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Accounting standard-2 on "inventory valuation"
"A company is constructing one of its departmental store on its own expenses.The work doesnt get completed at the end of this year. sacks of cements are lying just there which are being used and to be used further in constructing the store.The departmental store will be used for running services by company .In such case , cements are need to be shown as closing inventory this year or not???
need some explanation please.
Replies (1)
Inventory or stock refers to the goods and materials that a business holds for the ultimate purpose of resale.
Therefore from my point of view the cement that is being used to make a fixed asset (dptm.store ) and does not belong to the stock of materials from ordinary operation cycle it shold not be inculded in inventories.
Rather you can show it in the "Capital-work-in-progress" sub-heading under Fixed Assets in the BALNCE sheet.
Or you can put it under current assests as' other current assests '..
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