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

Himalaya Foods Ltd had opening inventory of Rs 8,00,000. During 2026-27 it sold goods whose carrying amount was Rs 50,00,000, wrote down inventory by Rs 2,00,000 to NRV, lost goods costing Rs 1,00,000 in a warehouse fire (no insurance claim recognised), and reversed an earlier write-down of Rs 60,000 due to increased NRV. All items occurred in 2026-27. What is the total amount of inventories recognised as an expense for the year under Ind AS 2?

The expense is Rs 52,40,000. Under Ind AS 2, the carrying amount of goods sold (50,00,000), the write-down (2,00,000) and the losses (1,00,000) are expensed, while the reversal of 60,000 reduces the inventory expense, giving 52,40,000.

  1. ARs 52,40,000Correct
  2. BRs 53,00,000
  3. CRs 53,60,000
  4. DRs 51,40,000

Explanation

Expense = carrying amount of goods sold 50,00,000 + write-down 2,00,000 + losses 1,00,000 - reversal 60,000 = Rs 52,40,000. Opening inventory is irrelevant here as the sold carrying amount is already given. Rs 53,00,000 ignores the reversal; Rs 53,60,000 wrongly adds the reversal.

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