Home » IAS 2

Inventory valuation

23 December 2008 7,087 views 3 Comments

A company yet to start production had bought some raw materials necessary for production. But the production has been delayed. In the mean time the market value of raw materials has came down. what should be the accounting treatment for the raw material at year end ?

should it be valued at current market price and difference be treated as pre-operative expense or some other treatment should be given ?

Related Posts

  1. IAS 2 – Inventory
  2. Share application money
  3. Revaluation of PPE – VALUATION APPROACH- IAS 16
  4. exchange Inventory
  5. Treatment of under/over absorbed overheads
  6. Inventory Adjustment Entries
  7. Valuation Method
  8. Reversal of a previuos inventory writedown
  9. Valuation of Inventory according to re – denominated currency
  10. Inventory Write-Down
1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 2 out of 5)
Loading ... Loading ...

3 Comments »

  • raniero ciani said:

    According to IAS 2, the accounting treatment depends on the market value of the finished goods. If the selling price of the finished good is high enought to cover the original market value of the raw material and the other production expenses, you shoud not to make any write off. Otherwise, you shoud do it.

    Regards,
    Raniero

    # 3 January 2009 at 12:00 pm
  • cmanishiyer said:

    Only if Net Realisable Value of Finished goods, that is, Selling Price less costs to sell have decreased to such an extent that they are less than the costs incurred to get them to a saleable condition, the value of Raw Materials should be written down to their current replacement value otherwise not

    # 20 January 2009 at 10:48 am
  • sarahhall said:

    So if it decreases too much we can treat it as an expense?

    # 1 October 2009 at 2:44 pm

Leave your response!

You must be logged in to post a comment.