The stock lying in the hands of consignee at the end of accounting year is valued at cost or market price whichever is less. The cost of unsold stock or closing stock should be valued at cost to the consignor plus proportionate non-recurring expenses incurred by the consignor and consignee.
The following method should be carefully considered while valuing unsold stock:
Cost Price Of Goods Consigned.................................XXX
Add: Expenses incurred by consignor:
Freight.........................................................................XXX
Carriage.......................................................................XXX
Insurance on goods dispatch......................................XXX
Docks dues....................................................................XXX
Export/Import duties....................................................XXX
Loading and unloading charges...................................XXX
Add: Consignee's expenses:
Unloading charges.....................................................XXX
Landing charges........................................................XXX
Import duty................................................................XXX
Octroi.........................................................................XXX
Godown rent etc........................................................XXX
Total Cost..................................................................XXX
Cost of unsold stock = (Total Cost/Total Quantity) X Unsold Quantity
Alternative Method,
Cost Of Unsold Stock
= (Cost of goods sold+Proportionate of all expenses/Total Quantity) X unsold stock
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