Valuation of inventories

This query is : Resolved

CA Subin VR (Querist)
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15 August 2012 XYZ co refine certain goods on hire basis from B ltd. B ltd pay hire charges to XYZ. During refining a byproduct emerges Called NY. B ltd has no concern about the NY, hence XYZ sells the same. The closing stock of NY on 31st march is 5000kg. Net realisable value of NY on that date is 200 per kg. How to value closing stock ?

As there is no cost to XYZ, whether the practice of valuing the stock @ zero as per AS 2 result an unfair financial position of XYZ ?

CA Guru M

CA Guru M (Expert)
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15 August 2012 As per AS 2 only cost which are directly incurred & indirect cost which can be apportion, can be treated as cost of inventory.

In your case, since XYZ has incurred no cost, & but it derived the stock(asset) in the process, same should be shown @ nominal value of Rs.100

CA Guru M

CA Guru M (Expert)
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15 August 2012 Valuing the stock @ zero as per AS 2 will not affect the financial position of XYZ.

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