Accounting Standard : Accounting Standards Essay

1118 Words Dec 26th, 2015 5 Pages
Accounting Standard (AS) 2

Inventories constitute a major portion of current assets of an entity. A primary issue in accounting for inventories is the amount of cost to be recognized as an asset and carried forward until the related revenues are recognized.
Indian Accounting Standard (Ind AS) 2, Inventories, prescribes the accounting treatment for inventories, such as, determination of cost and its subsequent recognition as expense, including any write-downs of inventories to net realizable value and reversal of write-downs.
Ind AS 2 applies to all inventories, except:
(a) work in progress arising under construction contracts, including directly related service contracts;

(b) financial instruments
(c) biological assets (i.e., living animals or plants) related to agricultural activity and agricultural produce at the point of harvest.

This Standard does not apply to the measurement of inventories held by: (a) producers of agricultural and forest products, agricultural produce after harvest, and minerals and mineral products, to the extent they are measured at net realizable value in accordance with well-established practices in those industries. When such inventories are measured at net realizable value, changes in that value are recognized in profit or loss in the period of the change.

(b) commodity broker-traders who measure their inventories at fair value less costs to sell. When such inventories are measured at fair value less costs to sell, changes…
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