Turning a collection into a business

Turning a collection into a business

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A client has been a collector of antiques ( not high value items) for many years. He and his wife buy a shop and set up in business. The shop is stocked from his collection, none of which has any record of cost price. For trading purposes he values each item at a selling price and assumes cost is 50% of this. However, customers often negotiate and his margin is not always achieved. He does not have a record of which items are reduced from his assumed cost. The shop does not prosper and after three years is closed and the property sold. Does anyone have experience of how the revenue will view the calculation of cost of sales.
Mike

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By User deleted
28th Mar 2007 10:51

HI Mike
Well, the goods should go in at market value on day 1, so if you are valuing at cost it will depend if the valuation has changed since the time of purchase.
The only antique trader who I have ever seen under enquiry did not have a single query on this topic. Possibly because it is very hard to disprove a valuation on a small antique and providing that every item is not consequently sold at a loss!

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