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| Details |
Case Code: CLFIN016
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| Case Length: 3 pages |
| Period: 2019 |
| Pub Date: 2020 |
| Teaching Note:Available |
| Subject : Finance |
| Price:Rs.100 |
| Organization :Anirudh Solar Energy Solutions (Fictitious) |
| Industry : Solar Items Manufacturing Industry |
| Countries : India |
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Inventory Valuation-Cost Inclusions and Exclusions |
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| Anirudh, an electronics and electrical engineering graduate, started a solar items manufacturing unit Anirudh Solar Energy Solutions (ASES). ASES commenced its operations on January 01, 2019, to manufacture three categories of Solar LED Lanterns. However, the production operations did not commence as planned and hence ASES incurred some additional expenses. ASES did not sell any products till the end of March 31, 2019. Anirudh started planning the activities for the next financial year 2019-20, after lining up some active orders. But before proceeding, Anirudh needed to evaluate the value inventory lying in stock and decide on adjusting the available stock to meet the production and delivery of the new orders. The present case study can be used to discuss the process of valuing inventory based on the principles mentioned in Accounting Standard-2 (Inventory Valuation) and also to discuss the accounting treatment of exceptional items in valuing the inventory as per Accounting Standard-2.
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Issues: |
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- Understand the application of Accounting Standard-2 (Inventory Valuation).
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- Understand the process of determining the value of inventories in financial statements.
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- Study the Exceptional items in inventory valuation.
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| Introduction |
| On January 01, 2019, Anirudh Solar Energy Solutions (ASES) began its business operations. During the first week of January, ASES ordered the various raw materials required for the production of Solar LED lanterns (lanterns). ASES planned to manufacture three categories of these lanterns. The total cost of all the components for the manufacturing of the three different types of lanterns was Rs. Rs.555, Rs.760, and Rs.1000 (inclusive of taxes, duties, and rebates availed).. |
Keywords |
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Accounting; Accounting principles; Accounting Concepts; Accounting Standard-2; Inventory Valuation; Net Realizable value; Total Value of Inventory; Decision-making; Profit and loss account; balance sheet; Accounting treatment for Exceptional items in valuing inventory
* This caselet is intended for use only in class discussions.
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