Tax Consultation (US and India)
2970 Points
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Extracts of AS-13
Note1:
Shares, debentures and other securities held as stock-in-trade (i.e., for sale in the
ordinary course of business) are not ‘investments’ as defined in this Standard.
However, the manner in which they are accounted for and disclosed in the financial
statements is quite similar to that applicable in respect of current investments.
Accordingly, the provisions of this Standard, to the extent that they relate to current
investments, are also applicable to shares, debentures and other securities held as
stock-in-trade, with suitable modifications as specified in this Standard.
Para 31
Investments classified as current investments should be carried
in the financial statements at the lower of cost and fair value
determined either on an individual investment basis or by category of
investment, but not on an overall (or global) basis
Disclosure:
Shares, debentures and other securities held for sale in the ordinary course of business
are disclosed as ‘stock-in-trade’ under the head ‘current assets’.
In respect of shares, debentures and other securities held as stock-in-trade, the cost of
stocks disposed of is determined by applying an appropriate cost formula (e.g. first-in,
first-out, average cost, etc.). These cost formulae are the same as those specified in
Accounting Standard (AS) 2, in respect of Valuation of Inventories.
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