AS 2 - 46 Accounting Standard (AS) 2 (revised 1999)...

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Unformatted text preview: 46 Accounting Standard (AS) 2 (revised 1999) Valuation of Inventories Contents OBJECTIVE SCOPE Paragraphs 1-2 DEFINITIONS 3-4 MEASUREMENT OF INVENTORIES 5-25 Cost of Inventories 6-13 Costs of Purchase 7 Costs of Conversion 8-10 Other Costs 11-12 Exclusions from the Cost of Inventories 13 Cost Formulas 14-17 Techniques for the Measurement of Cost 18-19 Net Realisable Value 20-25 DISCLOSURE 26-27 The following Accounting Standards Interpretation (ASI) relates to AS 2: ASI 2 - Accounting for Machinery Spares The above Interpretation is published elsewhere in this Compendium. Valuation of Inventories 43 Accounting Standard (AS) 2* (revised 1999) Valuation of Inventories (This Accounting Standard includes paragraphs set in bold italic type and plain type, which have equal authority. Paragraphs in bold italic type indicate the main principles. This Accounting Standard should be read in the context of its objective and the Preface to the Statements of Accounting Standards 1 .) The following is the text of the revised Accounting Standard (AS) 2, ‘ Valuation of Inventories’ , issued by the Council of the Institute of Chartered Accountants of India. This revised Standard supersedes Accounting Standard (AS) 2, ‘ Valuation of Inventories’ , issued in June, 1981. The revised standard comes into effect in respect of accounting periods commencing on or after 1.4.1999 and is mandatory in nature. 2 Objective A primary issue in accounting for inventories is the determination of the value at which inventories are carried in the financial statements until the related revenues are recognised. This Statement deals with the determination of such value, including the ascertainment of cost of inventories and any write-down thereof to net realisable value. Scope 1. This Statement should be applied in accounting for inventories other than: * The Standard was originally issued in June 1981. 1 Attention is specifically drawn to paragraph 4.3 of the Preface, according to which Accounting Standards are intended to apply only to items which are material. 2 Reference may be made to the section titled ‘Announcements of the Council regarding status of various documents issued by the Institute of Chartered Accountants of India’ appearing at the beginning of this Compendium for a detailed discussion on the implications of the mandatory status of an accounting standard. 48 AS 2 (revised 1999) (a) work in progress arising under construction contracts, including directly related service contracts (see Accounting Standard (AS) 7, Accounting for Construction Contracts 3 ); (b) work in progress arising in the ordinary course of business of service providers; (c) shares, debentures and other financial instruments held as stock-in-trade; and (d) producers ’ inventories of livestock, agricultural and forest products, and mineral oils, ores and gases to the extent that they are measured at net realisable value in accordance with well established practices in those industries....
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AS 2 - 46 Accounting Standard (AS) 2 (revised 1999)...

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