Valuation of stock in trade

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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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