ECONOMICS

Detailed explanation-1: -If normal loss units have any realizable scrap value, the process account is credited by that amount. If there is no abnormal gain, then there is no necessity to maintain a separate account for normal loss. Generally the cost of normal loss is absorbed by the cost units.

Detailed explanation-2: -Normal losses are always valued at their scrap value – regardless of what costs were incurred in making them and regardless of the state of completion. if there is no scrap value, then the value of the normal loss is zero. Only abnormal losses are valued the same way as normal output.

Detailed explanation-3: -1 An abnormal loss occurs when expected output exceeds actual output. 2 The scrap value of an abnormal loss is credited to the process account. 3 The allocated cost of an abnormal gain is credited to the process account.

Detailed explanation-4: -The normal loss means a loss which is inherited and can not be avoided. It should also be considered while valuing the closing stock.

Detailed explanation-5: -Scrap value is the estimated cost that a fixed asset can be sold for after factoring in full depreciation. The asset that is disposed of is usually salvaged into multiple parts, with each part valued and sold separately.