Value of sales and purchase

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Sharwan Baluni (Querist)
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03 July 2012 Does freight inward and labour charges paid by purchaser for trading or manufacturing is included in purchase value as per AS 2. If yes then why it is shown as separate expense under head "freight inward" in P&l Acc.

Does sales expenses is deducted from sales. Is there any guidance note or AS on it. AS 9 does not provide value of sales.

Please clarify

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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03 July 2012 The costs of purchase consist of the purchase price including duties and
taxes (other than those subsequently recoverable by the enterprise from the
taxing authorities), freight inwards and other expenditure directly attributable
to the acquisition. Trade discounts, rebates, duty drawbacks and other similar
items are deducted in determining the costs of purchase. - AS 2 para 7

It has to be shown seperately becasue it is a seperate transaction but part of cost as per para 7.

Sales are shown gross of expenses since tehre is a seperate head of selling & distribution expenses in P&L debit side.

Sharwan Baluni

Sharwan Baluni (Querist)
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05 July 2012 It means fright inward is included in closing stock as per AS2 and it is separately shown under separate head in P&L accounts.

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