CA Pratik Sirwani (Chartered Accountant) (127 Points)
08 January 2012Hellloo Frnds.. I have one query on AS 2 - Valuation of Inventory. A company has decided to store a particular product for a prolonged time to improve its quality. In this case, as per the provisions of AS 2, whether the interest cost of holding the inventory incurred by the company shall be included in determining the cost of inventory ?
Prashanth
(Chartered Accountant)
(2322 Points)
Replied 08 January 2012
Yes, u can do but not as per AS-2 but according to AS-16(Borrowing cost) ,interest cost can be capitalised till the iventory or asset is ready for its intend use.Now in this case u can add interest cost to the inventory as per AS-16....
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