Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

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

Reply
Follow
Share

6 Replies

Yasaswi Gomes new (Finance ) (4514 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

Upgrade to CAclubindia Pro. Subscribe Now!

Atharv Sankliya (1354 Points)
Replied 21 April 2023

Not getting you sir

NARENDRA (ACCOUNTS MANAGER) (1994 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 .

1 Like

Yasaswi Gomes new (Finance ) (4514 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

1 Like

Atharv Sankliya (1354 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

Upgrade to CAclubindia Pro. Subscribe Now!

Yasaswi Gomes new (Finance ) (4514 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?