CA Parul Saxena (CA) (8488 Points)
11 February 2013
As per the FAQ issued by ICAI on revised schedule vi 'Inventory should always be classified as Current'. If it is the case then what is the use of the word consumption mentioned in 1st condition of Current Asset as per Revised Schedule VI?
CA Parul Saxena
(CA)
(8488 Points)
Replied 11 February 2013
but it is written under FAQ issued by icai
CA Parul Saxena
(CA)
(8488 Points)
Replied 11 February 2013
that's why i am asking........me too have a doubt on it......
Sanjeev Sethi
(Finance & Accounts)
(40 Points)
Replied 12 February 2013
Hi it is ok as per revised schedule VI the inventory is to be classified as current.
CA Parul Saxena
(CA)
(8488 Points)
Replied 13 February 2013
and what about slow moving stock if neither expected to be utilized in operating cycle nor within 12 months after the balance sheet date.
Karthik
(student)
(147 Points)
Replied 14 February 2013
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.
Sanjeev Sethi
(Finance & Accounts)
(40 Points)
Replied 15 February 2013
| 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....
CA Parul Saxena
(CA)
(8488 Points)
Replied 15 February 2013
Dear Kartik and Sanjeev Sethi Inventory can be of raw material also. then in such a case 2nd condition will not be the criteria.
CAclubindia
