What are the method's of valuation of Investment...?
If the question doesn't specify any method...which method should be valued?
If Avg cost basis of valn is given...for finding the cost price...we generally deduct opening bal...purchases etc from interest (in Cr side of invstment a/c) .Likewise..Should we deduct Right shares Sold for some agreed price credited in invstmnt a/c...??
Hi Whizkid/ Divya
There are broadly two methods of valuation of investments as per AS-13:-
1-- Long term investments - Value it at cost.
2-- Short term investments- Value at lower of cost or Net realizable value.
If question is silent about valuation(i.e. if market value not mentioned) , valuation of investment is to be done at cost.
If question says to value at Avg. cost , then first calculate the cost of investments. Make the total and divide by investments(units). Compare it with market price or realizable value and take lower value of it.
In case of Right shares, Cost is determined by deducting sale value of rights sold. In such cases, calculate the cost of shares by making total of investments cost on Dr. side and then deduct value of rights sold.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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