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Commodity stocks like metal stocks like gold , silver oil etc prices may suddenly fall or spurt , how will it be shown during year end ?
LCM Lower cost or market Means that if the market value which is the middle between three values (Ceiling, Replacement cost, Floor) is lower the the cost, the company should recognize inventory loss and the value in the balance sheet should be Lower between cost or market.
as per IFRS
inventory must be shown in the FS Low of cost or market
since the market price is less than the historical cost, then you must adjust the inventory prices to reflect the market price
the diff should be close in the other rev./loss from continuing operation
recognise the net realisable value
As per the relevant accounting standard the inventory is valued at lower of cost or net realisable value, as at the reporting date.
Hence if the value of an inventory falls below actual cost, the loss on account of the same should be recognised in profit and loss statement and accordingly the lower value should be reflected in Balance sheet
it shown negatively or fall down during the year
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