INVENTORIES

IND-AS 2
  The following items are excluded from the scope of the
standard.
 Work in progress under construction contracts (covered by Ind-
AS 115 Revenue from contracts with customers)
 Financial instruments (ie shares, bonds)
 Biological assets
SCOPE  Certain inventories are exempt from the measurement rules, ie
those held by:
 Producers of agricultural and forest products and minerals
 Commodity-broker traders
  Inventories are assets:
 Held for sale in the ordinary course of business;
Inventories:  In the process of production for such sale; or
 In the form of materials or supplies to be consumed in the
production process or in the rendering of services.
  Inventories can include any of the following.
 Goods purchased and held for resale, eg goods held for sale by
a retailer, or land and buildings held for resale
 Finished goods produced

Inventories:  Work in progress being produced

 Materials and supplies awaiting use in the production process
(raw materials).
 The standard states that 'Inventories should be measured at the
lower of cost and net realisable value.
  The cost of inventories will consist of all costs of:
 Purchase
Cost of  Costs of conversion
Inventories:  Other costs incurred in bringing the inventories to their present
location and condition.
 Variable  Variable production overheads are those indirect costs of
production that vary directly, or nearly directly, with the
production volume of production, eg indirect materials. and indirect
overheads: labour.
  As a general rule assets should not be carried at amounts

Net realisable greater than those expected to be realised from their sale or use.
In the case of inventories this amount could fall below cost
value (NRV): when items are damaged or become obsolete, or where the
costs to completion have increased in order to make the sale.
Recognition of  When inventories are sold, the carrying amount of those
Inventories inventories shall be recognised as an expense in the period in
which the related revenue is recognised
Measurement  Inventories shall be measured at the lower of cost and net

of Inventories realisable value.

  The financial statements shall disclose:
 The accounting policies adopted in measuring inventories, including
the cost formula used;
 The total carrying amount of inventories and the carrying amount in
classifications appropriate to the entity;
 The carrying amount of inventories carried at fair value less costs to
sell;
Disclosures of  The amount of inventories recognised as an expense during the period;
Inventories  The amount of any write-down of inventories recognised as an
expense in the period
 The amount of any reversal of any write-down that is recognised as a
reduction in the amount of inventories recognised as expense in the
period
 The circumstances or events that led to the reversal of a write-down of
inventories and
 The carrying amount of inventories pledged as security for liabilities.