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INVENTORY VALUATION ( AS 2)....

13 August 2022

Raw material: Raw materials are to be valued at cost only. Exception: if the finished goods in which the raw material is used is likely to be sold below the cost, then the raw material should be valued at NRV.

could you please explain me elaborately and with example please

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prasad Nilugal ( GST Practitioner & Accounts ) (14546 Points)
Replied 13 August 2022

Material and other supplies held for use in the production are all valued at Cost, if the finished product in which they are used are expected to be sold at or above the Cost, However, when there has been a decline in the price of material and it is estimated that Cost of Finished product will exceed net realisable Value, then row material are valued at NRV .In such case , the replacement cost of the material may be the best available of their NRV.

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