Stock Valuation

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Dear All

What should be the Value of Closing stock in the following case

I/P units 105units(Cost Rs. 10500)

F/G-100units.

MV Rs. 15000.

Assume no other Conversion Cost.

The loss of 5units is a normal loss of the process undertaken.

Now i am clear that as per AS-2 para 13 abnormal loss is to be excluded.

what about normal loss? Quote Relevant para of AS/CAS.

Replies (4)

Naveen Chand Khulve

692 Points Posted on 24 March 2009

Originally posted by :Vipul Garg

Dear All

What should be the Value of Closing stock in the following case

I/P units 105units(Cost Rs. 10500)

F/G-100units.
MV Rs. 15000.
Assume no other Conversion Cost.
The loss of 5units is a normal loss of the process undertaken.
Now i am clear that as per AS-2 para 13 abnormal loss is to be excluded.
what about normal loss? Quote Relevant para of AS/CAS.

In this case value of Closing should be Rs 10500 (100Units). Since it is given that 5 units are Normal loss so it should be charged by good products.

Karuna

CA Professional

100 Points Posted on 24 March 2009

Originally posted by :Naveen Chand Khulve

Originally posted by :Vipul Garg

"

Dear All

What should be the Value of Closing stock in the following case

I/P units 105units(Cost Rs. 10500)

F/G-100units.
MV Rs. 15000.
Assume no other Conversion Cost.
The loss of 5units is a normal loss of the process undertaken.
Now i am clear that as per AS-2 para 13 abnormal loss is to be excluded.
what about normal loss? Quote Relevant para of AS/CAS.

In this case value of Closing should be Rs 10500 (100Units). Since it is given that 5 units are Normal loss so it should be charged by good products.

"as per AS-2, normal loss is to be borne by good units. so the cost of rs.10500 will be for 100 units(105 units - 5 units) and therefore, cost per unit will be rs 10.50.

stock is valued at cost and not at market value.

prashant

enginnering

32 Points Posted on 05 May 2009

In Case of Normal Loss We dont pass on the charge to the customer...if it will be suppose abnormal loss then the final output wil also be valued at 10

Anuraag Sharma

Sr Executive Finance

560 Points Posted on 07 May 2009

as per AS-2 value of Closing Stock should be Rs. 10,500 (100Units). Normal loss (5 units) should be charged by good products i.e. the cost of remaining goods ( input goods - normal loss )/Finished goods is to be increased by the amount of normal loss.

further as per AS-2 Closing stock is valued at cost or NRV whichever is lower not at the market value

so the cost of rs.10500 will be for 100 units(105 units - 5 units) and therefore, cost per unit will be rs 10.50.