Can anyone advise as to what value I should place on some faulty goods awaiting return to the manufacturer at the time of the end-of-year stocktake (the first I've ever done)?
In one sense they are worthless - they don't work.
In another sense they have a value; the manufacturers will, we hope, admit that they are faulty after examining them and refund what they cost.
If it is relevant, the goods concerned are a mixture of sales returns and items that were never dispatched to customers in the first place. The sum involved is fairly small, so I could arbitrarily assign them a value of 50% of cost price or something like that but that feels too slapdash.
One last related question, in Sage I know that in general for products in a stocktake one credits Closing Stock (5201) on the P&L and debits Stock (1001) on the balance sheet. Would it be usual to lump faulty goods like this in those nominal codes, or is it more usual to have a separate code or codes?
sorry, not been around much for the poast few days so just picking up on any posts that haven't received a reply.
this seems the sort of thing that the accountant should be telling you how to treat as it may have a material effect on the financial statements.
I'm suspecting that the accountant would tell you to write down to recoverable amount and recognise a seperate, ringfenced contingent asset for the potential refund.
A contingent asset being defined as "a possible asset arising from past events whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity's control".
So it would seem your refund meets the terms of a contingent asset.
Refer to
IAS37, Provisions, Contingent liabilities and Contingent Assets
IAS2 Inventories
ISA501 Audit Evidence - Specific considerations for selected items
I can't unfortunately help with the sage side of things. There are others on the site much better at Sage than myself (I'm a VT shop). You may find it better to seperate out the Sage question and post that one seperately as I suspect people are reading stocktake and then no further.
#1 piece of advice here is to talk to the accountant and ask how you are to treat the inventory.
kindest regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
"Expenses, Assets and Drawings... the debit side of the Force are they"
lol.
If you want to see a great ad have a look at this youtube clip of the volkswagon ad with the four year old pretending to be Vader. It's a classic.
http://www.youtube.com/watch?v=R55e-uHQna0
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
great one Tim... Just had me crying with laughter at that one and several other Lego one's that it linked to.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
