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valuation of inventory

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(Querist)
25 February 2009 Dear sir,
As per AS-2,freight charges paid on purchase of fabric should include in the cost of purchases(i.e) whatever may incurred to bring the goods to the godown should included in the cost of purchases.
but in my client place,freight charges are grouped under direct expenses..clearship and forwarding under purchase a/c(tally software)..
whether will it reveal the correct value of inventory in balance sheet? becoz direct expenses is not affecting the inventory valuation..
my opinion is,they should group freight charges under purchase a/c..is it right?



Thanks in Adv,
A.Rekha
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CA Nitin Wadhwani

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CA Nitin Wadhwani (Expert)
25 February 2009 If direct expenses are not included in inventory valuation, then it must be included separately.
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