Question 2 (c)
Inventories to which Ind AS-2 does not apply
4 marks
- Time to write
- About 8 minutes
- Notes
- Crux notes
Question
Question 2 (c) · 4 marksName four items of inventory to which Ind AS-2 does not apply. (4)
Note: an exclusion older lists still show (added 2026-10-09). Older textbooks and the earlier Ind AS 2 text, and AS-2 (still followed by companies outside Ind AS), also list work in progress under construction contracts as an exclusion. The current Ind AS 2 has removed it: its para 2(a) is shown as omitted. A student who writes it is answering under AS-2, not Ind AS 2, so it is not one of the four below. No AS-2 text is among our sources, so the AS-2 half of this note is not cited.
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- listHeaded points, one or two lines of explanation each.
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Financial instruments (para 2(b)) 1 mark 2 min
- 2 Biological assets related to agricultural activity (para 2(c)) 1 mark 2 min
- 3 Agricultural produce at the point of harvest (para 2(c)) 1 mark 2 min
- 4 Producers' inventories measured at NRV: measurement only (para 3(a)) 1 mark 1 min
Try it first. About 8 minutes for 4 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Answer: four inventories outside Ind AS-2
Ind AS 2 applies to all inventories except those its scope paragraphs carve out. Paragraph 2 takes three kinds of item out of the standard altogether. Paragraph 3 takes a further group out of its measurement rules only.
| # | Inventory to which Ind AS 2 does not apply | Where the standard says so | Dealt with instead by (beyond the question) |
|---|---|---|---|
| 1 | Financial instruments: for example shares or debentures held as stock-in-trade | Para 2(b) | Ind AS 32 and Ind AS 109 |
| 2 | Biological assets (living animals or plants) related to agricultural activity | Para 2(c) | Ind AS 41, Agriculture |
| 3 | Agricultural produce at the point of harvest | Para 2(c) | Ind AS 41, Agriculture |
| 4 | Producers' inventories, farm and forest products, harvested agricultural produce, minerals and mineral products, where long-standing industry practice carries them at net realisable value: for measurement only | Paras 3(a) and 4 | Measured at net realisable value, with changes in that value taken to profit or loss |
Item 4 is a partial exclusion, and the answer should say so. Such inventories are excluded from only the measurement requirements of the standard; its other requirements still apply to them. Items 1–3 are outside the standard entirely.
A fifth item, of the same partial kind: inventories of commodity broker-traders who measure them at fair value less costs to sell. They too are excluded from only the measurement requirements (paras 3(b) and 5).
What is no longer on the list. Work in progress under construction contracts (see the note under the question): para 2(a) of the current Ind AS 2 is shown as omitted, so it is not given here as one of the four.
Where the 4 marks sit
| # | Exclusion | Marks |
|---|---|---|
| 1 | Financial instruments (para 2(b)) | 1 |
| 2 | Biological assets related to agricultural activity (para 2(c)) | 1 |
| 3 | Agricultural produce at the point of harvest (para 2(c)) | 1 |
| 4 | Producers' inventories measured at NRV: measurement only (para 3(a)) | 1 |
| Total | 4 |
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