Valuation of Inventory

NO

hi Chintan,

Please refer definiation of Cost of Inventories in AS 02

"The cost of inventories should comprise all costs of purchase, costs of conversion and other cost incurred in bringing the inventories to present location and condition"

According to difination, excise duty liability arise when inventories moved from factory, so, we need not to include excise duty in cost of inventory.

But, we need to think accounting point of view. Because, once goods are produced at factory, we are liabile to pay excise duty. So, we need to make provision of excise duty in our books. In this case, we need to include excise duty in cost of inventory.

with regards,

CMA.Baskar.V

thx friends....