Regarding Stock-in-Trade, Every year Valuation is done at Cost or Market Value which ever is lower. In case where Market Value is lesser then Cost then in same year adjustment entry made and such stock is shown at market value .Now in Next year, Market value of previous year is taken as Cost, instead of Original Cost. IS THIS IS RIGHT PRACTICE ??????????
Regards
Madhusudan
Yes dear
This is the right practice.
what if the stock in trade is real estate like partly constructed building or land in case of a real estate developer
MARKET VALUE MEANS NET REALISABLE VALUE (NRV) AND AS ON BALANCE SHEET ONE HAVE TO LOOK FORWARD THAT WHAT IS NRV IN COMING PERIOD / DAYS AND NOT AT BALANCE SHEET DATE ONLY.
Normally for Really Estate business, the Market price (Net Reasiable Value) is not go beyond the cost. If it happens then the inventory should be valued as NRV. As per Accounting Standard 2 issued by ICAI.
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