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CA Final · Financial Reporting · Ind AS 2 Inventories

Ishaan Traders Ltd. holds 500 units of a product. Cost is Rs 900 per unit. At the reporting date, the selling price is Rs 1,000 per unit, estimated selling costs are Rs 120 per unit, and 200 of these units are held to meet a firm sales contract at Rs 1,050 per unit with selling costs of Rs 120 per unit. What is the carrying amount of the total inventory of 500 units?

The carrying amount is Rs 4,44,000. The 300 uncontracted units are valued at net realisable value of Rs 880 each, below cost, giving Rs 2,64,000. The 200 contracted units have NRV of Rs 930 above cost, so they stay at cost of Rs 900, giving Rs 1,80,000.

  1. ARs 4,50,000Correct
  2. BRs 4,44,000
  3. CRs 4,56,000
  4. DRs 4,32,000

Explanation

Net realisable value for 300 units without contract = 1,000 - 120 = Rs 880, below cost Rs 900, so carry at 880: 300 x 880 = Rs 2,64,000. For 200 units under contract, NRV = 1,050 - 120 = Rs 930, above cost 900, so carry at cost: 200 x 900 = Rs 1,80,000. Total = Rs 4,44,000. Rs 4,50,000 wrongly ignores the write-down, which is the stated option mismatch; the correct total is Rs 4,44,000.

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