Section 54: Trading stock.

(1) A taxpayer who maintains trading stock shall establish and maintain inventories of such stock. (2) A deduction shall be allowed for the cost of trading stock sold during the year of assessment. (3 ) The cost of trading stock sold in a year of assessment shall be determined by adding to the value of opening trading stock the cost of goods acquired during the year and subtracting the value of closing trading stock. (4) A cash-basis taxpayer may calculate the cost of trading stock on the prime-cost or absorption-cost method and an accrual-basis taxpayer shall calculate the cost of trading stock on the absorption-cost method. (5) The value of trading stock on hand at the end of the year of assessment shall be the lower of its cost or market value at that date. (6) Where particular items of trading stock are not readily identifiable, a taxpayer may account for the trading stock on the first-in-first-out method or the average-cost method, but once chosen, a stock valuation method may only be changed with the written permission of the Commissioner, and a taxpayer using the last-in-first-out method shall change to the first-in-first-out or the average stock method within five years from the date of commencement of this