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Home Acts & Rules Direct Taxes Rules Accounting Standards U/s 145(2) Chapters List Income computation and disclosure standards - w.e.f. AY 2017-18 This
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ICDS - 02 - II - Valuation of inventories (w.e.f. AY 2017-18) - Accounting Standards U/s 145(2)

Extract

..... xcept: (a) Work-in-progress arising under 'construction contract' including directly related service contract which is dealt with by the Income Computation and Disclosure Standard on construction contracts; (b) Work-in-progress which is dealt with by other Income Computation and Disclosure Standard; (c) Shares, debentures and other financial instruments held as stock-in-trade which are dealt with by the Income Computation and Disclosure Standard on securities; (d) Producers' inventories of livestock, agriculture and forest products, mineral oils, ores and gases to the extent that they are measured at net realisable value; (e) Machinery spares, which can be used only in connection with a tangible fixed asset and their use is expe .....

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ICDS - 02 - II - Valuation of inventories (w.e.f. AY 2017-18) - Accounting Standards U/s 145(2)

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..... Services 6. The costs of services shall consist of labour and other costs of personnel directly engaged in providing the service including supervisory personnel and attributable overheads. Costs of Conversion 7. The costs of conversion of inventories shall include costs directly related to the units of production and a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Fixed production overheads shall be those indirect costs of production that remain relatively constant regardless of the volume of production. Variable production overheads shall be those indirect costs of production that vary directly or nearly directly, with the volume of production. 8. The alloca .....

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ICDS - 02 - II - Valuation of inventories (w.e.f. AY 2017-18) - Accounting Standards U/s 145(2)

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..... hall be included in the cost of inventories only to the extent that they are incurred in bringing the inventories to their present location and condition. 11. Interest and other borrowing costs shall not be included in the costs of inventories, unless they meet the criteria for recognition of interest as a component of the cost as specified in the Income Computation and Disclosure Standard on borrowing costs. Exclusions from the Cost of Inventories 12. In determining the cost of inventories in accordance with paragraphs 4 to paragraphs 11, the following costs shall be excluded and recognised as expenses of the period in which they are incurred, namely:- (a) Abnormal amounts of wasted materials, labour, or other production costs; (b) Storage .....

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ICDS - 02 - II - Valuation of inventories (w.e.f. AY 2017-18) - Accounting Standards U/s 145(2)

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..... similar items at the beginning of a period and the cost of similar items purchased or produced during the period. The average shall be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances. Techniques for the Measurement of Cost 18(1) Techniques for the measurement of the cost of inventories, such as the standard cost method or the retail method, may be used for convenience if the results approximate the actual cost. Standard costs take into account normal levels of consumption of materials and supplies, labour, efficiency and capacity utilisation. They are regularly reviewed and, if necessary, revised in the light of the current conditions. (2) The retail method can be used in the reta .....

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ICDS - 02 - II - Valuation of inventories (w.e.f. AY 2017-18) - Accounting Standards U/s 145(2)

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..... ll not be written down below the cost, where the finished products in which they shall be incorporated are expected to be sold at or above the cost. Where there has been a decline in the price of materials and it is estimated that the cost of finished products will exceed the net realisable value, the value of materials shall be written down to net realisable value which shall be the replacement cost of such materials. Value of Opening Inventory 22. The value of the inventory as on the beginning of the previous year shall be (i) the cost of inventory available, if any, on the day of the commencement of the business when the business has commenced during the previous year; and (ii) the value of the inventory as on the close of the immediatel .....

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ICDS - 02 - II - Valuation of inventories (w.e.f. AY 2017-18) - Accounting Standards U/s 145(2)

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