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Non movement of stock

Suresh Pai S (Tax Consultant) (1029 Points)

04 March 2017

As an accountant, what will be your action for non movement of stock?

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sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 04 March 2017

Highlight such stock with ageing to the management valuation of this stock is different say provison need to be made sometimes have to be written down below cost management to Inform logistics department about this stock for disposal when this stock is no more needed

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Sanjay S (Chartered Accountant) (1375 Points)
Replied 05 March 2017

Agreed with Above.

Non-moving stock is to be reported to the Management for decision-making purposes. The decisions to be taken grossly revolves around the following:

1. Valuation Aspect: The non-moving stock may need to be revalued downwards, since its realisable value may have fallen over time. As per AS 2, if NRV has fallen below Cost, then the goods should be recognised at such NRV.

2. Purchase Dept should be intimated: The puchase dept should know about the existence of non-moving stock at the unit. This will prevent the dept from accidentally ordering anymore of such non-moving goods. They can even route the goods to other branches where there may be demand for the same.

3. Marketing Dept: If needed, the marketing department can put up special advertisements for clearing out such non-moving stock at discounted prices. Hence the marketing department needs to be intimated.

4. Accounting: If the goods have no market value and no demand, then the only action left to be taken is to WRITE IT OFF and sell it off for scrap.

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