Dear all,
As per AS 2 Inventory should be valued at cost or NRV whichever is less, so if in Profit and loss statement in Expenses change in inventory of stock in trade has to be provided, then how would be done ?
I understood it as [Opening balance of stock in trade - closing balance of stock in trade] here closing would be valued at Cost or NRV whichever be less.
Suppose in a manufacturing company, cost of inventory of stock in trade is Rs. 100 and NRV is 80, Now it should be valued at Rs. 80 but where will the loss of Rs. 20 will be presented or go under??
AS 5 says
"Circumstances which may give rise to the separate disclosure of itemsof income and expense in accordance with Paragraph 12 include:
(a) the write-down of inventories to net realisable value as well as
the reversal of such write-downs".
In nutshell Please tell if it is recorded at Rs. 80 then where will the loss of 20 will be recorded and what AS 5 is saying in that regard..?? Also is AS 5 saying that Rs. 20 will come under Loss from Exceptional Items..??
Please Correct me if interpreted it wrongly.
Thank you all
Ashish
CAclubindia
