18 Questions
What does 'distribution costs' refer to in the context of Ind AS 2?
Costs incurred by the seller to complete a sale transaction
According to Ind AS 2, why are distribution costs excluded from the cost of inventories?
They are not related to bringing goods to their current location
What determines the allocation of costs to joint products as per the Indian Accounting Standard 2?
Relative sales value of each product
When are joint products considered separately identifiable in a production process?
At the completion of production
Why are most by-products often considered immaterial in terms of accounting?
Due to their nature
Which costs are allocated between products on a rational and consistent basis in joint product scenarios?
Costs of conversion of each product
What is the net realizable value (NRV) of the by-product BP?
40,000
Which of the following costs is deducted from the cost of conversion for allocation between joint products MP1 and MP2?
NRV of by-product BP
How is the joint cost allocated between MP1 and MP2?
Based on the sales price per unit
What is the cost per unit for MP2 after allocating the joint cost?
$28.4
What is the value of closing stock for MP1?
$9,600
According to Ind AS 41, how are inventories comprising agricultural produce harvested from biological assets measured on initial recognition?
At fair value less costs to sell at the point of harvest
What is the method of allocating costs to products when the cost of conversion is not separately identifiable?
Based on the relative sales value of each product
In the scenario where a byproduct is immaterial, how is it measured and accounted for?
Measured at net realisable value and deducted from the cost of the main product
What happens when more than one product is produced in a process resulting in joint products?
The costs are allocated based on relative sales value
How is a byproduct treated when it is material in a production process with joint products?
Accounted for as a separate product
In what scenario is the carrying amount of a main product not materially different from its cost?
When there are joint products in the production process
How is the cost of each product determined when the cost of conversion is separately identifiable?
Based on historical costs only
Test your knowledge on solution selling and distribution costs, which are essential in completing a sale transaction. Understand how these costs are related and accounted for in business operations.
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