BGR Energy Systems

Limited

IND AS 02
Inventories

Checklist
 IND AS
Sr. No Particulars Compliance
Reference
Applicability
A This standard should be applied in accounting for
inventories with respect to capitalisation of assets,
2015 –
subsequent recognition of expense, including the
2.1 2016 –
write-down to net realisable value, and in
2017 –
determining the cost formulas to be used in
assigning costs to inventories.
Scope
1 2015 –
Is the entity a trading concern? If yes, this standard
2.6 (a) 2016 –
is applicable to the entity.
2017 –
2 Does the entity produce or manufacture inventories 2015 –
for sale? If yes, this standard is applicable to the 2.6 (b) 2016 –
entity. 2017 –
3 Are any buildings included by the entity in 2015 –
inventory, bought or constructed with the intention 2016 –
of resale in the ordinary course of business? 2017 –
4 2.6 (c) 2015 –
Does the entity include any material or supplies to
2016 –
be used in the rendering of services in inventory?
2017 –
5 Are spare parts used in connection with fixed assets 2015 –
over more than one accounting period excluded 2016 –
from inventory? 2017 –
6 Are re-usable and returnable packaging or parts 2015 –
used during more than one period excluded from 2016 –
inventory? 2017 –
7 Are samples held by the entity excluded from 2015 –
inventory? 2016 –
2017 –
Recognition
8 Does the entity include the following in the cost of 2.10
inventories:
a) All cost of purchase, 2015 –
2016 –
2017 –

b) All cost of conversion, and 2015 –

2016 –
2017 –
 c) Any other cost incurred in bringing the 2015 –
inventories to their present location and 2016 –
condition? 2017 –
9 Do the costs of purchase included in the cost of 2.11
inventories comprise the following:
a) The purchase price (less trade discounts, and 2015 –
rebates and similar items), 2016 –
2017 –

b) Transport and handling charges, 2015 –

2016 –
2017 –

c) Taxes that are not recoverable, and 2015 –

2016 –
2017 –

d) Other costs directly attributable to the 2015 –

acquisition of finished goods, materials and 2016 –
services? 2017 –
10 Do the costs of purchase included in the cost of 2.12
inventories comprise the following:
a) Those costs that are directly related to the units 2015 –
of production (e.g. direct labour), and 2016 –
2017 –

b) A systematic allocation of fixed and variable 2015 –

production overheads that are incurred in 2016 –
converting the materials into finished goods? 2017 –
11 Has the entity based the allocation of fixed 2.13
production overheads on either:
a) Normal capacity of the production overheads, 2015 –
(which is the production that the entity expects 2016 –
to achieve on an average over a number of 2017 –
periods or seasons under normal circumstances,
taking into account the loss of capacity resulting
from planned maintenance), or
b) The actual level of production, (only where it 2015 –
approximates normal capacity)? 2016 –
2017 –
12 In case of a situation where there is low production 2.13 2015 –
(compared to normal capacity) or plant is idle, has 2016 –
 the entity expensed the unallocated overheads? 2017 –
13 In periods of abnormally high production, has the 2.13
2015 –
entity adjusted the amount of fixed overheads
2016 –
allocated to each unit of production (such that
2017 –
inventories are not measured above cost)?
14 Has the entity allocated variable production 2.13 2015 –
overheads to each unit of production on the basis of 2016 –
the actual use of the production facilities? 2017 –
15 Does the production process of the entity generate 2.14
multiple products,
a) If yes, can the cost of conversion of each product 2015 –
be separately identified, or 2016 –
2017 –

b) If not separately identifiable, is the cost allocated 2015 –

individually or on a rational and consistent 2016 –
basis? 2017 –
16 Do the costs included in the carrying amount of 2.15
2015 –
inventories such as other costs represent only those
2016 –
costs that have been incurred in bringing
2017 –
inventories to their present location and condition?
17 Are the costs which are not directly related to 2.16
2015 –
bringing inventories to their present location and
2016 –
condition recognised as expenses in the period in
2017 –
which they are incurred?
18 Are qualifying borrowing costs included in the cost 2.17 2015 –
of inventories? (Refer Ind AS 23, Borrowing Costs) 2016 –
2017 –
19 If the entity has purchased inventories on deferred 2.18
settlement basis and the arrangement effectively
contains a financing element, has the entity
2015 –
recognised that element (for example a difference
2016 –
between the purchase price for normal credit terms
2017 –
and the amount paid) as interest expenses over the
period of financing under the effective interest
method?
20 If the entity is a service provider, has it measured 2.19
inventories at their cost of production which
2015 –
include labour and other costs of personnel directly
2016 –
engaged in providing the service, including
2017 –
supervisory personnel, and attributable overheads
in computation of cost?
21 If the entity holds any agricultural produce 2.20
harvested from biological assets have the costs of 2015 –
such assets been measured on initial recognition at 2016 –
their fair value less costs to sell at the point of 2017 –
harvest?
Measurement
22 Does the entity measure the inventory at the lower 2.9 2015 –
of cost and NRV? 2016 –
2017 –
23 Does the entity use techniques for the measurement 2.21
2015 –
of the cost of inventories, such as the standard cost
2016 –
or the retail method, for convenience if the results
2017 –
approximate cost?
24 If the entity applies the standard cost method, 2.21
a) Do the standard costs take into account normal 2015 –
levels of material and supplies, labour, efficiency 2016 –
and capacity utilisation, and 2017 –

b) Are standard costs regularly reviewed and 2015 –

revised if necessary? 2016 –
2017 –
25 If the entity applies the retail method, 2.22
a) Is the cost of the inventories determined by 2015 –
reducing the sales value of the inventories by the 2016 –
appropriate percentage gross margin, and 2017 –

b) Does the percentage used take into consideration 2015 –

inventories that have been marked down to 2016 –
below their original selling price? 2017 –
26 a) Does the entity hold inventories of items that are 2.23 2015 –
not ordinarily interchangeable and goods or 2.24 2016 –
services produced and segregated for specific 2017 –
projects?
b) Does the entity identify the cost of such 2015 –
inventory items by using specific identification 2016 –
of their individual costs? 2017 –
27 For the items other than those dealt with under Q 2.25
26 above, does the entity assign the cost of 2015 –
inventory on one of the following bases: 2016 –
a) The FIFO method, or 2017 –
b) The weighted average cost formula?
28 Does the entity consistently use the same cost 2.25 2015 –
 formula (i.e. FIFO or weighted average) for all 2016 –
inventories that have a similar nature and use to the 2017 –
entity?
29 If the entity uses a different cost formula for 2.25 2015 –
inventories with a different nature or use, has it 2016 –
provided appropriate justification for doing so? 2017 –
30 Does the entity assess the (NRV) of inventories on 2.29
an item by item basis, unless they are similar or
related items, in which case they can be assessed on
2015 –
a group basis?
2016 –
(Note: In case of service providers, costs are accumulated
2017 –
generally in respect of each service for which a separate
selling price is charged. Therefore, each such service
should be treated as a separate item.)
31 Are the estimates of NRV based on the most 2.30
2015 –
reliable evidence available at the time the estimates
2016 –
were made, of the amount the inventory is expected
2017 –
to realise?
32 Do the estimates of NRV take into consideration 2.30
fluctuations of prices or costs directly relating to 2015 –
events occurring after the end of the period only to 2016 –
the extent that such events confirm conditions 2017 –
existing at the end of the period?
33 Do the estimates of NRV take into consideration the 2.31 2015 –
purpose for which the inventory is held? 2016 –
2017 –
34 If the NRV of materials and supplies held for use in 2.32
the production of inventories has fallen below the
cost, have such materials and other supplies not
been written down below their cost if the related
2015 –
finished goods are expected to be sold at or above
2016 –
cost?
2017 –
(Note: Materials and other supplies held for use in the
production of inventories are not written down below
cost if the finished products in which they will be
incorporated are expected to be sold at or above cost.)
35 If the circumstances that previously caused 2.33
inventories to be written down below cost no
2015 –
longer exist, or if there is clear evidence of an
2016 –
increase in NRV because of changed economic
2017 –
circumstances, has the write-down been reversed
(limited to the amount of the original write- down)
 so that the new carrying amount represents the
lower of cost and the revised NRV?
36 Has the carrying amount of all inventories which 2.34 2015 –
were sold during the period been expensed in the 2016 –
period when the related revenue was recognised? 2017 –
37 Has the entity recognised the write-down of 2.34
2015 –
inventories to NRV, and all other losses of
2016 –
inventories, as an expense in the period the write-
2017 –
down or loss occurred?
38 Is the write-down of inventory to NRV reversed, as 2.34
a result of an increase in net realisable value?
2015 –
In such case, has the reversal been recognised as a
2016 –
reduction in the amount of inventories recognised
2017 –
as an expense, in the period in which the reversal
occurs?
39 a) Have inventories been allocated to some other 2.35 2015 –
asset account (e.g. inventory used as a 2016 –
component of self-constructed property, plant or 2017 –
equipment)?
b) In such case have the inventories been 2015 –
recognised as an expense during the useful life 2016 –
of that asset? 2017 –
Disclosure

40 Does the entity disclose the following: 2.36

a) The accounting policies adopted in measuring 2015 –
inventories, including the cost formula used, 2016 –
2017 –

b) The total carrying amount of inventories and the 2015 –

carrying amount in classifications appropriate to 2016 –
the entity, 2017 –

c) The carrying amount of inventories carried at 2015 –

fair value less costs to sell, 2016 –
2017 –

d) The amount of inventories recognised as an 2015 –

expense during the period, 2016 –
2017 –

e) The amount of any write-down of inventories 2015 –

recognised as an expense in the period and 2016 –
 presented in cost of sales, 2017 –

f) The amount of any reversal of any write-down 2015 –

that is recognised as a reduction in the amount 2.37 2016 –
of inventories recognised as expense in the 2017 –
period and presented in cost of sales,
g) The circumstances or events that led to the 2015 –
reversal of a write-down of inventories, and 2016 –
2017 –

h) The carrying amount of inventories pledged as 2015 –

security for liabilities? 2016 –
2017 –
(Note: Information about the carrying amounts held in
different classifications of inventories and the extent of
the changes in these assets is useful to financial
statement users. Common classifications of inventories
are merchandise, production supplies, materials, work in
progress and finished goods. The inventories of a service
provider may be described as work in progress.)