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share received in gift

sumit----- (student) (24 Points)

29 June 2011

if i received share in gift (rs 10000) and sold in rs12000 .how i record this transaction in my book in case i am a share trader and treat every sale pur as trading.

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X (student) (25 Points)
Replied 01 July 2011

Not sure 'cause am a newbie

You are share trader means you hold share for sale in ordinary course of business therefore AS-2 shall apply for your valuation of inventory

First of all, shares worth rupees 10,000 can not be entered in the book of accounts

Secondly according to AS-2 cost of inventory for these shares would be cost of purchase + conversion cost + cost for bringing inventorry to present location and condition , which is NILL FOR YOU

Therefore in your register you will increase the quantity of shares BUT WILL NOT CHANGE THE TOTAL VALUE OF SHARES

So say you have 100,000 shares worth 10,00,000 rupees

now your new stock of shares in your register should be (assuming you get 1000 shares @ 10)

101,000 shares WORTH 10,00,000 rupees

so your trading and p&L (assuming all shares are sold at 12 per share)

stock debit 10,00,000 sales credit 12,12,000 (101,000 @ 12)

p&L 2,12.000