Dear friends,
Should the excise duty on the finished goods in inventory be added to the value of such inventory? Does it fall within the components of cost provided in AS 2 Inventory Valuation?
Thx in adv....
Regards,
Chintan
Chintan Shah (-) (534 Points)
08 March 2010Dear friends,
Should the excise duty on the finished goods in inventory be added to the value of such inventory? Does it fall within the components of cost provided in AS 2 Inventory Valuation?
Thx in adv....
Regards,
Chintan
CMA.Baskar.V
(Cost Accountant)
(400 Points)
Replied 08 March 2010
hi Chintan,
Please refer definiation of Cost of Inventories in AS 02
"The cost of inventories should comprise all costs of purchase, costs of conversion and other cost incurred in bringing the inventories to present location and condition"
According to difination, excise duty liability arise when inventories moved from factory, so, we need not to include excise duty in cost of inventory.
But, we need to think accounting point of view. Because, once goods are produced at factory, we are liabile to pay excise duty. So, we need to make provision of excise duty in our books. In this case, we need to include excise duty in cost of inventory.
with regards,
CMA.Baskar.V
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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