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a) Was wondering, if sales tax is included into the cost of goods (valuation).
1) If sales tax is recoverable, do not include it into inventory.
2) If sales tax is irrecoverable, include it into inventory.Is my above illustrations correct?
b) Another question: What is the difference between registered and non registered sales companies?
1) Registered: Collect taxes on behalf of government and can claim on input taxes. [Illustration]
2) Non registered: No claims can be made on taxes, paid taxes either capital or revenue expenditure [Illustration]
3) Does non registered company charge/collect taxes on it product or services? [Question]Please do correct my above illustration and question if wrong.
c) Add on question:
Cost should include all: [IAS 2.10]
costs of purchase (including taxes, transport, and handling) net of trade discounts received
Question: Given that only trade discount is mentioned, do i have to exclude purchase discount and purchase allowance as well?
For example, purchase of 5000, purchase discount 50, thus inventory valuation is 4950 or in short net purchases. However given that only trade discount was mentioned my bet would be on 5000.a) yes – what you have written is correct
b) 1 and 2 are correct. 3 – no, if they are non-registered then they do not charge tax on sales.
c) I do not know what you mean by a purchase discount or purchase allowance – they are not standard terms. if they get a trade discount then the cost of the goods is the net amount on the invoice and this is how the inventory will be valued.
have you watched the free lectures? The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
Hi,
I have watch some of your videos along with the notes but i do have some difficulties comprehending your videos due to the accent.
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