How to value unsold imported stock in UK accounts
Value unsold stock at the lower of cost and net realisable value, rather than its advertised selling price. Identify attributable purchase costs and assess damaged or obsolete goods using expected sale proceeds less completion and selling costs. Keep expected margin separate. Cambridge China Bridge can help gather supplier and inspection records.
Separate accounting valuation from pricing
HMRC identifies the lower of cost and net realisable value as an acceptable stock valuation basis. Net realisable value means estimated selling price less costs to complete and sell. Ask your accountant to confirm the accounting policy appropriate to your business before preparing the closing-stock schedule.
Our landed-price guide helps you set selling prices. Its commercial allowances for defects, samples and tooling are useful for planning, but do not copy the resulting cost per sellable unit straight into your accounts. Keep a separate accounting schedule showing actual stock, attributable costs and any reduction in value.
Build a traceable purchase-cost schedule
Gather factory invoices, supplier credits, freight and insurance bills, duty records, clearance charges and delivery invoices. Ask your accountant which costs belong to the stock acquired. For shared shipment charges, propose an allocation that reflects the goods concerned, such as weight or space used, and record the reason.
Keep recoverable import VAT separate; our import VAT guide explains the cash-flow distinction. Flag samples, tooling, financing, general administration and ongoing storage separately for review rather than adding every expense to inventory. The hidden-costs guide is a purchasing checklist, not an instruction to capitalise every cost.
Assess damaged goods separately
Separate sound stock from damaged, repairable and scrap stock in your count. Record the affected product, batch, quantity and condition, with photographs and inspection reports. Obtain repair or repacking estimates and evidence of the price buyers would pay in that condition.
Compare the damaged goods' cost with expected selling proceeds after completion and selling costs. Where inventory is impaired, its carrying amount is reduced to that lower recoverable amount. Keep the loss visible rather than spreading it into the cost of sound goods merely to preserve the original shipment total. Give any supplier credit or insurance claim to your accountant separately.
Test obsolete stock against realistic demand
Review discontinued designs, superseded models, dated packaging and stock with little recent demand. Collect recent achieved prices, customer enquiries, returns and clearance offers. Use those records to support an expected selling price and the costs still needed to complete and sell the goods.
Treat age as a prompt to investigate, rather than an automatic write-down. Old stock may remain saleable above cost, while a recent purchase may already need a reduction. Ask your accountant to review assumptions for affected product lines, and explain why any proposed scrap-only value reflects the actual selling prospects.
Keep margin out of closing-stock cost
An expected selling price above cost does not increase stock valued on the lower-of-cost basis. Keep purchase cost, accounting carrying value and expected selling price in separate columns. Show expected sales margin in your pricing analysis rather than adding anticipated profit to the inventory asset.
Give your accountant a dated stock count, reconciled purchase-cost schedule, allocation notes and evidence for each proposed write-down. Include separately identified goods held at the factory or in transit, with the purchase and delivery documents, so ownership and period-end cut-off can be reviewed. Cambridge China Bridge's staff in China can help gather factory records and condition evidence.
Frequently asked questions
Can I value unsold stock at its retail price?
Under the lower-of-cost basis, use cost unless net realisable value is lower. An advertised retail price above cost does not justify adding expected profit to closing stock.
Which import costs should I give my accountant?
Provide goods invoices, credits, freight, insurance, duty, clearance and delivery records. Identify recoverable VAT and flag samples, tooling and other expenses separately for classification.
How do I value damaged imported stock?
Document its condition and expected selling price, then deduct completion and selling costs. Compare that amount with cost and support any write-down with photographs, reports and repair estimates.
Does old stock need to be written off?
Age alone is not enough. Check realistic selling prospects and remaining completion and selling costs. A write-down follows a lower recoverable value, rather than simply how long stock has been held.