Valuation of inventory –
Trading stock of continuing business
- Basis of valuation of trading stock of a continuing business is not provided for in the tax laws
- Generally, valuation is done based on the ordinary commercial and accountancy principles of stock valuation
- Change in the method of valuation of trading stock may be made if taxpayer satisfies the tax authorities the reasons for change in such method
Trading stock on discontinuance or transfer of business
- Sale price or value of consideration given for transfer will be taken for valuation purposes
Work in progress
- Valuation methodology not provided for in the tax laws
- Generally, valuation is done based on the accepted accounting principles and decided cases
Depreciable asset
- Valued based at cost for capital allowances purposes
Non-depreciable asset
- No specific provisions provided for valuation of non-depreciation asset like land/ goodwill
- However, Intellectual property rights that has commercial value are valued at cost for capital allowance purposes
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