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Chapter BIM33160

Document Cited in Related
Vincent
Published date22 November 2013
Record NumberBIM33160
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

The stock is valued at its market value, rather than at the lower of cost and net realisable value.

Strictly FRS102 only allows the use of the lower of cost and net realisable value as a method for valuing stock. Therefore entities which wish to use a mark to market method are using the true and fair view override (see BIM31020). That is, they assert that in order to present a true and fair picture of the business a mark to market valuation method must be used, rather than the lower of cost and net realisable value.

This method is only appropriate where there is a liquid market in the stock, so that the value could be realised easily. It is currently used by financial institutions and commodities dealers.

For entities applying one of EU endorsed IFRS or FRS 101 then agricultural produce is measured at fair value less costs to sell at the point of harvest in accordance with IAS 41.

For entities applying FRS102 then a policy choice is available which permits an entity to...

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