Reconciliation of Closing Stock -31.3.2016 with iCDS

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 R. KANDASUBRAMANIAN asked over 2 years ago

how to reconcile closing stock -31.3.2016 with ICDS need practical aspects

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2 Answers
Open uri20170510 32134 1c996lj?1494421732 Anil answered over 2 years ago

Hie This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts. If there is any conflict between the provisions of the Income-tax Act, 1961 ICDS, then provisions of the Act shall prevail. Valuation of Inventories under ICDS is similar to Valuation under AS-2 except for the 2 things mentioned below 1. Standard Cost method of valuation is allowed under AS-2 for valuation of inventories however same is not accepted as valuation method under AS-2. 2. In case of dissolution of a partnership firm or association of person or body of individuals, whether business is discontinued or not, the inventory on the date of dissolution shall be valued at the net realizable value. Whereas in case of AS-2 if is business is continued then valuation can be done as cost or NRV whichever is lower.

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R. KANDASUBRAMANIAN commented over 1 year ago

Dear Sir thanks for your reply to us r kandasubramanian

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Open uri20170510 32134 ivjxpn?1494421728 Shreedhar Sutar answered over 2 years ago

Hi R. Kandasubramanian, This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head “Profits and gains of business or profession” or “Income from other sources” and not for the purpose of maintenance of books of accounts. If there is any conflict between the provisions of the Income-tax Act, 1961 ICDS, then provisions of the Act shall prevail. Valuation of Inventories under ICDS is similar to Valuation under AS-2 except for the 2 things mentioned below 1. Standard Cost method of valuation is allowed under AS-2 for valuation of inventories however same is not accepted as valuation method under AS-2. 2. In case of dissolution of a partnership firm or association of person or body of individuals, whether business is discontinued or not, the inventory on the date of dissolution shall be valued at the net realizable value. Whereas in case of AS-2 if is business is continued then valuation can be done as cost or NRV whichever is lower.

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R. KANDASUBRAMANIAN commented over 1 year ago

Respected Sir thanks for your response in the case of ICDS, it is stated that stock of inventory includes expenses and also includes VAT etc. As such, how to reconcile closing inventory as per BS and ICDS at present, not included VAT in Closing Inventory

Shreedhar Sutar commented over 1 year ago

Dear Sir, Section 145 of the income tax states inventory valuation should be done inclusive of taxes whereas AS 2 values inventory excluding AS-2. But the same is revenue neutral. The presentation only differs however impact on the profit & loss account is same.

R. KANDASUBRAMANIAN commented over 1 year ago

Dear Sir thanks for your immediate reply

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