Methods of Evaluation of Stocks at Exit from Company’s Assets

Abstract

In the case of using the permanent inventory method, inventory accounts are debited upon entry into management with the acquisition cost and credited upon exit from management or upon disposal with the value of the same cost, calculated according to one of the methods for evaluating inventory exits, such as: CMP, FIFO, LIFO or the "standard price" method. The last method takes into account the predetermined price used in the evaluation and registration of stocks at fixed prices, the establishment of which was done previously, based on the average prices of the respective stocks realized in the previous period. This becomes the registration price in the accounting only if the existing price differences in relation to the purchase cost or the production cost, as the case may be, are reflected distinctly in the accounting. The standard prices must be updated at least once a year, depending on the evolution of prices.