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Trading Stock Valuation (s 22 of the ITA)
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2012/07/06 at 10:06:00 AM GMT
Posts: 7
Trading Stock Valuation (s 22 of the ITA)



I have a question on the valuation of trading stock.

The company acquired property, stock etc. in 2005. As a result of the purchase price, a negative goodwill was raised against the stock figure.

As far as I understand, the Act mentions that stock should be valued incorporating general accepted accounting practice (section 22 (3A)).

My question is should I be excluding negative goodwill in my stock cost of sales?



Guy Patron



2012/07/16 at 6:15:12 PM GMT
Posts: 64

A negative goodwill seems to indicate that the company acquired a business at a bargain price.

That being so, did the agreement of sale stipulate separate amounts for each of the assets purchased in terms of stock, m/vehicles, furniture etc.etc.

If so, I think that the amount specified for stock acquired would represent the purchase price even if the market value for the stock acquired was(at the time) significantly greater than its cost to the company.

Also refer Broomberg on Tax Strategy (Lexis Nexis 4th edition) Chapter 4 and in particular from page 45 onwards.

2012/07/20 at 10:26:17 AM GMT
Posts: 7
Trading Stock Response



Thank you for your opinion. The stock was property held for resale and each property was costed / valued individually.


I will look at the referred text book as well.


Thank you and regards





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