AS 2 excludes certain costs and recognizes them as expenses in the period in which they are incurred, while valuing inventories. Which of the following are such costs? (i) abnormal amounts of wasted materials. (ii) storage costs, unless those costs are necessary in the production process prior to a further production stage; (iii) administrative overheads that do not contribute to bringing the inventories to their present location and condition.
All of (i), (ii) and (iii)
The correct answer is option 1. All the listed costs are excluded under AS 2 and are treated as expenses in the period they are incurred. This includes abnormal waste of materials, storage costs unrelated to the production process, and administrative costs not contributing to inventory preparation.
Similar Questions
Which of the following is not considered as inventory under AS 2?
Krishna Ltd. purchased raw material 'R'. The cost price is ₹1,000. The other information is as follows:
Freight: ₹50
Unloading charges: ₹20
Trade discount: ₹15
Determine the cost of purchase for inventory valuation.
Important Questions from Valuation
Calculate the year’s purchase for a property of useful life of 30 years and rate of interest of 5% per annum.
A building has been purchased by a person at a cost of Rs. 25,000. The useful life of the building is 40 years and the scrap value of the building is Rs. 3,000. Calculate the annual sinking fund (Rs.) at the rate of 5% interest. (Take 1.0540 = 7.04)
The junk or demolition value of a structure, calculated at the end of its utility span, that has lost all of its structural strength and is near to its demolition is called:
X is the measure and adjustment of price levels for goods and services across a broad sector of the economy, where X is:
In which of the following cases, valuation is not required?
