Section EB 11 — Income Tax Act 2007: Market selling value

EB 11 Market selling value Valuation at market selling value (1) A person may determine the value of their closing stock at its market selling value if the market selling value is less than the cost of the stock. Establishing market selling value (2) The market selling value of closing stock is found by taking the amount that the person would normally expect to receive in the ordinary course of business from the sale of the trading stock and subtracting the following costs: (a) the estimated costs of completion; and (b) the expected costs of selling it. Expected costs of selling (3) For the purposes of subsection (2)(b), the expected costs of selling the stock are the costs that the person usually incurs for the following: (a) transport: (b) insurance: (c) sales commissions: (d) discounts to buyers. Expected costs of selling: financial statements (4) For the purposes of subsection (3), if the person prepares financial statements, the costs must have been taken into account in the statements in calculating net realisable value. Substantiating market selling value (5) If the person uses market selling value to value closing stock, they must be able to substantiate that value. If they cannot, they must use 1 of the following to value their closing stock: (a) cost, as described in sections EB 6 to EB 8 or EB 15 to EB 18 ; or (b) discounted selling price, as described in section EB 9 or EB 19 ; or (c) replacement price, as described in section EB 10 or EB 20 . Defined in this Act: amount , business , closing stock , cost , financial statements , , trading stock Compare: 2004 No 35 s EB 11