Normal and abnormal loss

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 February 2012 for instance 5000 units of input at 1000 per unit.normal loss =250 units.actual loss=300 units. so to compute cost of inventories is it correct that abnormal loss of 50 units at 1000 =50000 should be deducted from 50 lacs and then the remaining divided by 4700 to find cost i.e 50 lacs - 50000 divided by 4700

CA Himanshu Sharma

CA Himanshu Sharma (Expert)
Follow

26 February 2012 yes for fair calculation u should do that.

SOURAV GOEL

SOURAV GOEL (Expert)
Follow

27 February 2012 In order to comply with the requirements of AS-2 the effect of abnormal loss should be deducted from the Inventory.

In view of that, the treatment proposed by you is correct