MAHSHAD (IPCC) (42 Points)
20 January 2012Someone please answer my Query related to AS 2.......
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 treat remedial work expense as cost of completion of product?
CMA Shilpa Shinde
(COST ACCOUNTANT)
(217 Points)
Replied 23 January 2012
Dear MAHSHAD,
In general Cost of rework on defective inventory may be treated as factory overhead of the year in which such expenses have been incurred.
while in special cases exclusive contract terms when specify to cover the same in product cost then the same may be included as part of that product cost.
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