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Inventory acquisition cost

20 April 2023

a company purchase inventory of rs 1 cr and the supplier delivered the good of rs 1 cr 50 thousand ( 50 thousand as a promotional gift) so at which value/cost it is recorded in books of account of company

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6 Replies

Yasaswi Gomes new (Finance ) (4492 Points)
Replied 21 April 2023

1.5 in the inventory

1 in cos

0.5 as gain

You have 1 in trading cause it sets off with purchases

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Atharv Sankliya (1323 Points)
Replied 21 April 2023

Not getting you sir

NARENDRA (ACCOUNTS MANAGER) (1756 Points)
Replied 21 April 2023

If that particular 50 k is not payable by the company, at that time you should book the value of 1 Cr but at the same time you should punch the whole inventories ( promotional gifts too ) in your books .

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Yasaswi Gomes new (Finance ) (4492 Points)
Replied 21 April 2023

In pl

Dr. Inventory 1

Cr. Cost of sales 1

Again

Dr. Inventory 0.5

Cr. Gain/promotions 0.5

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Atharv Sankliya (1323 Points)
Replied 22 April 2023

But why we are booking 50k as gain in books instead we record the inventory at 1 crore which reduces the cost per unit

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Yasaswi Gomes new (Finance ) (4492 Points)
Replied 22 April 2023

Inventory is valued at lower of cost or NRV but not purely on purchases cost. As, indas, IFRS 2 doesn't address free stock. But revenue recognition does as part of variable consideration eg. Buy one product and demand one free. If it's a b2b scenario, accounting must be done right?