A company got mining right from Government. Its activity involves excavation of ore, concentration of metal from excavated ore, and then smelting and refining of concentrated metal. But the company neither values closing stock of ore nor does it values closing stock of concentrated metal. At the most, it shows WIP for concentrated metal. Is this type of valuation acceptable?
What I forgot to mention that the company is charging all its ore extraction expenses, concentrating expenses to P/L A/c and citing such charging off to revenue as an argument for not calculating closing stock. If possible, kindly explain whether such treatment is correct.
Kindly help me to understand this issue.
CAclubindia
