realised through sale.
Please wait for other opinion as well.
Part of the goods which was written off was sold during the next financial year.
Is there is any logic? Or are you stating from the standard?
AS 2- stock should be recorded at cost or NRV whichever is low. so there is no chance of overvaluing the stock at the year end. if the stock is realized at higher cost the same will be indirectly reflected in GP . make a small working note. then it becomes easy to workout the same.
for this question. write 13.8k in the abnormal purchase column and write-off 4,600 on the credit side. in the statement of claim , add 6,900(1
for this question. write 13.8k in the abnormal purchase column and write-off 4,600 on the credit side. in the statement of claim , add 6,900(13.8-6.9) to the normal stock and then deduct salvage if any .
Revision was advised for the year ended 31.3.2015. Because the estimation of stock value for that year was wrong.
in this chapter we directly differentiate between normal and abnormal.
To calculate the GP rate correctly the stocks should be at cost. This is for insurance claim & nothing to do with AS.
In the year of fire the stock is segregated into normal & abnormal & apply normal GP rate to the normal rate. Closing stock of abnormal goods on date of fire is valued at what it is likely to realise. The insurance company will not pay for loss in value of abnormal goods as it is not because of fire.
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