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Hello dear tutor…
I hope that you are well
– it is said in IAS 2:
“For inventory items that are not interchangeable, specific costs are attributed to the specific individual items of inventory”. [IAS 2.23]
Q1)Could you please tell me using exapmles what does “not interchangeable” mean?and what does this sentence mean?-also it said as one of the items which shouln’t be included in cost:
“foreign exchange differences arising directly on the recent acquisition of inventories invoiced in a foreign currency”
Q2)does it mean that we should not remeasure inventory using year end exchange rate as a non monetray item according to ias21?(if not,please explain me what does this sentence mean)-also it is said(again as one of the items to be excluded from cost):
“interest cost when inventories are purchased with deferred settlement terms.”
Q3)what does it mean?-also as one of item excluded from cost:
“Admin expenses unrelated to production”…
Q4)so is it correct to say we must include admin expenses related to production in cost of inventory (such as factory manager wage)?-also it is said:
“Any write-down to NRV and any inventory losses are also recognised as an expense when they occur. [IAS 2.34]”
Q5)is it correct to say we are not permitted to use the word “impairment” for inventory because according to ias 36, inventory is one of those item which is exluded from ias 36?
Q6)is it correct to say that this written down amount shold goes to operating expenses(not cost of sale)?And my final question:
Q7)is it correct to say inventory is not depreciated because it is not used?(if it is incorrect please explain the CONCEPT for non depreciation?I am sorry if i ask you many questions BUT please answer all of these questions(and if it is very time consuming please answer as much as you have time)….
Many many thanks Thanks in advance
Another question:
Q8)it is said:
“Also, while the following are within the scope of the standard, IAS 2 does not apply to the measurement of inventories held by: [IAS 2.3]
producers of agricultural and forest products, agricultural produce after harvest, and minerals and mineral products, to the extent that they are measured at net realisable value (above or below cost) in accordance with well-established practices in those industries. When such inventories are measured at net realisable value, changes in that value are recognised in profit or loss in the period of the change.commodity brokers and dealers who measure their inventories at fair value less costs to sell. When such inventories are measured at fair value less costs to sell, changes in fair value less costs to sell are recognised in profit or loss in the period of the change.”
Q8)for agricultural product at time of harvest we must measure it
F.V-CTS(even if it lower than cost) based on ias 41(assume it is 5m$) and then(at year end) there may be 2 situation:
1-use this amount as cost and then apply ias 2 measurement requirements ie value it at lower of cost(NRV at harvest=in this example=5) and NRV(@ year end=in this exaple assume=6) so no change in inventories.Or 2-any changes in F.V-CTS goes to sopl ie in this example 1 goes to sopl(D:inventory 1 and C:sopl 1)
Which one is correct?
Q9)is it correct to say for brokers who use F.V-CTS any changes whether upward or downward should goes to sopl(and inventory)?
Thank you very much…
Hi,
When I get a few spare hours I will endeavour to answer your questions. Is there any particular reason that you have gone into extreme detail on IAS 2 when it would never be seen in this depth in the exam?
Thanks
Chris
Hello again dear tutor
I have passed P2 and now I am waiting for P7 results as my last paper in september
now I am trying to study standards in a deeper manner…and i donot know where should I ask my questions…
I thought i can ask my questions here and maybe i am wrong…
I am sorry if i ask you many questions but please advise me where should I ask my questions?should i ask in F7 forum?or here?
Thank you again for your helps and sorry if i bother you…
Hello again…i hope that you are well
As i told you…
There is no time limitation or urgency for me in your replies.Also i will try to ask my questions in the format of IS IT CORRECT TO SAY in order to try to write as much as i can( and increase the chance of smaller replies by you in order to not waste you time)
And i want you to answer any part of my questions you want( and do not answer to any of my questions if you feel it needs lots of time for typing or …)
Thank you again and i am waiting for your answers whenever you have free time….
Im sorry if i ask you many questions…
I had passed P2….and waiting for P7 results this september as my last paper
But now i am trying to study standards in a deeper manner…
And unfortunately i have many problems…I think I can ask my questions here…
Maybe I am wrong….
Could you please tell me where should i ask my questions?i dont know…maybe in F7 Forum?Again Im sorry if i ask you many questions….
Please advice me
Hi,
Now I understand why you’re asking such detailed questions but am even more confused as to why you’d spend time going into this much depth given you’ve passed the exam.
Please feel free to study the standards in as much detail as you wish but can I please suggest that if you need answers to your questions then you research them yourself as my time is only to spent on this forum answering questions that will help P2 students pass their exam. The amount of depth that you’ve gone into I believe would have many students fear about the level of knowledge required to pass the exam.
I wish you all the best for your P7 and a successful future career.
Thanks
Many many thanks…
You are right….
I will search by my self as much as i can and only ask questions related to P2 in this forum(after this…so please ignore IFRS 6)…
Also as a suggestion you can delete these 2 unrelated topics ie ias 2 inventories and ifrs 6 if you feel it is necessary…
Again thanks…
I will ask you more RELATED questions in the future….
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