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Should valuation of wine stock include unpaid duty?

Should valuation of wine stock include unpaid...

One of my clients (a wine trader) had year end stock in a bonded warehouse. The valuation obviously includes cost plus freight, storage and duty paid up front (on beers). Duty on the wine is not payable until it leaves the warehouse apparently. Question is - should the stock valuation include unpaid duty on the basis that it was almost certain to be incurred and the event causing it (ie importing from France) had already happened?

If so, the double entry would be Debit Stock and Credit Accruals, but can you include future costs in the stock value? Does the standard permit this?



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01st Feb 2012 08:05

Do not include

in my opinion.

The liability to duty is not incurred until it is withdrawn from bond and so there is no present obligation. It would be possible for the trader to sell the stock in bond and never incur the duty. So the effect of including duty would be to goross up the blanace sheet for an uncertain (albeit probable) future cost.

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01st Feb 2012 11:01


SSAP9 applies.  The stock should be valued at the lower of its cost and net realisable value.  Cost is defined in SSAP9 as being "that expenditure which has been incurred in the normal course of business in bringing the product or service to its present location and condition".  This is the normal course of the business, the present location is the bonded warehouse, and the present condition is duty unpaid.

If your client's wine disappeared from the warehouse tonight, it wouldn't be your client who was liable for the excise duty.  As Paul says, it is also possible for your client to sell the goods to someone else who holds them in the same condition, or to re-export them without the excise duty becoming payable.

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By 3569787
03rd May 2016 17:58

Cigarettes in a bonded warehouse


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By cfield
02nd Feb 2012 02:11

Thanks all

Yes that does make sense. I was thinking along the lines that it was the act of importing them that created a liability for the duty, but of course, it is the ultimate despatch from the bonded warehouse, so you are correct, no need to add on the duty.


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