AS 2 - Valuation of Inventories: Paper 1: Financial Reporting Chapter 1 Unit 3
AS 2 - Valuation of Inventories: Paper 1: Financial Reporting Chapter 1 Unit 3
AS 2 - Valuation of Inventories: Paper 1: Financial Reporting Chapter 1 Unit 3
CA B. Hari Gopal B.com, PGDBA, FCA, FCMA, DISA(ICAI), PMP (PMI, USA),
EPBM (IIMC), MCT
2
Learning Objectives
2. Disclosure requirements
3
AS 2 – Background
AS 2 – Exceptions
AS 2 does not apply in accounting
for following inventories
WIP arising under Construction contracts
including directly related service contracts
AS 2 – Scope
Accounting Standard 2 – defines inventories as
assets
Finished goods
Work In Progress
Raw Materials
7
Measurement of inventories
8
Measurement of inventories
Inventories
Raw Finished
WIP
Materials Goods
Lower of the
At Cost
following
Realizable value
Cost of Cost of Other
less
Purchase conversion costs
Selling Expenses
9
Measurement of inventories
Inventories SHOULD BE valued at the lower of cost
and net realizable value
Cost of goods is the summation of
Cost of purchase
Cost of conversion
Other costs
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Cost of Purchase
Cost of Conversion
Borrowing costs
Cost Formulas
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Cost Formulas
Following are various cost formulas suggested by the
statement
Disclosure
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Disclosure
The Financial Statements should disclose:
(a). The accounting policies adopted in measuring inventories, including
the cost formula used
(b). The total carrying amount of inventories together with a
classification appropriate to the enterprise
Lesson Summary
1. We have learnt the background of AS – 2,
exceptions and Scope
Testing time
AS – 2 : Valuation of Inventories
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True or False – 1
A. True B. False
Answer: B. False
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True or False – 2
Accounting Standard 2 does not apply to work in
progress arising in the ordinary course of business of
service providers
A. True B. False
Answer: A. True
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MCQ – 1
MCQ – 2
What Next ……
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Thank You