Inventory count and inventory valuation | Free template
Inventory count and inventory valuation is a free template for the documentation of a physical inventory of a warehouse and to valuate this inventory on an accounting basis and according to tax rules.
A company can have different types of inventories in its operations, raw material inventory, inventory of work in progress (PIA), inventory of finished goods or commodities and inventory of consumable materials. Raw material inventory consists of purchased materials or semi-finished products that have not yet been processed. Inventory of work in progress consists of products that started production but who have not yet been finished products, products that are in progress. Inventory of finished goods consist of finished products that are ready for delivery and stocks of merchandise are goods bought which is ready to be shipped. Inventory of consumables are components for repair, maintenance and other materials designed to be consumed in the production and therefore is not for sale.
Regardless of what type of inventory the inventory must be counted physically at least once per year on the last date of the financial year. Inventory counts can be made several times per year to keep accurate and current records of stock numbers and stock value. Physical inventories can be made continuously in operation whenever material or goods are removed from storage. Lack of information on inventory can lead to lost customers, unnecessary purchases and lack in accounting.
Inventory is current assets because these goods are held in inventory to be sold and delivered to customers or consumed in the company. Current assets are valued at the lowest value principle which means that stocks are valued at the lower of cost or fair value. Goods in stock shall be valued item by item which means that certain goods can be valued according to cost and other goods to the real market value.
The cost of inventory is the cost of its acquisition or production and shall include all expenses required to acquire or produce it. For the cost of purchased goods should the purchase price, costs to receive goods and other direct costs be included. For the cost of the goods produced shall in addition to the purchase price and costs to receive goods also direct costs and a reasonable surcharge for indirect production costs be included. At valuation at cost the FIFO or LIFO principle can be applicable. At valuation at cost, the company also may be able to make a deduction for obsolescence of about 3% of the cost.
Fair value for stocks is the net realizable value equal to the sales value of goods less the costs associated with a possible sale. Selling expenses consist of discounts, bonus, commission, storage costs and a reasonable deduction for indirect selling expenses and administrative costs.
Simplifications from the above valuation principles are available for smaller companies.
You can use this template to make an inventory count and inventory valuation in your company under the lower of cost principle if you do not have an enterprise software or inventory software where the stock valuation is made in the software.
01-01-2015 | Created by All-templates.biz
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