02-23-2009, 04:03 PM
Awais,
There is no mention in the Companies Ordinance about costing methods. IASs are notified under companies ordinance Section 234.
IAS - 2 "Inventories" guides about the adoption of costing method. Please read the paragraphs of conversion cost in IAS-2.
Some understanding of the paragraphs about conversion cost is given below;
Entities engaged in manufacturing goods must assign costs to inventory. The costs of inventories should include all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. IFRS do not permit direct costing methods, where all overheads are expensed. Such costs are allocated to inventory, regardless of their classification by the entity.
Regards,
*
There is no mention in the Companies Ordinance about costing methods. IASs are notified under companies ordinance Section 234.
IAS - 2 "Inventories" guides about the adoption of costing method. Please read the paragraphs of conversion cost in IAS-2.
Some understanding of the paragraphs about conversion cost is given below;
Entities engaged in manufacturing goods must assign costs to inventory. The costs of inventories should include all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. IFRS do not permit direct costing methods, where all overheads are expensed. Such costs are allocated to inventory, regardless of their classification by the entity.
Regards,
*
