Valuation of Goods

[Guest]

The raw material which is purchase is been used  to manufacture two finished products. Both the products require same material with only one raw material with lesser quantity and amount. How to value both the products at the end of the Year? Is the raw material purchased has to be bifurcated between two products at GRN level and maintain separately as stock OR can be taken into stock as it is and then issue as per requirement?

Please Suggest.  

 

[CAGOPALJI AGRAWAL]

Inventory has to be valued at lower of cost or net realisable value. Raw material is valued at cost unless the final products is expected to fetch the NRV lesser than cost. There is no need to bifurcate the raw material as such product qua.

AI Summary

Inventory valuation: raw material is held at cost unless finished goods' net realisable value falls below cost, no GRN bifurcation Inventory is valued at the lower of cost or net realisable value. Raw material used across two finished products may be carried in stock at cost and issued as required; apportionment at GRN is not necessary unless the finished goods' net realisable value falls below cost, in which case NRV adjustments must be applied.