Hi I have a client who produces personalised goods for companies, pens, mousemats etc. All stocks are currently being valued at cost of item (no finishing added) and the direct labour and additional materials has historically been written off in month. Now we are at year end, making a potential loss and the balance sheet showing as 100% "raw" stock - when I think about 2/3 of it should have a proportion of Direct labour, printing etc added to its value. The companies they are dealing with have ongoing contracts for these items .
Is there any reason why we cannot now revalue the balanse sheet stock to add back the cost of finishing from the PnL?