Gardening Made Easy Ltd manufactures lawn mowers and hedge trimmers. It supplies its product to hardware stores and garden centres throughout New Zealand. Gardening Made Easy Ltd has a 31 March balance date and in the past has always valued its stock at year end at cost for tax purposes.

The company has been making losses in the current year and two previous years due to high overhead and interest costs. The shareholders, Mr and Mrs Apiata, are considering selling the business and retiring.

Year end (31 March 2023) has passed and Mr and Mrs Apiata have been discussing the sale of their shares with a prospective purchaser.

The estimated value of stock on a cost basis at 31 March 2023 is as follows:

Lawn mowers 35,000

Hedge trimmers 15,000

50,000

The estimated market selling value of that stock (based on gross margins achieved in the last two years) at 31 March 2022 would be:

Lawn mowers 75,000

Hedge trimmers 20,000

95,000

(i) Can Gardening Made Easy Ltd choose to value its 2023 closing stock at market selling value for tax purposes?

(ii) If it chose to, could Gardening Made Easy Ltd value the stock of lawn mowers at market selling value and value the stock of hedge trimmers at cost?

(iii) What advantages would arise from valuing the 2023 closing stock at market selling value?