CMA Intermediate · Corporate Accounting and Auditing · Inventories (Ind AS 2)
Which of the following assets of a manufacturing company fits the definition of 'inventories' under Ind AS 2?
Lubricants and packing supplies awaiting use are inventories because Ind AS 2 covers materials and supplies to be consumed in the production process. Machines used over years, rental buildings and investments are not held for sale or consumption in production.
- ALubricants and packing supplies awaiting use in the production processCorrect
- BA machine held for use in production over several years
- CA building held to earn rentals
- DA long-term investment in shares of a subsidiary
Explanation
Inventories include assets held for sale, in the process of production for sale, or in the form of materials or supplies to be consumed in production. Lubricants and packing supplies awaiting use are supplies consumed in production. A machine used over years, a rental building and share investments are not held for sale or consumption in production in this sense.
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