Accounting Treatment For Increase or (Decrease) of Provision For Stock Obsolescence(Part 6)

INCREASE IN PROVISION FOR STOCK OBSOLESCENCE: Assuming a provision for Stock Obsolescence of $100,000 is created at Quarter 1. At end of Quarter 2, you have re-done the provision and noted that you need increase a further amount of $50,000. How should we treat this increase in provision? For Quarter, Let’s us have the Original … Read more

Different Methods of Creating Provision for Stock / Inventory Obsolescence (Part 5)

Like the provision for doubtful debts, the accounting for provision for stock obsolescence is almost similar. [please refer to my earlier article on stock written off] This article is to discuss the various methods of creating provision for stock obsolescence METHOD 1: GENERAL PROVISION BASED ON AS % OF CLOSING STOCK BALANCE This methodology is … Read more

Accounting For Stock: Selection Of The Best Stock Valuation Method (Part 4)

As the correct selection of stock valuation will affect the calculation of gross profit and ultimately the net income, we should understand the rationale for some enterprise to choose the type of stock valuation method. FACTORS TO CONSIDER IN THE SELECTION OF STOCK VALUATION: Tradition-Certain trade or industry has its own particular method of valuing … Read more

Accounting For Stock/Inventory: What Is Stock And Why Hold Stock ( Part 1)

WHAT IS STOCK/INVENTORY? Stock/Inventory forms part of the operating cycle of the business. The enterprise purchases stock from the supplier in raw material form, convert it into work in progress and finally finished goods for resale to customers. Stock/inventory is part of the Current Asset Category of the Balance Sheet. To define stock, it is … Read more

Substance Over Form

To ensure that the financial statements reflects the complete, relevant and accurate picture of the transactions and events, it is important to appreciate and adhere to this concept called Substance Over Form WHAT IS SUBSTANCE OVER FORM? When an entity practice the Substance Over Form, it means that the financial statements reflect the financial reality … Read more

Dividends And The Difference Between Interim Dividend and Final Dividend

This article describes briefly what are dividends and then proceed to differentiate interim and final dividend. Generally, what do we mean by dividends? When profits are divided among the shareholders of a company, each shareholder receives a portion of the profit called dividends. How dividends are computed: Dividends are calculated based on the paid-up capital … Read more

Appreciate Everything You Have- Life is Too Short!

One day, the father of a very wealthy family took his son on a trip to the country with the express purpose of showing him how poor people live. They spent a couple of days and nights on the farm of what would be considered a very poor family. On their return from their trip, … Read more