AS - 2
This query is : Resolved
22 June 2010
As per AS-2, Finished Goods has to be valued at cost which includes conversion cost to transform RM to FG. So while valuation of goods, Conversion cost will be included.
Also In Accounts, all the manufacturing expenses are debited to Production expenses A/c which goes to P&L.
So here, there are two debits - 1) Increasing the Inventory Valuation to the extent of Conversion Cost and 2) The same duplicate debit is in Manufacturing Expenses A/c.
Ideally speaking, the manufacturing expenses to the extent incurred on FG should be credited and debited to Inventory A/c.
Please answer the same.
Also In Accounts, all the manufacturing expenses are debited to Production expenses A/c which goes to P&L.
So here, there are two debits - 1) Increasing the Inventory Valuation to the extent of Conversion Cost and 2) The same duplicate debit is in Manufacturing Expenses A/c.
Ideally speaking, the manufacturing expenses to the extent incurred on FG should be credited and debited to Inventory A/c.
Please answer the same.
CMA Ramesh Krishnan
(Expert)
22 June 2010
Since the closing stock appreaing as credit your Debit of Expenses and same recognaised as credit will match
CMA Ramesh Krishnan
(Expert)
22 June 2010
Since the closing stock appreaing as credit in P&L your Debit of Expenses and same recognaised as credit will match
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