CH 4 - Stock adjustments

Question 1

Stock Adjustments

How is stock valued

general rule

Answer 1

at the lower of cost
and ‘estimated selling price
less costs to complete and sell’ (formerly referred to as ‘net realisable value’ (NRV)).

Question 2

Stock Adjustments

How is stock valued on cessation
to an unconnected UK trader

Answer 2

the tax value of the stock is the actual sales consideration

when sold with other assets ,

the value placed on the stock has to be just and reasonable

(ITTOIA 2005, s.176(2), (3))

Question 3

Stock Adjustments

How is stock valued on cessation
or transfer to

not a UK trader/Npn-trader

Stock Adjustments

Answer 3

the stock must be valued at its market value

(ITTOIA 2005, s.175(4))

Question 4

Stock Adjustments

transfer of stock between
‘connected’ UK traders,

Answer 4

the transfer takes place at;

MV at the date of transfer

subject to an election to transfeer at higher of - cost or actual selling price

(ITTOIA 2005, s.177)

Question 5

How is valued stock on incorporation using
a joint election?

Answer 5

Under joint election (ITTOIA 2005, s.178)

the buyer and the seller transfer

at higher of
cost
or
actual selling price