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CA Final · Financial Reporting · Ind AS 2 Inventories

Under Ind AS 2, how is the nature-wise presentation of expenses connected to inventories, given the differences from IAS 2?

Ind AS 2 deletes the IAS 2 paragraph on function-wise expense classification because Ind AS 1 requires only nature-wise classification. The paragraph number is retained so that numbering stays consistent with IAS 2, and later paragraphs are not renumbered.

  1. AInd AS 2 retains the IAS 2 paragraph on function-wise expense classification, so cost of sales may be shown
  2. BInd AS 2 deletes the IAS 2 paragraph on function-wise classification, because Ind AS 1 requires only nature-wise classification of expenses, but retains the paragraph numberCorrect
  3. CInd AS 2 permits either method at the entity's option under Ind AS 1
  4. DInd AS 2 removes the paragraph and renumbers all later paragraphs

Explanation

The comparison with IAS 2 notes that the paragraph on recognising inventories as an expense based on function-wise classification has been deleted because Ind AS 1 requires only nature-wise classification. The paragraph number is retained to stay consistent with IAS 2 numbering, so later paragraphs are not renumbered. Option C is wrong because no option exists under Ind AS 1.

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