Assignment Help on Valuation of Inventories (IAS 2)
IAS 2 precribes the accounting treatment for valuation of inventory. The standard helps in ascertaining the cost of inventories by using methods of valuations such as First in first out , specific identification method and weighted average cost method. Courseworktutors provide complete acaedemic accounting help on Valuation of inventory Assignment help . IAS 2 on valuation of inventory requires that inventory should be valued at lower of cost or Net realisable value.
What is the meaning of Cost and Net Realisable Value?
Cost would include :
- Cost of purchase
- Cost of Conversion
- Other cost incurred in bringing the product to selleable location and Condition
Net realisable value is the estimate selling price of the product in the market at ordinary course of business less the estimate cost of completion less estimate cost necessary to make the sale.
To Explain Cost and Net Realisable value , Courseworktutors has taken an instance : A pen has a selling price of 10$ in the market. Currently the company is having a pen without a cap and to complete manufacture the Pen , an additional cost would be $2 for manufacturing cap and $1 for other marketing expense . So as per IAS 2 , Valuation of Inventory Assignment help , NRV of the pen would be :
Estimate Selling price of pen $10 – Estimate Cost of Completion $2 – Estimate cost necessary to make the sale $1 = $7. NRV of pen would be $7
Cost incurred to make the pen without cap is $6
As per IAS 2 , Inventory should be valued at lower of Cost or NRV . So , Value of Inventory i.e pen would be $6.
What is the meaning of Inventory as per IAS 2?
Inventory is considered as a Current Asset which is available for sale in the ordinary course of business , or a raw materials which can be used in the production process for producing main product or work in process.
Frequently Asked Question
What are the inventories which are excluded from IAS 2 Valuation of Inventory ?
IAS 2 excludes certain inventories for which other prescribed IAS are already given :
Work in Process which arises from Construction Contracts
What are the exclusion from cost of inventory ?
Inventory cost does not included :
Administrative Cost unrelated to production
Foriegn Exchange difference
What is the Fundamental principal of IAS 2 Valuation of Inventory Assignment Help?
Inventory should be valued at Lowe of Cost or Net Realisable Value.
Why Courseworktutors for Inventory Valuation Assignment Help?
Our email based Assignment Help on inventory valuation ensures that students get best information and knowledge that they can implement in their acaedemic career and earn better grades.All our experts at Courseworktutors have practical knowledge of Industries as they applied all relevant IAS for measurement , classification and disclosure of inventories.Courseworktutors can help students in all their difficult homework problems relating to Valuation of inventory within reasonable time at affordable rates.
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