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How can an industrial company inflate the value of its inventory so as to decrease net income and the taxes is has to pay that year?
If a company increases the value of its inventory, the cost of the sales enhances and/or the same thing happens to general expenses, which makes the net income go up instead of going down. The valuation of the inventory of an industrial company depends on the value assign to the workforce and on the several of general expenses.
Madhuban group manufactures a product. The following particulars are as follows: 5 Monthly demand 1000 units Cost of placing an order Rs. 100 Annual carrying cost per unit Rs. 15 N
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