A manufacturing entity has a stock of finished goods with a total Historical Cost of ₹12,00,000. Due to a market slowdown in early 2026, the estimated selling price of this stock is ₹11,50,000. The entity expects to incur a 5% brokerage commission on the sale and ₹20,000 in specialized packaging costs to ship the goods to the buyer. What should be the value of inventory in the Balance Sheet as per Ind AS 2? 

Solution

As per Accounting standards, inventory must be valued at the Lower of Cost or Net Realizable Value (NRV).   Cost: Given as ₹12,00,000.   Calculating NRV: ·        Estimated Selling Price: ₹11,50,000 o   Less: Estimated costs necessary to make the sale: 5% of 11,50,000 = ₹57,500 o   Less: Estimated costs of completion (Packaging): ₹20,000 Thus, NRV = 11,50,000 - 57,500 −20,000 = 𝟏𝟎 , 𝟕𝟐 , 𝟓𝟎𝟎 . Since NRV (₹10,72,500) is lower than Cost (₹12,00,000), the inventory is recorded at ₹10,72,500.