12 January 2011
Sir, I am unable to find any specific guidelines for valuation of shares held as stock in trade as: 1) as per AS-2 it is covered under exclusion list( out of scope of AS-2) 2) AS-13 is not applicable. 3) AS-30,31 are applicable for non-SMC's
Practically people value such shares at lower of cost or NRV; whichever is lower...how?
12 January 2011
Very simple, what is the actual cost as on that day of your shares and what is the amount you get if the same shares sold out as on that day.
12 January 2011
Sir, what i meant to ask is that where is it written that valuation (lower of cost or NRV) is the correct method? No AS..or section or clause..prescribes valuation method.
12 January 2011
Accounting Standard-2 (AS-2) issued by ICAI deals with valuation of stocks, which states that‘inventories should be valued at a lower cost and net realisable value’. This standard does not apply to inventories consisting of shares, debentures and other financial instruments held as stock-in-trade.
Accounting Standard–13 (AS-13) deals with Accounting for investments, which is applicable for investments only. Therefore, there is no mandatory Accounting Standard for valuation of shares held as stock-in-trade. But in the absence thereof, the trading or manufacturing companies generally follow the practice of valuing Closing Stock (Trading Stock) of shares (other than shares held as an investment) on the basis of AS-2 that is lower of cost or net realisable value.
12 January 2011
Accounting Standard-2 (AS-2) issued by ICAI deals with valuation of stocks, which states that‘inventories should be valued at a lower cost and net realisable value’. This standard does not apply to inventories consisting of shares, debentures and other financial instruments held as stock-in-trade.
Accounting Standard–13 (AS-13) deals with Accounting for investments, which is applicable for investments only. Therefore, there is no mandatory Accounting Standard for valuation of shares held as stock-in-trade. But in the absence thereof, the trading or manufacturing companies generally follow the practice of valuing Closing Stock (Trading Stock) of shares (other than shares held as an investment) on the basis of AS-2 that is lower of cost or net realisable value.
CAclubindia
