stock valuation

hanapospis

Hi,

I just wondered if somebody can help me with stock valuation question.

at the end of the accounting period the stock was valued a cost £289400

a) 5 midi system costing £1200 each have now been replaced by improved models. It is thought that in order to sell them the price of each system will have to be reduced to £1000.

b) a number of amplifiers costing altogether £2000 were mistakenly ordered for 100V USA specification. They must be converted to 240V at a total cost of £200 before they can be used.

I have an answer. The stock valuation after all necessary adjustments is £288200. I just cannot figure out how they did it. I understand that the cost of stock will be decreased by £1000 in a) but why did they decreased it by 200 as well? I had increased it at it is apparently wrong :crying: :confused1:

Bluewednesday

The £200 must come off the valuation as it is a cost required to sell the items thereby reducing the value.