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Material Record on FIFO or Average Price

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rakesh

student

467 Points Posted on 10 September 2022

can we maintain material record at construction site on average price for closing stock and in accounts can we maintain on FIFO basis as the closing stock total amount will be same in avg price and FIFO method

Replies (6)

Quick Summary

This discussion explores the use of FIFO and Average Price methods for managing material records at construction sites and in accounting. While both methods establish cost per unit, the question arises whether they can be used concurrently for closing stock valuation, with the total closing stock amount remaining the same. The conversation touches upon accounting standards, particularly AS 2, and the applicability of actual cost basis for non-fungible goods and self-constructed assets, stressing the importance of disclosing chosen accounting policies.

Yasaswi Gomes new

Finance

4592 Points Posted on 10 September 2022

Yes only through FIFO and AVCO, the cost is established. I recently read some acca books and i found out cost per unit or something can also be used. I'll get back once i remember the third method.

Yasaswi Gomes new

Finance

4592 Points Posted on 10 September 2022

But i doubt both will be the same.

Yasaswi Gomes new

Finance

4592 Points Posted on 10 September 2022

Alright the third method is actual cost basis of they are non fungible goods only. But if your doing contracts, you have to use that standard as 2 is not applicable for wip. If it's self constructed asset, and as 2 is not applicable work in progress not unless you have an intention to sell.

sabyasachi mukherjee

Profession Business

28246 Points Posted on 10 September 2022

But whatever policies are being set it must be disclosed in accounting standard and basis of accounting policies. Accounting standard 2 is best suited.