Skip to content

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

Which of the following is NOT described in Ind AS 2 as falling within the definition of inventories?

Machinery held for use in production over many years is not inventory. Ind AS 2 covers assets held for sale in the ordinary course, work in process, and materials or supplies consumed in production or services. Long-lived machinery is not sold or consumed as material, so it falls outside.

  1. AGoods held by a trader for sale in the ordinary course of business
  2. BWork in progress in a factory meant for sale
  3. CRaw materials to be consumed in production
  4. DMachinery held by a manufacturer for use in producing goods over many yearsCorrect

Explanation

Inventories are assets held for sale in the ordinary course, in the process of production for such sale, or as materials or supplies to be consumed in production or services. Machinery used over many years for production is not consumed as material or held for sale, so it is not inventory.

Did you get it right without looking?

One question tells you little. A timed set on Inventories (Ind AS 2) shows your real accuracy, how long you take and where you lose marks.

Practise Inventories (Ind AS 2)Free diagnostic mock

More Inventories (Ind AS 2) questions