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CMA Intermediate · Corporate Accounting and Auditing · Inventories (Ind AS 2)

Ananya Commodities, a broker-trader, buys commodities mainly to sell in the near future to profit from price fluctuations, and measures them at fair value less costs to sell. Per Ind AS 2, what is the position of these inventories?

Broker-trader inventories measured at fair value less costs to sell are excluded only from the measurement requirements of Ind AS 2. The rest of the Standard, such as disclosure, still applies, so they are not wholly outside its scope.

  1. AThey are wholly outside the scope of Ind AS 2, including disclosure requirements
  2. BThey are excluded only from the measurement requirements of Ind AS 2Correct
  3. CThey are excluded only from the disclosure requirements of Ind AS 2
  4. DThey are covered by Ind AS 2 fully, as broker-traders get no exclusion

Explanation

The text states that when such broker-trader inventories are measured at fair value less costs to sell, they are excluded from only the measurement requirements of the Standard. Other requirements, such as disclosures, still apply. Treating them as wholly outside scope is the common error.

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