valuation of closing stock

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 April 2010 chapter-insurance claim

in given problem total closing stock is rs.170000.
and opening stock included 40000 abnormal item.it EXPECTED abnormal item to be sold
at rs 16000.
in what should value taken to valuation of normal item/stock.
a) rs 130000
b) rs 154000

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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02 April 2010 MY VIEW Rs. 154000/-.

Querist : Anonymous

Querist : Anonymous (Querist)

02 April 2010 thanks sir ,but sorry to says sir i refer a pc tulsian book here they normal stock considered a 130000, and abnormal stock is 40000.that time i confused,,,,,thanks sir

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CA Ravi Sisodia

CA Ravi Sisodia (Expert)
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02 April 2010 Rs. 130000/- (after reduce abnormal loss).

shakuntala chhangani

shakuntala chhangani (Expert)
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07 April 2010 The answer given by Mr. Gupta is absolutely right. As per AS 2 stock is to be valued at cost or NRV. in the given case, cost of stock is 40,000 but it is expected to realise Rs. 16,000. Hence it will be valued at NRV. now, to find the normal stock on date of fire, follow the rule " REMOVE ABNORMAL ITEMS WHEREVER INCLUDED AND AT WHATEVER PRICE INCLUDED". So from debit side of trading A/c
reduce Rs. 40,000 from opening stock and from cl. stock reduce Rs. 16,000 if abnormal item is included in closing stock at valuation But if abnormal item is included in cl. stock at cost then u need to deduct Rs. 40,000 following the abovementioned rule.
Regards, CA Shakuntala Chhangani