TaxTMI 
TaxTMI 
ICDS II : Valuation of Inventories
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....ng : • Work-in-progress under construction contracts (ICDS III) • Work‐in‐progress which is dealt with by other ICDS • Share debentures and other financial instruments held as stock-in-trade (ICDS VIII) • Producers inventories of livestock, agriculture and forest products mineral oils, ores and gases to the extent that they are measured at net realisable value. • Machinery spares, which can be used only in connection with a tangible fixed asset and their use is expected to be irregular (ICDS V) Note: (a) Items of inventory that have not been used in the construction work and have not become part of work-in progress of the contract will come within the scope o....
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....ll consist of labour and other costs of personnel directly engaged in providing the service. Note: In case of service providers ICDS II will not have application and value of service not fully rendered need not be computed under this ICDS. 6. Costs of conversion:- Costs of conversion are incurred for converting raw material into finished products. These costs can be classified into three categories: • costs that are directly related to the units of production • variable production overheads and • fixed production overheads 7. Other Costs:- Other costs shall be included in the cost of inventories only to the extent that they are incurred in bringing the inventories to their present locati....
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....buted to specific or identified items of inventory. This is not common and has limited applicability. It is used only in special circumstances, for example in valuing inventory of paintings in an art gallery. It is used where goods or services have been specifically produced and segregated for specific project. Where there are a large numbers of items of inventory which are ordinarily interchangeable, specific identification of costs shall not be made. Note: Under specific identification of cost, specific costs are attributed to identified items of inventory. 10. First-in First-out and Weighted Average Cost Formula ICDS II recognises that inventory valuation involves the process of approximation and estimation. Cost of inventori....
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....trade for measuring inventories of large number of rapidly changing items that have similar margins and for which it is impracticable to use other costing methods. The cost of the inventory is determined by reducing from the sales value of the inventory, the appropriate percentage gross margin. The percentage used takes into consideration inventory, which has been marked down to below its original selling price. 12. Net Realisable Value:- Cost of inventory determined in accordance with ICDS should be compared with the NRV and lower of the two should be taken as the value of the inventory. ICDS requires that the comparison of cost and NRV should be done on item-by item basis and not globally. Where 'items of ....