Aditi AcharekarAditi Acharekar asked 1 year ago

Good morning Sir,
Change in valuation of Inventory is change in Accounting policy to be reported under clause 14 right?
In PM its given its change in Accounting Method as per IT Act but they haven’t mentioned clause 13. 
I just want to know, whether there will be reporting in Clause 13
PM Q2, Pg :15.2

3 Answers
RaviRavi Staff answered 1 year ago

In clause 13 — method of accounting means only 2 things Accrual Vs Cash, if there is change from accrual to cash or vice versa then only clause 13 will be applicable.
now clause 14 is specifically for inventory valuation as per section 145A —
it say that method of valuation should be consistent, it should be same as regularly followed. change is allowed if its justified.
here when we talk about method of valuation for inventory, which includes accounting principles (cost or nrv which ever is lower) as well as method of their application (fifo / weighted average)
now in this case change to comply with AS-2 is justified , so no contravention of Sec 145A which asks for consistency so no reporting under clause 14

Aditi AcharekarAditi Acharekar answered 1 year ago

Just confirming my understanding..
No reporting under:
Clause 13 – CZ it’s no where related to change in method of accounting.
No reporting under:
Clause 14 – there is change in accounting policy but since that change is bonafide n in line with Sec 145A, no reporting even under clause 14.
 

RaviRavi Staff answered 1 year ago

correct

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