Stocktaking

Inventory and operating result

You must not deduct the cost of purchasing products until they have been sold. If you have deducted the cost of purchasing products which you still have in stock, this will give an artificially low net income for the period. You might sell these products during the next period and the net income during this period will then be higher than it actually is. It is therefore important to carry out stocktaking at the end of a period if you have goods of any significance in stock.

Timing of stocktaking

Stocktaking should be carried out as close as possible to the end date of the period. If you count the goods you have in stock before the end date (usually 31 December), you must remember to deduct goods sold and add goods received between the count and 31 December. If you count the goods after 31 December, you must deduct goods which have been purchased and add goods which have been sold between 31 December and the time of counting. If you do not have a stock system to does this for you, getting an accurate count may prove to be difficult. You should therefore try to carry out stocktaking as close as possible to the end date.

Documentation

Stocktaking must be documented through stocktaking lists. These list must state:

• Type of goods
• Number of products
• Value of each item
• Summation column for the specified goods

The Bookkeeping Regulations on the documentation of stock (in Norwegian only)

Accounting and tax value

If you are required to keep accounts, you will need to use both the accounting value and the tax value of the stock. For accounting purposes, you must use the acquisition cost or fair valuethe actual value of the product/market value, whichever is lower. For tax purposes, you must always use the acquisition cost. If you are not required to keep accounts, you need only comply with the tax rules.

Obsolete goods

Goods are obsolete when the market price is lower than the cost of the goods. For tax purposes, it is not permissible to write down stock because of obsolete goods or a fall in price. Obsolete goods must be discarded or sold before you are entitled to a deduction for these. For accounting purposes, you can write down the stock for obsolescence or a fall in price. 

Temporary differences

In some cases, enterprises which are subject to the accounting obligation must therefore comply with different requirements as regards which figures must be used for tax purposes and which figures must be used for accounting purposes. This leads to a difference between the taxable result and the accounting result. This is normally adjusted against a balance account, which is often called 'deferred tax asset' or 'deferred tax liability'.

Tips ahead of stocktaking

• Plan the stocktaking well in advance
• Tidy up the stock in advance
• Prepare instructions for stocktaking if more than one person will be involved in the counting
• If you have a warehouse system, extract count lists covering all the product types concerned
• Use pre-numbered stocktaking lists or a stocktaking book
• All products must be included in the list, including obsolete goods
• Make sure you have a good system which gives a clear overview of what has been counted and what is outstanding

The lists must be dated and signed by the person who performed the count. Stocktaking lists are accounting documents and must be retained for 5 years.

The Norwegian Accounting Standards Board - Accounting Standard NRS 1 - Goods (in Norwegian only)

Tax – ABC on the value of inventory at the end of the year (in Norwegian only)