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How to record stocks in balance sheet

Meenakshi S (Self employed) (198 Points)

28 December 2020

I have invested in few stocks of different companies and is planning to keep them for more than 5 years. I have to make my balance sheet. How will I record them and what will be the second effect. Kindly explain in detail. Suppose in my first year B/S only capital (liability side) and FA, Cash and Bank were there (on asset side). Now in the second year I invested in share market. How will be my second year B/S? Kindly explain. Thanks

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3 Replies

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 28 December 2020

You add the investment asset on the asset side. You have to follow AS 13.

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sabyasachi mukherjee (27117 Points)
Replied 28 December 2020

HOW MUCH YOU HAVE INVESTED IN STOCK
THAAT WILL BE YOUR CAPITAL.

IF YOU HAVE DEMATERIALISED THE STOCKS THAT IS YOUR Investment recorded at fair market value as per accounting conventions.
Any dematerialized stocks sold will be shown under current assets under BANK.
IF ANY EXPENSES INCURRED FOR DEMATERIALIZATION OF SHARES AND OF CONSIDERABLE AMOUNT WILL BE SHOWN AS PRELIMINARY EXPENSES.
I HOPE THE BALANCES SHETT ASSET SIDE IS MORE OR LESS READY.
PLS REVERT BACK IF U HAVE FURTHER QUERIES.
Now ,

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 28 December 2020

Fixed asset a/c includes brokerage, fee and duty in cost of share issue or consideration paid

Fixed asset a/c

Share Capital / Bank a/c

Bank a/c

To Income a/c when there is cash inflow from investments

then, assuming you have fixed investments, the carrying value reduction is charged to income statement and it isn’t reversed when the carrying value rises next year.

Loss on investment

To Fixed investment a/c- reduction in carrying amount

Fixed investment a/c

To Gain on investment a/c

Loss on investment

To Gain on investment To the extent of increase in fixed investments

Finally while disposing the investment

disposal expenses a/c

Bank a/c a/c

To Disposal proceeds a/c

To Bank a/c

To FIxed investment a/c