Revised schedule vi-inventory

it's not necessary that inventory is always a current assert under revised schedule VI

but it is written under FAQ issued by icai

strange! biut I'll check it out.

yes FAQ 20 has said that. But i think there is lil doubt on it!!

that's why i am asking........me too have a doubt on it......

Hi it is ok as per revised schedule VI the inventory is to be classified as current.

and what about slow moving stock if neither expected to be utilized in operating cycle nor within 12 months after the balance sheet date.

I'ave got it. These stock are assumed to be dead stock or unusable stock and therefore will be sold soon and consequently current asset. No need to apply that 12 months rule and all on stock.

according to the definition of current assets in revised schedule VI,

an asset is considered as current asset if,

(i) It is expected to be realised in, or is intended for sale or consumption in the company’s normal operating cycle;

(ii) It is held primarily for the purpose of being traded;

(iii) It is expected to be realised within 12 months after the reporting date;

or

(iv) It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after reporting period date.

So, stock in trade is covered under (ii) above. It is held primarily for the purpose of being traded. Hence it should be always shown as current asset. It doesnt matter whether the inventory is non-moving or dead. It is primarily held for trading and not for any other purpose.

Originally posted by : Karthik
	according to the definition of current assets in revised schedule VI, an asset is considered as current asset if, (i) It is expected to be realised in, or is intended for sale or consumption in the company’s normal operating cycle; (ii) It is held primarily for the purpose of being traded; (iii) It is expected to be realised within 12 months after the reporting date; or (iv) It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after reporting period date.   So, stock in trade is covered under (ii) above. It is held primarily for the purpose of being traded. Hence it should be always shown as current asset. It doesnt matter whether the inventory is non-moving or dead. It is primarily held for trading and not for any other purpose.

Aggred....

Dear Kartik and Sanjeev Sethi Inventory can be of raw material also. then in such a case 2nd condition will not be the criteria.