Inventories

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 January 2013 A company has overvalued its inventories due to some clerical mistake,,,at the time of finalization of accounts that diff in actual nd overvalued fig was transferred to the CWIP just to hide the same...and tally the balances by hook or crook....so i just want to ask that what appropriate adjustment entry should be passed so that overvalued amount can be written off as it does not exists any where in actual...if it is not adjusted in this year it will be carried forward in CWIP itself for years and never going to be converted in the fixed assets......

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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23 January 2013 when value the inventory higher value, your profitability must be shown as higher side. so need to reverse back the same. no need t pass any entry. just you can value the inventory with actual value it will balanced correctly with adjusting your current periof profit. but CWIP need to be reversed with giving credit and debiting the inventory