Many a times, it so happens that a manufacturer, consignor or a head office does not directly engage in selling its products. It instead sends or consigns the goods to a profit centre--a dedicated centre for selling its products. The profit centre in case of a consignor is a consignee and in the case of a head office, its branch or retail outlet. Now when the principal sends the goods to the profit centre, it issues/transfers the goods at a price which is higher than the cost of production of those goods. This price is generally called Invoice Price (I.P.) and this is the value at which the branch/consignor records the receipt of the same. When the branch sells these goods it sells at a price greater than the I.P. thus earning a profit which has two components-- # The mark up on the cost of production (i.e., the difference between the I.P. and the cost of production), and # The profit made by the branch/consignee (i.e., the difference between seeling price of the branch and I.P.) At the end of the accounting period, any stock is lying unsold with the branch/consignee is having the value of I.P. (at which the head office/consignor had issued the goods). But as per AS-2, inventory can only be valued at cost or NRV, whichever is lower. The excess mark-up on the value of the goods needs to be removed as that is unrealised profit. This unrealised profit is given a name in accountancy - STOCK RESERVE.
example of stock reserves
Only banks can own stock in the Federal Reserve banks. However, this stock ownership does not provide the members banks with any control over what the Federal Reserve system does. Any bank that wants to become a member of the Federal Reserve Bank within their Federal Reserve District must invest a certain percentage of their capital in Federal Reserve stock. The Federal Reserve will pay dividends on this stock but banks do not become controlling shareholders as a result of these investments. The individual Federal Reserve banks are controlled (for lack of a better term) by the boards of directors of the Federal Reserve banks and by the board of governors in Washington, D.C.
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Securities and Exchange Board of IndiaNational Stock ExchangeBombay Stock Exchange (BSE)Reserve Bank of India
STOCK: materials in the environment which have the potential to satisfy human needs but human beings do not have the appropriate technology to access these. RESERVE: the subset of the stock, which can be put into use with the help of existing technical 'know-how' but their use has not been started. These can be used for meeting future requirements. Posted by Gaurav Gautam...(student)
According to the Clymer manual a stock Banshee tank holds: 3.17 U.S. Gallons Total with a .66 reserve 12 Liters with a 2.5 reserve 2.64 Imp. Gallons with a .55 reserve.
Buy Back
you take it in the closing stock .. it means that you have already added with in closing stock .. therefore you are closing stock reduce ... so excess stock entry will be made directly for the purpose of balance sheet. you are give this effect on it stock sheet only..
full of charge
The exact definition of 'buy in' is to buy back for the owner at or below the reserve price. This generally means you are paying the stock price or below but purchasing the stock directly from a person.