## Partial Sale of Investments – Cost Assignment (AS 13)
### The Problem
When the same security (e.g., 12% debentures of Company X) is purchased at different dates and different prices, and later only part of the holding is sold, we must determine which cost to use for the units sold.
AS 13 recognises two acceptable methods:
| Method | When to Use |
|---|---|
| Weighted Average | Default method under AS 13 |
| FIFO | Only when the question specifically instructs FIFO |
### Weighted Average Method
$$\text{Weighted Average Cost per Unit} = \frac{\text{Total Cost of All Units Held}}{\text{Total Number of Units Held}}$$
$$\text{Carrying Amount of Units Sold} = \text{Units Sold} \times \text{WA Cost per Unit}$$
$$\text{Carrying Amount Remaining} = \text{Total Cost} - \text{Carrying Amount of Units Sold}$$
### FIFO Method
Assumes the earliest-purchased units are sold first. Each lot retains its original purchase cost until fully exhausted.
### Practical Rule for Exams
- Default = Weighted Average. Do not switch to FIFO unless the question explicitly says so.
- After a sale, recompute the weighted average cost for the remaining holding — the new average applies to any future sales.