A company imports some Raw material say for Rs 1cr and pays 5lk as freight and other incidental expenses. Now, at the year end say 40% percent of this R/M lies unused. Firstly, i would like to ask that how the freight exp be shown in books? Shd it be debited to Purchase a/c or be it debited to Carriage Inward A/c? Now, How the closing stock of Raw Material be valued.? Shd the proportionate freigh cost be also added in actual cost or what?
05 May 2009
Yes Proportionate freight cost should be added in actual cost. For your knowledge I am pasting here Para 7 of AS 2:-
Costs of Purchase 7. The costs of purchase consist of the purchase price including duties and taxes (other than those subsequently recoverable by the enterprise from the taxing authorities), freight inwards and other expenditure directly attributable to the acquisition. Trade discounts, rebates, duty drawbacks and other similar items are deducted in determining the costs of purchase
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