IAS 2 --- queries

[insaan]

Q NO 01

inventories are assets held for sale whether purchased or produced
and also assets classified as held for sale come under scope of IFRS 5
now watz da difference between these two?
is it that inventory applies to current assets and IFRS5 to non current assets?

Q NO 02

para 38 tells us that;
The amount of inventories recognized as an expense during the period, which is often referred to as cost of sales,
consists of those costs
previously included in the measurement of inventory that has now been sold and unallocated production overheads and
abnormal amounts of production costs of inventories.
The circumstances of the entity may also warrant the inclusion of other amounts, such as distribution costs.

para 39 tells us that;
Some entities adopt a format for profit or loss that results in amounts being disclosed other than the cost of inventories recognised as an expense during the period.

Under this format, an entity presents an analysis of expenses using a classification based on the nature of expenses.
In this case, the entity discloses the costs recognised as an expense for raw materials and consumables, labour costs and other costs together with the amount of the net change in inventories for the period.

plz explain para 38
we make P/L on basis of para 39,M I Rite?

[Abdur.Rehman]

Q 1
The full name of IFRS 5 is NON-CURRENT ASSETS HELD FOR SALE..... So, i think no need to go further. If u still want to get an overview of IFRS 5 then tell me i will explain u..

Q 2
Para 38-
i) Previous year costs v value our inventory on absorption costing in the accounts. So, overheads, direct or indiret r absorbed in them. Now v value the closing stock by taking them into account. and the cost absorbed in closing inventory pertains to previous period. and in current year those stocks will be sold. so the previous years expense appears here.
ii)Unallocated production overheads These are the indirect costs, that support production process but cannot be traced in the product. Like depreciation of plant, rent of factory, pay of factory manager etc. These are also charged to cost of sales.
iii)abnormal amounts These include any abnormal losses, like the loss by fire or losses by pilferage of raw material. These are also included in cost of sales.
iv)distribution costs These distribution costs may also be included in cost of sales if borne by us. These include delivery expenses etc.

Para 39-
Very rarely it is the case. Management accounts are normally prepared under this format. But not the financial statements. But as the standard has allowed it, so a company may present profit and loss as per this format.

ask if any ambiguity....