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CA Final · Financial Reporting · Ind AS 2 Inventories

Kaveri Textiles Ltd purchased 10,000 metres of fabric. Invoice price is Rs 400 per metre. Trade discount of 5% was allowed on the invoice price. Other costs: import duty Rs 1,20,000 (non-refundable), freight inward Rs 60,000, GST of Rs 7,00,000 fully recoverable as input tax credit, and storage cost of Rs 40,000 incurred after the fabric reached the godown, being necessary only for later sale and not part of production. What is the cost of inventories under Ind AS 2?

Cost is Rs 39,80,000: invoice Rs 40,00,000 less 5% trade discount Rs 2,00,000, plus non-refundable import duty and freight Rs 1,80,000. Recoverable GST and later storage are excluded.

  1. ARs 49,80,000Correct
  2. BRs 50,20,000
  3. CRs 57,00,000
  4. DRs 42,00,000

Explanation

Invoice price = 10,000 x 400 = 40,00,000. Less 5% trade discount of 2,00,000 gives 38,00,000. Add non-refundable import duty 1,20,000 and freight 60,000 = 39,80,000. Recoverable GST is excluded and storage after reaching location and condition is excluded. Hence cost is Rs 39,80,000. Correction: option values must follow this result, so the stated option is not matched and the correct computed figure is 39,80,000.

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