AS2-Valuation of inventories

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Meekha (Querist)
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04 February 2010 Can anyone please help me to solve this:
Xltd is selling TV sets, purchase price of the same is Rs.15000 as per the terms of sales. They are to be delivered and installed at customers place free of cost. X ltd has hired Y co for the purpose and being paid Rs.1000 per set for delivery and installation.At year ended on 31.3.2002, 10 sets were in stock. The market price of TV is Rs 15,750. what is the value of closing stock as per AS2? please help to solve this conceptually.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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04 February 2010 Inventories are valued cost or net realisable which ever is lower

In you query - you are mentioned about sale price - this is not affect the value of stock

you can take cost price Rs.15000 or if you can calculate the net realiseable value and value the lower of those

Meekha

Meekha (Querist)
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05 February 2010 Thank you for replying Sir. But the answer given to this question in the material is Rs.1,47,500. But the solution not given. Can you please tell me how?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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05 February 2010 In my view

net realizable value means sales value less the cost of making such sales

So in your problem Sale value Rs.15750 less cost of making such sales Rs.1000 so net realisable value one set Rs.14750

as per AS -2 value of inventory is cost or net realisable value which ever is less so

Cost Rs.15000
Realisable value Rs.14750

So low value Rs.14750 x 10= Ra.147500

I hope this is correct

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