Valuation of Finished Goods as per AS-2 and Cost Accounting Principles

[Rakesh Singh]

As per AS-2, Finished Goods are required to be valued as 'Cost or Net Realizable Value' whichever is earlier. While calculating ' Cost ' there is no variance in principles as per Costing and AS-2 except:

(1) Method of valuation of materials consumption; and

(2) Inclusion of ED in the value.

Would prefer to solicit opinion of experts including further elaboration.

[DR.MARIAPPAN GOVINDARAJAN]

You are the expert in the field. You have to guide us.

AI Summary

Valuation of finished goods: apply cost-or-net realizable value rule; material consumption method and excise duty inclusion differ. Valuation of finished goods requires stating inventory at cost or net realizable value, whichever is lower. Practical differences from cost accounting arise in the method of valuing material consumption and in whether excise duty is included in the inventory value, affecting per unit cost measurement and reconciliation between costing records and accounting valuation.