Khun Fai,
Thank you very much for spending time with me last week and for the below provided options.
I do understand how the cost to make pure mercury was compiled, however there is another fundamental question with regard to the valuation of the mercury stock, and that is: Is the pure mercury sellable?
• In case it is: the calculation method is fair to estimate a cost price for the pure mercury (it shows cost to separate the mercury butter – waste product from our normal process – into disposable waste and pure mercury)
• In case it is NOT sellable: the calculation just gives you an estimate of additional costs we have to make to properly dispose of the mercury butter waste as part of our normal process – note in this case mercury is waste NOT a product!
So where do we currently stand? The reality is that we have not sold any mercury in 2013 nor in 2014, and it is not very likely we will sell anything to a credible buyer in 2015 either.
Do we have any leads though to sell mercury? The answers is yes, however the volumes are small – may be 1 ton / year. Not completely sure what we had in stock end 2013 (5.2 tons?), but if that is correct, it would cover supply till roughly 2020 – if we sell!
Yes, we did produce more mercury in 2014, however the chance that we will sell any of it, is rather small to non-existent.
Just to be crystal clear, we are in the mercury waste treatment and disposal business, not in mercury sales. Any sales just would be a nice benefit. And, if we sell more than the 5 tons we have in stock, we treat it as an extraordinary sales item.
Based on the above, I suggest that we keep the mercury of 2013 in inventory with the value as currently in the books, while we don’t add anything in 2014. If that is not possible, I have no problem in revaluating our mercury stock to ZERO, based on the fact it is not sellable and hence has a Fair Value of Zero. (Please note, that I do not know the accounting consequences of this – please Mels or Hans, feel free to comment).
I guess it is a kind of option 2?
I hope this helps.
Khun Chulalak,
Any other suggestions?
Wim