Realisable value
This query is : Resolved
21 September 2010
Finished goods are valued at the lower of cost or net realisable value. Net realisable value is considered as on the balance sheet date. If subsequent to the B/S date but before the approval of the B/S by the Board of Directors, if there is further decline to the net realiasable value, whether the same would be considered for the purpose of inventory valuation?
Finished goods are valued at the lower of cost or net realisable value. Net realisable value is considered as on the balance sheet date. If subsequent to the B/S date but before the approval of the B/S by the Board of Directors, if there is further decline to the net realiasable value, whether the same would be considered for the purpose of inventory valuation?
23 September 2010
AS4 Contingencies and Events occurring after BS Date para 8.2 and 8.3 (click this link to get access http://220.227.161.86/245as4new.pdf )
No adjustment is required.
An adjustment is required only if we get additional information affecting the determination of amounts relating to conditions existing at BS date. In this case conditions did not existed at BS date, it happened after BS date. Note 3 things.
1 Information (we get after BS date)
2.Condition (as at BS date)
3.Value (as at BS date is questionable)
Para 8.3 also gives the example of investment (which is similar to stock in hand), and it says if market value of investment fluctuate after the BS date, no adj required, as it does not relate to conditions existing at BS date.
Hope you are clear.
No adjustment is required.
An adjustment is required only if we get additional information affecting the determination of amounts relating to conditions existing at BS date. In this case conditions did not existed at BS date, it happened after BS date. Note 3 things.
1 Information (we get after BS date)
2.Condition (as at BS date)
3.Value (as at BS date is questionable)
Para 8.3 also gives the example of investment (which is similar to stock in hand), and it says if market value of investment fluctuate after the BS date, no adj required, as it does not relate to conditions existing at BS date.
Hope you are clear.
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