Some query : as ?

This query is : Resolved

Vijay Parmar (Querist)
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11 November 2011
1.AS-2 Valuation of inventory :
company borrow money for working capital. can this borrowing cost include in inventory ?

2. can company follow cash system for income tax ??

3. can professional persona prepare books of a/c under cash system . follow as? or not?

4. AS-25 interim financial report is only applicable to enterprise prepare quarterly result ??

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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12 May 2012 1. Borrowing cost will not form part of inventory cost.

2. A company can follow cash system for Income Tax, but in that case it will have to maintain 2 sets of account. 1 on accrual basis under Companies Act and other on cash basis for Income Tax.

Therefore, it is advisable to prepare books on accrual basis.

3. AS 1 requires that accounts shall be maintained on accrual basis only.
Therefore, professionals or for that matter everyone should maintain accounts on accrual basis.

4. AS 25 is applicable only to enterprises who prepare interim financial statements.