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as per Accounting standard 2 valuation of inventories, valuation of raw material..cost of raw material or replacement value whichever is lower we should have to take that lower amount am I correct?? for an example the raw material cost is RS 1000 but the replacement cost Rs 600 means we should have to take lower value to value the raw material rupees 600 am I correct?? does replacement cost and market price both same?? plse guide me
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Best Answer
Raw materials are always valued at cost. However, If raw material prices are falling down and finished goods are expected to be sold at below cost i.e their NRV is less than the cost then raw material will be valued at NRV and replacement cost of raw materials is the best measure of their NRV. Replacement Cost is the cost we will incur if we buy the raw material today.
Thread Starter
MPR Sanjay KumarFriend replacement cost and market price or both the same???
As per As 2, inventory is valued at lower of cost or Net realisable Value. Net realisable Value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Chandu vadla
As per As 2, inventory is valued at lower of cost or Net realisable Value. Net realisable Value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Friend replacement cost means market price??
Market value is the estimated price at which your property would be sold on the open market between a willing buyer and a willing seller under all conditions for a fair sale. Replacement cost is the estimated cost to construct, at current prices, a building with equal utility to the building being
Divy Degda
Market value is the estimated price at which your property would be sold on the open market between a willing buyer and a willing seller under all conditions for a fair sale. Replacement cost is the estimated cost to construct, at current prices, a building with equal utility to the building being
Sometimes as per Accounting standard valuation of inventories raw materials are valued at replacement cost if it is lower.. My question is replacement cost which means alternative cost or market price??
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