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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.


Sugam SM

Sugam SM

CA Inter

6K+

01-Dec-22

98

Answers (11)

Value of raw material is Rs.140 being lower of cost or replacement cost


Shankari C

Shankari C

CA Inter

12K+

01-Dec-22

So, 140*800 = 112000 is the value


Shankari C

Shankari C

CA Inter

12K+

01-Dec-22

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 SM

Sugam SM

CA Inter

6K+

01-Dec-22

It is just said that if FG are sold below cost, then replacement cost to be taken for valuing raw materials.


Thread Starter

Sugam SM

Sugam SM

CA Inter

6K+

01-Dec-22

Suraj Lakhotia Admin

You cannot value Raw Material above cost.

So following prudence, it is not needed.


Thread Starter

Sugam SM

Sugam SM

CA Inter

6K+

03-Dec-22

Then is it wrong?

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Thread Starter

Sugam SM

Sugam SM

CA Inter

6K+

03-Dec-22

Thread Starter

Sugam SM

Then 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.


Shankari C

Shankari C

CA Inter

12K+

03-Dec-22

Thread Starter

Sugam SM

Then is it wrong?

What is wrong?


Suraj Lakhotia

Suraj Lakhotia

Admin

03-Dec-22

Thread Starter

Sugam SM

Then is it wrong?

It is right only. Replacement cost is less than cost.


Shankari C

Shankari C

CA Inter

12K+

03-Dec-22

Thread Starter

Sugam SM

Then 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)


Yoganathan LAKSHMANAN

Yoganathan LAKSHMANAN

CA Inter

120

03-Dec-22

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