Karthik (student) (147 Points)
22 June 2010
A company need a specific material for the production of one of it products.
The company stopped the production of the said product from the present FY.. Wot accounting treatment
should be done with regards to the materials in the inventory???
Should the company write it off compeletely???
Venkateswara Rao Sapare
(Accountant)
(1500 Points)
Replied 22 June 2010
"Should the company write it off compeletely???"
The Historical cost the "specific material for the production of one of its products," of which production is discontinued, must be part of Value of Closing Inventory.
If this specific material does not carry any realizable value, "you can write it off" completely from Value of Closing Inventory, by specifically showing it as a special item in the statement of Profit and Loss, as per the Accounting Standards.
Karthik
(student)
(147 Points)
Replied 22 June 2010
Thanks for the reply but i want a lil more clarification sir.. u said the company should carry the material at cost??? Can it be considered as an Inventory item?
Venkateswara Rao Sapare
(Accountant)
(1500 Points)
Replied 22 June 2010
"Can it be considered as an Inventory item?"
Yes, It should be.
Karthik
(student)
(147 Points)
Replied 22 June 2010
so, it should be carried at cost or NRV whichever is lower right??
Kalpesh Chauhan,
(Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com))
(8311 Points)
Replied 24 June 2010
CAclubindia
