2012 Unit 5 Profit computation - s

There is a no of court cases on stock valuation there

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Unformatted text preview: . There no. Apart from these, ordinary commercial Apart accounting principles should be referred to. accounting The recommendations in SSAP are generally The recommendations acceptable to the IRD. An important exception is recognition of loss An exception 15 on uncompleted contract (see ppt 32). on Principles Developed from Case Law Stock should be valued at the lower of Stock should be valued at the lower of cost o market value Whimster & Co cost orr market value ((Whimster & Co v CIR 1925) 12 TC 813). The IRD v.. CIR ((1925) 12 TC 813). The IRD generally requires market value to be the generally requires market value to be the “net realisable value”. This means “net realisable value”. This means eplacement cost s not rreplacement cost (( )) iis not acceptable. acceptable. 16 Meanings of ‘Cost’ & ‘Net Meanings Realisable Value’ (NRV) Realisable Cost ( ) = the actual or historical cost Cost the NRV ( NRV ) = the estimated selling price in the ordinary course of business – the estimated costs of completion – estimated costs necessary to make the sale (SSAP 22) 22) 17 Case Law Last in first out (‘LIFO’)( Last in first out (‘LIFO’)( )) iis s not acceptable ((Minister of National not acceptable Minister of National Revenue (Canada) v. Anaconda R...
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