Bafu Ltd., a private limited company, manufactures a wide range of bathroom fittings. These fittings are made from steel components which are chromed in small vats. The steel components are sourced from outside suppliers. The year end stock mainly consists of these steel components and finished items. As at 31 October 2004, the total stock was valued at Sh. 6,048,000 out of total assets of Sh. 19,200,000. This stock figure was obtained by a physical count as at 31 October 2004, and valuation by reference to purchase invoices and manufacturing cost estimates. Required: With reference to each of the matters listed below, state the work you would do to conclude whether the amount attributed to stock is fairly stated; Valuation of stock

Valuation of Stock
• Check that the stock sheets used during the count are the ones used as the basis of valuation.
• Compare valuation sheets with copies of stock count sheets to ensure that no alterations were made or if so, this is reflected in valuation.
• Ensure costs allocated do not exceed net realizable value.
• Ensure costs allocated do not exceed net realizable value.
• Ensure items treated as damaged/obsolete in valuation really are damaged/obsolete.
• Check calculation of scrap on Net Realisable value and compare this with cost in respect of damaged/obsolete stock.
• Check for consistency in valuation method.



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