MPR sanjay Kumar (CA student) (216 Points)
02 March 2021
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 02 March 2021
The company values inventory both in cost terms and NRV. Then it considers which ever is lower. Eg. if you purchased computers for 10,0000₹ and want to sell them immediately because you want to buy another one. Currently, your inventory after few days, the market selling price is down to 9,0000₹ it is a loss to you when you sell it. To record this loss, this philosophy is used to value inventory at lower of cost or NRV.
Cos 90,000₹ - closing inventory balance @ NRV
NRV loss write off 10,000₹ Loss is debited to revenue
Inventory 1,00,000₹ - Inventory always recorded at historical cost or NRV
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 02 March 2021
Please note that on the balance sheet, only revalued inventory value is recorded. The above entry is just an example on how a loss is recognised. Sent a PM with examples
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 02 March 2021
Hi sry made a mistake
usually the adjustment with cos is like
By Inventory a/c
To COS a/c
(cos reduced by closing inventory)
so
By Inventory a/c 90000
To Cos a/c 90000
By NRV loss write off a/c 10000
or simply
Cos a/c 10,000
To Inventory 10,000
note. Adj made again. I’m giving up. Some help appreciated eon entries.
CAclubindia
