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Practical Income Manual 2021.

7. Variation in stocks (only if there is an increase in stocks at the end of the year)

The variation in inventories is the difference that occurs between the initial and final inventories (merchandise and raw materials) of the accounting year, valued at their acquisition price.

The purpose of the inventory variation is to determine the inventory consumption for the year and adjust the result. Therefore, when the valuation of inventories at the beginning of the year is lower than at the end of the year, said difference must be reflected as income since it means that part of the inventories acquired in the year have not been consumed at the end of the year.

Unlike the above, when the valuation of the initial inventories is greater than the valuation of the final inventories, said negative variation must be reflected as an expense. In this case, said variation means that more inventory has been consumed during the year than was acquired throughout the year, also considering the inventory that appeared in the inventory on January 1.

See within the "Tax-deductible expenses" the section on “ Variation in inventories ” as well as the registration and valuation standard 10 of the General Accounting Plan, approved by Royal Decree 1514/2007, of November 16 ( BOE of 20), dedicated to the valuation of stocks. Also see the Resolution of April 14, 2015, of the Institute of Accounting and Audit of Accounts, which establishes criteria for determining the cost of production.


Don PXR, dedicated to the sale of household appliances, has stock in its warehouse valued at the beginning of the 2021 financial year for an amount of 40,000 euros. At the end of the year, the count and inventory of the stock in your warehouse reaches a value of 60,000 euros.

Determine whether the inventory valuation should appear as income or expense for the year to determine the net return on the activity.

Solution :

Final stock: Assessment: 60,000

Initial stocks: Rating 40,000

Inventory change (60,000 – 40,000) = + 20,000

Since the final inventory of stocks is higher than the initial one, the difference (20,000 euros) will appear as income for the year for this concept. This means that during the year 20,000 euros less than the stocks that have been acquired throughout the year have been consumed, which ultimately means an increase in final stocks by 20,000 euros.