ind as 2

Compiled by CA M

ohit Goyal M.No 9987059115

Ind AS-2 Inventories

Compiled by CA Mohit Goyal M.No 9987059115

Asset

Construction Contracts Ind AS-11

Financial Instrument Ind AS-32

Biological Assets Ind

AS-41

Measurement of

InventoriesAgricultural

Asset, Forest

Produce

Commodity trade

Not Applicable


Inventory

held for sale in the ordinary course of business;

in the process of production

for such sale; or

in the form of materials or supplies to be consumed in

the production process or in the

rendering of services.


Valuation of Inventory

Material

Cost only

FG is expected to be sold below

cost then recognize decline

Others

Cost or NRV which ever is

lower


CostCost of

Purchase

Cost Of Conversion

Other Cost

NRVSelling Price

Less Estimated Cost to sell


Joint & By Products

Joint Product or by product are Material

Cost should be allocated on rational and consistent

basis

Joint Product or by product

are Immaterial

By Product= NRV

Main Product=Cost-

NRV of By Product

Issue

Inventory purchased on credit – Rs. 100000 Cost of same inventory on cash basis- Rs 95000 Credit period-5 Months What will be the value of inventory?


Value of Inventory = 95000Finance charges=5000 to be written of during the credit period


Cost of inventory in case of service

provider

Cost of Production

Cost of inventory of Agricultural

Produce harvested from biological assets

Fair Value less cost to sell


Techniques to measure cost

Standard Cost

calculated by cost

department

Retail Cost Method

Sales price- certain

percentage of profit


Cost Formulas

Items are not interchangeable

Use SIMS

Other

FIFO or Weighted Average

Same cost formula for the inventories of similar nature

and use


Inventory Valued at lower side at

NRV

Subsequently the NRV increased

above Cost

Earlier write down should be

reversed but value of inventory

should not be more then cost


Recognition of Expense

Expense- Carrying Amount of Inventory When-Sale are made and revenue is recognized. Write Down and losses – when occurs Reversal of write-down- Deduct from the expense Inventory Transfer to use in any asset-recognize that

as an expense over the useful life of asset.


Disclosures

Amount of inventory

recognized as expense

Amount written down

reversal

Carrying amount of

inventory held as pledge

Circumstances which leads to

reversal

Accounting Policies

Carrying amount

Carrying amount of agricultural

produce


Differences

Basis AS Ind ASName Valuation of Inventory InventoriesApplication Silent Exclude biological asset, financial

instruments, forest produce etc.Subsequent Recognition No only valuation Yes

service provider Silent COPTreatment of financing arrangement of inventory

Silent Recognize expense over the useful life of asset

Reversal Not prescribed Value of inventory should not exceed cost

Biological asset no Valued at fair value less cost to sellDisclosure Some new disclosures


Thanks CA Mohit Goyal

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ind as 2

Law