When you value closing stock as a Share Trader, you are allowed the option of valuing your securities at Cost, at Market or the Lower of Cost or Market.
When using the Lower of Cost or Market, do you determine it on a security basis or can you determine it on a purchase lot basis within a security?
For instance, say my closing stock consists of 200 BHP bought in two lots of 100 each. To make things simple, lets ignore brokerage and tax. One lot (A) was bought at $20 per share and the other (B) at $30 per share and the closing price at the end of the tax year was $27.
So lot A's Cost price is $2,000 and Market Price is $2,700.
Lot B's Cost Price is $3,000 and Market Price is $2,700
Taken together, my 200 BHP has a cost price of $5,000 and Market Price of $5,400.
So if I want to value closing stock at the Lower of Cost or Market, do I use $5,000 (which is the lower of BHP taken as a whole), or can I use $4,700 which is the lower for lot A (= Cost) plus the lower for lot B (=Market)?