Someone please answer my Query related to AS 2. This is the second time I am posting the same query.......
How is defective inventory valued at the year end if we expect remedial work expense to make the goods in saleable condition in the next year?How to treat the expected remedial work expense in the curent year?
Can we take remedial expenses as cost of completion of goods to ascertain NRV Or Is there any other treatment for remedial work expense which is being expected to be incurred in the next year?
FOR FURTHER INFORMATION SEE THE QUESTION BELOW..........
The closing inventory at cost of a company amounted to Rs 284700.The following items were included at cost in the total.
a) 400 coats, which had cost Rs 80 each and normally sold for Rs 150 each. Owing to defect in manufacture, they were all sold after the balance sheet date at 50% of their normal price.Selling expenses amounted to 5% of proceeds.
b) 800 skirts, which had cost Rs 20 each.These too were found to be defective. Remedial work in April cost Rs 5 per skirt, and selling expenses for the batch totaled Rs 800. They were sold for Rs 28 each. What should be the inventory value according to AS 2 after considering the above items.
CAclubindia
