Valuation of raw material

As per AS-2 Valuation of Inventories,  Raw materials are also included in inventories.

as per the said standard all the cost incurred alongwith the purchase price to bring the inventoreis to their present location & condition are included in the cost of inventories and should be included while valuing the closing stock.  As regards freight if it is incurred alongwith the raw materisl to bring them to their location then it shud be included in the cost of inventories. 

In case of taxes/duties like Cenvat, VAT, Customs if they are recoverable subsequently from the tax authorities then the same should not form part of the inventories.  They should be shown as Current Assets in teh B/S as you will be taking the credit of the taxes paid on purchase while discharing the liability on your sale.

However if youa re not availing any credit of the taxes paid as mentioend above then the same would form part of the cost of inventories.

sir,

Thank you for reply, but just let me be clear if the same as you mentioned, will apply in both the cases whether we are paying freight seprately to a transporter not to buyer or directly to  buyer as he is arranging transportation..??

Regards,

Gaurav.

Yes in both the cases it will be included in the cost of inventory, as it is incurred for bringing the raw materials to the place of manufacture.

Can u pls explain howthe above shown under Rev sch VI

U can simply add that freight while calculation of cost of material consumed.