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      Question

      As per AS- 2 what should be the valuation of inventory

      from the following information: Purchase Price = 2000 Trade Discount = 200 Cash Discount = 100 Delivery Cost = 500 Import Cost = 600
      A 2600 Correct Answer Incorrect Answer
      B 2000 Correct Answer Incorrect Answer
      C 2900 Correct Answer Incorrect Answer
      D 3100 Correct Answer Incorrect Answer
      E 2800 Correct Answer Incorrect Answer

      Solution

      Valuation of Inventory using AS-2 considers cost of inventory as cost of purchase, cost of conversion and other cost incurred to bring inventory to its present condition. It ignore Cash discount. So, Valuation of Inventory = Purchase Price + Delivery Cost + Import Cost – Trade Discount = 2000+500+600-200 = 2900

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