According to IAS 2 Inventories, the items that may be included in
computing the value of an inventory of finished goods manufactured by a
business are clearly specified.
Which one of the following lists consists only of items which may be included in the statement of financial position value of such inventories according to IAS 2?
A Foreman’s wages, carriage inwards, carriage outwards, raw
materials.
B Raw materials, carriage inwards, costs of storage of finished goods,
plant and machinery costs.
C Plant and machinery costs, carriage inwards, raw materials,
foreman’s wages.
D Carriage outwards, raw materials, foreman’s wages, plant and
machinery costs.
***the answer is c, why not a?
why are plant and machinery costs included in inventory valuation?
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Inventory valuation
4y ago#1A is not correct because carriage outwards is not a cost of production (it is a cost of delivery to customers).
By plant and machinery costs, it does not mean the cost of buying them but means the cost of depreciating them and of running, maintaining, repairing and depreciating them, and these are production costs.
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