Please Help: as 2
Posted Date : 30-Sep-2011 , 07:06:20 pm | Posted By anu jain
A raw material costing RS. 150 has net reliable value (which can be the replacement cost) RS 130. The finished good for which the raw material is used has other cost to incur RS 60. At what price raw material should be valued if finished good has net realizable value:-
1. RS 210 or above
2. Less than RS 190
3. RS 200
Ans =( m I rgt)
cost of finished goods ( 150+60=210),
1. at 150
2. at 130
3. at 130
( m I rgt)
1. RS 210 or above
2. Less than RS 190
3. RS 200
Ans =( m I rgt)
cost of finished goods ( 150+60=210),
1. at 150
2. at 130
3. at 130
( m I rgt)
Category : Accounts | Answers : 1 | Comments : 1 | Hits : 415
Answers
Answer By: Ashish Karundia
Dear Anu,
The answer given by Vipin is correct i.e. 1) 150, 2) 130 3) 140. In this regard, you are advised to refer para 24 of AS-2 'Valuation of Inventories'.
Hope the above answers your query.
The answer given by Vipin is correct i.e. 1) 150, 2) 130 3) 140. In this regard, you are advised to refer para 24 of AS-2 'Valuation of Inventories'.
Hope the above answers your query.
Comments
CA VIPIN GARG
01-Oct-2011 , 09:00:07 amDear Anu, As per my understanding about AS-2, regarding raw material the valuation can be done as follows in different cases : - 1. It should be valued at Rs. 150 because in case of raw material if the total cost (including further cost) is less than or equal to the value of finished goods then we should value the stock of RAW MATERIAL at cost even if its market value is less. 2. In this case the value should be Rs. 130 as the value of existing raw material in the market is Rs. 130 even though its total cost exceeds the value of finished goods. 3. In this case the value of raw material should be Rs. 140 because we should write off our cost of raw material to minimum possible as per AS 2. Hope you got the answer you were looking, Have a nice day........