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Summary of the Article
MENTOR: Change in Method of Stock Valuation is an article written about Kasturi and Sons Limited, extracted from the Business Line, dated 11th May, 2009. It gives a highlight about the overall operations of the company, and the changes that are making on the method of stock valuation within the company. The article reports the channel of the overall change process and the impact of such changes to the financial operation of the company in terms of stock flow. The change takes place from the first-in-first-out (FIFO) method to average-cost basis method, of which the results are rejected by the company's assessing office after an annual quantification is carried out on the method.
The article also talks about the legal positions that are supposed to be applied in times of applying a business loan mainly designed for business purposes. In this case, the article talks about the financial implications associated with such process of applying financial assistance, especially with small businesses.
Analysis of the Article
Sell of items from the stock of any given business for the purpose of coming up with capital can be a substitute of raising funds, and this amount is treated as a short term taxable resource. Contesting the issue of notice as barred by limitation is possible as the time frame of the issue will be intact. In this case, from June 2007 to May 2009, that is exactly two years, and as per section 149(3) the issue of notice was to take two years.
Relevance to Principles of Finance
Stock valuation is a financial process that is normally carried out basing on the overall quantity on the existing stock standard price that is issued on the existing product. This is considered to be true for almost same settings, standards and also average implication to financial relevance. On the level of finances, the standard price is updated, only on the average, when validating all realized purchase invoice. Therefore, this implies that the overall stock value of any given venture will adjust on confirmation of the invoice.