Disclosure of Cost Formulae Used in Valuation of Finished Goods Inventory in Indian Manufacturing Industry
The IUP Journal of Accounting Research & Audit Practices, Vol. XII, No. 3, July 2013, pp. 19-27
Posted: 21 Nov 2013
Date Written: November 21, 2013
Abstract
A proper disclosure of valuation of finished goods inventory is required for consistent and accurate financial statements. Accounting Standard (AS)-2 is specifically devised for this purpose. This paper makes an attempt to compare the actual prevailing practices of disclosure of cost formulae in the Indian manufacturing industry and disclosure requirement of methods of cost formulae suggested in the AS-2. It is found that only capital goods industrial sector followed 100% disclosure throughout the study period, while lower disclosure was observed in automobiles. The study clearly indicates that there is no significant difference among different sectors of the Indian manufacturing industry regarding different methods of valuation of cost formulae used in finished goods inventory.
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