STOCK Impairment
Just as in the corrections explained above, when net realizable value of stocks is less than its purchase price or production cost , we recognize an expense in the profit and loss account . In the case of raw materials or supplies present in the production process does not take place if a correction is expected that the finished products end up being sold above cost.
As always, if the circumstances leading to the correction of the value of the stocks have ceased to exist, the amount of the adjustment will be reversed in recognizing it as income.
NON-CURRENT ASSETS HELD FOR SALE
The valuation rule 7 th of PGC required to classify a current asset as held for sale If book value is recovered via sale, provided that certain conditions are met: The asset must be available for immediate sale and its sale must be highly likely due to the initiation of search efforts are expected buyer and complete the sale within a maximum period of one year .
According to the rule, assets are valued at the lesser of the following two amounts, the book value and fair value less costs to sell. Keep in mind that while an asset remains available for sale, this is not depreciable, must acquire the appropriate valuation adjustments to the carrying value does not exceed reasonable.
The general plan of SMEs does not refer to this category assets so do not apply the old rules.
INSTRUMENTS OF - SHARES OF OTHER COMPANIES
An enterprise should classify these assets into one of the following categories:
Financial assets held for trading
According to rule 9 th of PGC, financial assets held for trading should be valued initially at fair value is not more than the appraised price. The costs of the sale shall be borne by the account profit and loss for the year. At the end, if the asset is maintained, this will make the necessary corrections to its fair value without deduction of cats that might be incurred in its disposition.
Financial assets available for sale
Similarly, financial assets available for sale must be valued initially at fair value unless evidence to the contrary, will be possible transaction price less expenses directly attributable. After recognition, the closure, the assets available for sale are measured at fair value without deduction of expenses that may incur to dispose. The changes occurring in their value are recorded directly to equity, by accounts of groups 8 and 9 until the asset is then removed from the balance via sale or deterioration, when the amount so recognized will be charged to account income.
On the other hand, those equity instruments whose fair value can not be determined easily be valued at cost least in their case, the cumulative amount of impairment losses of value.
ADJUSTMENT OF STOCK
As we know, the regulation of goods leads to the usual notations for which we give the initial low period an account under 610 while the end we consider as income through payment of the account 610. if we need to assign value to specific assets and interchangeable in our inventory, was adopted as a general the average cost method weighted. FIFO also be acceptable if it reflected more clearly to the company's operational , for example, if you rotate your stock with ease.
ACCRUAL
Under the accrual basis, the allocation of expenditure and revenue must be in terms of real power of goods and services they represent and regardless of the cash flow of receipts and payments arising therefrom . We therefore need accrual adjustments to stabilize certain gaps and account for each period and revenue expenditure attributable to it.
The mechanics are simple, the adjustments are recognized in the following accounts:
- 480. anticipated expenses, the expenditure is recorded in the year and belong to the following, for example, the proportion of insurance.
- 485. anticipated revenue, would be the revenues recorded in the financial year ending, corresponding to NEXT, the proportional part of a biennial fee of fitness from the perspective of the owner.
- 567. Prepaid interest ado, are the interest paid by the company during the year and under the next.
- 568. interest collected in advance, is the interest charged by the company in the financial year ending and that really correspond to the next.
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