Rahul Verma (CA-Final) (484 Points)
20 May 2016Hellozz guys
Kindly help me in this particular situation.
As per AS-2, Inventory should be valued as per FIFO or Weighted Average Method.
Kindly Tell
1. Which type of stocks are eligible to value through Weighted Average Method.
2. If i have business of manufecturing Jwellary So Whether can i adopt WA Method.
Thanks in Advance
Milind M. Kulkarni
(Practicing CA)
(580 Points)
Replied 26 May 2016
Rahul, I think weighted average method is more scientific and gives more authentic results than FIFO method, hence more preferred in stock valuation. Others can, of course, comment if they have different views. WA method may not be appropriate in cases where items of stock differ drastically in rates per unit and weighted average will give a totally misleading picture. I do not see any other scenario where WA method should not be applied.
Even in case of jewellery stock as mentioned by you, gold rates are per gram or those of silvers in per kg; hence WA method can give authentic results according to me. However, those having practical experience in jewellery stock valuation can comment with greater authority.
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