AS-2 Valuation of inventory

As  per AS-2 Inventories are to valued at lower of Cost and Net Realizable Value.

Cost for above purpose includes Cost of Purchase , Cost of Conversion &                                   Other costs incurred in bringing inventories to their present location & condition Cost of conversion includes cost directly related to units i.e. Direct labour ,direct material , direct expenses. Even the Fixed & Variable Production Overheads incurred in conversion process are considered as cost of conversion and allocated to units produced.

So expenditure for material , ink, covering material etc including royalty paid are considered for determining value of books held as inventory. For apportioning royalty paid kindly refer to terms of  agreement determining amount of royalty.

AS-2 Valuation of inventory

Posted in: Accounting standards