As-2

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Sagar Kulkarni (Querist)
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06 February 2012 A company produces a product 'X'in the manufacturing process which is to be captively consumed. The cost of producing X is Rs. 20000/- per tonne. As it is, X is not marketable & therefore, market price is not known. However, further cost of processing X to convert it into final product is known & it is say, Rs. 10000/- per tonne. NRV of final product is also known & it is, say Rs. 28000/- per tonne of final product.
In this case, how will stock of X of 1000 tonnes be valued?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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07 February 2012 According to AS-2 stock need to be valued Cost or net realised value which ever is lower.

My view since it is captively consumed and no market value. it need to be considered as work in progress and can be valued as cost up to date incurred Rs.20000

no need to calculate the NRV for final products and compare

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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12 May 2012 AS per paragraph 24 of AS 2, materials and other supplies held for use in production of inventories shall be valued at cost if the finished product in which they will be used is expected to be sold at or above cost.

Otherwise, they shall be valued at replacement cost.

Accordingly, stock of X shall be valued at Rs. 20,000/- per tonne (being its cost).

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