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Accounting standards

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Querist : Anonymous

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Querist : Anonymous (Querist)
29 May 2012 According to AS-2--> Inventories should be valued at the lower of cost and net realizable value.
What is the logic behind this ??

Thanx in advance
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
29 May 2012 I(nventory is valued at lower of cost or NRV to account for a loss in the realisable value of the inventory.

Moreover, an enterprise cannot account for unrealised gain.
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