Article 47Calculation of Costs of Inventory Sold and Valuation Methods

①In the calculation of the amount that, pursuant to the provisions of Article 37, paragraph (1) (Necessary Expenses), is included, in association with the Inventory of a Resident, in the necessary expenses that are used to calculate the Resident's business income, the value of Inventory held by the Resident on December 31 of the relevant year (or at the time of the Resident's death or Absence From Japan, if the Resident dies or the Resident's Absence From Japan occurs partway through the year; the same applies in this Article through Article 50) which is used as the basis for that calculation (hereinafter referred to as "closing Inventory" in this paragraph) is the amount of money assessed based on the valuation method that the Resident has selected for the closing Inventory from among the method of taking the average acquisition cost of Inventory as the assessed value of the Inventory held on December 31 of that year and the other valuation methods prescribed by Cabinet Order (or based on the valuation method prescribed by Cabinet Order, if the Resident does not select a valuation method or if the value is not assessed based on the selected valuation method).

②Cabinet Order provides for special provisions on the selectable valuation methods referred to in the preceding paragraph, the way of selecting a valuation method, the acquisition cost of Inventory to be used as the basis for calculating the assessed value of Inventory, and other necessary particulars concerning the valuation of Inventory.