Inventories are three kinds (a) Raw Materials, (b) Work-in-Progress and (c) Finished Goods.
Inventory at any stage, it would be treated as an asset at the time of assessing the value of assets and liabilities of the organization.
All these inventories are considered as a part of Closing Stock. Since Closing Stock is treated as an asset and it is shown on the assets side of the balance sheet.
a. Valuation of Assets:
The expenses that are incurred to bring the asset into useful condition include in the value of asset.
The above expenditure is called Capitalizing Expenses
Examples:
The expenditure incurred on installation of new machinery..
Expenditure of renewal to bring the second hand machine bring into working condition.
These expenditure may be treated as revenue in normal course of action. But due to occurred to bring the asset in working condition during the period so they are treated as part of the value of an assets.
Inventory at any stage, it would be treated as an asset at the time of assessing the value of assets and liabilities of the organization.
All these inventories are considered as a part of Closing Stock. Since Closing Stock is treated as an asset and it is shown on the assets side of the balance sheet.
a. Valuation of Assets:
The expenses that are incurred to bring the asset into useful condition include in the value of asset.
The above expenditure is called Capitalizing Expenses
Examples:
The expenditure incurred on installation of new machinery..
Expenditure of renewal to bring the second hand machine bring into working condition.
These expenditure may be treated as revenue in normal course of action. But due to occurred to bring the asset in working condition during the period so they are treated as part of the value of an assets.
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