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Raw material valuation
Accountancy
Suppose, FG NRV is 350, cost of FG is 360. Raw material cost is 140, while replacement cost is 190. What should be the value of raw material say I have 800 units. This ques is same as of Nov2019 PYP AS-2 question.
Answers (11)
Shankari C
Value of raw material is Rs.140 being lower of cost or replacement cost
Where it is given in standard lower of cost or replacement cost
Thread Starter
Sugam SMIt is just said that if FG are sold below cost, then replacement cost to be taken for valuing raw materials.
You cannot value Raw Material above cost.
CA Suraj Lakhotia Admin
You cannot value Raw Material above cost.
So following prudence, it is not needed.
Thread Starter
Sugam SMThen is it wrong?
Share the question. If replacement cost of raw material is less than cost, then repl.cost is taken. If greater, cost is taken.
Thread Starter
Sugam SMThen is it wrong?
In this question FG cost is Rs.360 & its NRV value is Rs.340, i think u r confused regarding cost & NRV value!(Finished goods valued at NRV Being lower than the cost, then if Raw material replacement cost is also lower than cost, then RM valued at replacement cost)
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