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

Under Ind AS 2, techniques such as the standard cost method may be used to measure the cost of inventories:

Standard cost may be used for convenience if the results approximate cost. Ind AS 2 also expects standards to reflect normal levels of materials, labour, efficiency and capacity, and to be regularly reviewed and revised in light of current conditions.

  1. AOnly if they give a result higher than actual cost
  2. BOnly for finished goods, never for raw materials
  3. CFor convenience, if the results approximate costCorrect
  4. DOnly if standards are never revised during the year

Explanation

Ind AS 2 permits techniques such as standard cost or the retail method for convenience if the results approximate cost. Standard costs consider normal levels of materials, labour, efficiency and capacity, and are regularly reviewed and revised if necessary, so the 'never revised' option is wrong.

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