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EB 19: Discounted selling price for low-turnover traders
or “How low-turnover traders can calculate stock value using discounted selling prices”
You could also call this:

“How low-turnover traders can value their closing stock at replacement price”

If you’re a low-turnover trader, you can choose to value your closing stock at its replacement price. This applies whether you prepare financial statements or not. If you do prepare financial statements and use replacement price for your trading stock in them, you can use the same method for your closing stock. If you don’t prepare financial statements, you can still use the replacement price method.

The replacement price can be one of two things:

  1. The market value of your trading stock on the last day of the income year, or
  2. The last price you paid during the income year to buy similar trading stock.

You get to choose which of these two options you want to use as the replacement price for your closing stock.

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Next up: EB 21: Market selling value for low-turnover traders

or “Low-turnover traders can value closing stock at market selling price”
Next

Part E Timing and quantifying rules
Valuation of trading stock (including dealer’s livestock)

EB 20Replacement price for low-turnover traders

  1. A low-turnover trader who prepares financial statements may determine the value of their closing stock at its replacement price if they use replacement price for their trading stock in their financial statements.

  2. A low-turnover trader who does not prepare financial statements may determine the value of their closing stock at its replacement price.

  3. The replacement price is—

  4. the market value of the trading stock on the last day of the income year; or
    1. the last price that the low-turnover trader paid during the income year to acquire equivalent trading stock.

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