07 April 2010
Hi everybody, stock is to be valued at cost or NRV whichever is less. In the abovementioned question cost is not given. Chalo let us assume that the cost is 9000 in which case stock will be valued at 8,000 (NRV being lower). Now when on the credit side of trading A/c stock is taken as 8,000, profit will get reduced by Rs. 1,000 (cost 9,000 dr. to trading A/c valuation 8,000). now this lower amount will become opening stock for the next year. Sales will be recorded at actual selling price. the difference will be profit or loss. If the sales takes place before finalisation of A/c then actual selling price will be taken for comparision of cost and NRV otherwise estimated amount of NRV will be taken for comparision. Further taking sales as 10,000 will not show a profit of 2,000 as at that time only you will recognise exp. of disposal of Rs. 2,000. Regards, Ca Shakuntala Chhangani
CAclubindia
