MANAC 1

Akshay Mathur WMP7008

Assignment #: Inventory Valuation process for 1) Ambuja Cements 2) Alstom Projects

Ambuja Cements

Notes to accounts:
Inventories : Inventories are valued as follows: Coal, fuel, packing materials, raw materials, components, stores and spares: As per CFS present at lower of cost less provision for slow and non-moving inventory, if any, and net realizable value. However, materials and other items 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. Cost is determined on a moving weighted average basis. Work-in-progress and finished goods and trial run inventories: As per CFS present at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a monthly moving weighted average basis.

Consolidated notes to accounts:

Inventories : Inventories are valued as follows: Coal , fuel, packing materials, raw materials, components, stores and spares Lower of cost less provision for slow and non-moving inventory, if any, and net realizable value. However, materials and other items 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. Cost is determined on a moving weighted average basis. Work-in-progress and finished goods and trial run inventories Lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Alstom Projects

Significant Accounting Policies Inventories Inventories are stated at the lower of cost and net realisable value. The cost of various categories of inventories is arrived at as follows: Stores, spares, raw materials and components - at cost determined on moving weighted average method. Work-in-progress and finished goods - based on weighted average cost of production, including appropriate proportion of costs of conversion. Excise duty is included in the value of finished goods inventory. Packing materials, loose tools and consumables, being immaterial in value terms, and also based on their purchase mostly on need basis, are expensed to the profit and loss account at the point of purchase. Contract work-in-progress is valued at cost or net realisable value, whichever is lower. Cost includes direct materials, labour and appropriate proportion of overheads including depreciation. Net Realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. Provision for obsolescence is made, wherever necessary.