ECONOMICS

Detailed explanation-1: -Inventories are the assets that are: Held for sale in the ordinary course of business. In the process of production of such sale. And in the form of materials or supplies to be consumed in the production process or in the rendering of the services.

Detailed explanation-2: -Overview. IAS 2 defines inventories as assets which are: held for sale in the ordinary course of business, in the process of production for such sale, or. in the form of materials or supplies to be consumed in the production or rendering of services.

Detailed explanation-3: -This Standard deals with the determination of cost and its subsequent recognition as an expense, including any write-down to net realisable value. It also provides guidance on the cost formulas that are used to assign costs to inventories.

Detailed explanation-4: -As per AS-2, “Inventories should be valued at the lower of cost and net realizable value".

Detailed explanation-5: -Inventories should always be valued at cost or net realisable value, whichever is lower. In cases where the inventory is damaged, obsolete, or overvalued as compared to the market, an entity has to write down the inventory to net realisable value.