I am so happy to have found this website - it is so useful!
However, I have a question which I hope someone will be able to help with.
I work for a company that refurbish unwanted IT equipment, so towers, monitors etc. Most of the equipment we get is 'donated' as waste from companies and schools etc.
We do not pay for the waste, but do pay for the refurbishment if we need components, ie harddisks, ram.
We are currently doing the year end and do not how to price the stock/current assets. Is it 0 because we did not pay for it, or is it at a market value assuming we will sell the items at this price?
Hope it makes a bit of sense, but hopefully thanks for the answers in advance :)
Adopt the old stock principle of valuing at the lower of cost or net realisable value ie the lower of cost or what you could sell it for.
The cost would not be £nil if there is some refurbishment costs incurred and therefore the likely stock value of the IT equipment is the cost of the harddisks, ram, etc.
Thank you so much for the quick reply. So just to reinforce it, if we have lets say about 2500 computers, but only have bought 20 sticks of ram at a total cost of £100, then the closing stock value for the current assets will only be £100?
If that is the cost of your computers and you can sell them collectively for more than £100. (would expect you could sell a computer for more than 4p) Then yes that is the stock value.
In the example you give each one would be valued at 4p as closing stock (£100/2500) and therefore strictly speaking you should reduce your stock by 4p for each one you sell. Personally i wouldnt bother and just show stock as £100 as the value is immaterial.
