Valuation of Inventory / Stocks
Inventory valuation is the monetary amount associated with the goods in the inventory. The valuation is based on the costs incurred to acquire the inventory and get it ready for sale. While valuing Inventory/Stocks, due allowance/adjustment should be made for any obsolete, unusable or unmarketable stocks held by the organization.
Inventories are assets:
- Finished goods in ordinary course of business;
- in the process of production for such sale; or
- in the form of materials or supplies to be consumed in the production process or in the rendering of services.
Inventory valuation is the monetary amount associated with the goods in the inventory. The valuation is based on the costs incurred to acquire the inventory and get it ready for sale. While valuing Inventory/Stocks, due allowance/adjustment should be made for any obsolete, unusable or unmarketable stocks held by the organization.
Accounts receivable: A receivable shall be classified as a “trade receivable” if it is in respect of the amount due on account of goods sold or services rendered in the normal course of business.
Debtors may constitute a significant proportion of the total assets of an entity. While valuing Debtors/Receivables, appropriate allowance/adjustment should be made for ageing, any bad debts and debts which are doubtful of recovery.
At KANASSUE, we help companies select the most appropriate approach to estimate all required parameters.
