In the books of G Ltd., closing inventory as at 31.03.2024 amounts to 10,40,000 (on the basis of FIFO method). The company decides to change from…

CA Intermediate · Advanced Accounting · MTP · September 2025
In the books of G Ltd., closing inventory as at 31.03.2024 amounts to 10,40,000 (on the basis of FIFO method). The company decides to change from FIFO method to weighted average method for ascertaining the cost of inventory for 31.3.2024. On the basis of weighted average method, closing inventory as on 31.03.2024 amounts to 8,80,000. Realisable value of the inventory as on 31.03.2024 amounts to 12,00,000. What will be the value of inventory in the books and what disclosure should be given in the financial statement on 31.3.2024?
(A) The value of inventory will be - 8,80,000 and the fact that the valuation method has changed to be disclosed in the financial statement.
(B) The value of inventory will be - 12,00,000, and full disclosure with the amount the valuation method has changed to be disclosed in the financial statement.
(C) The value of inventory will be - 12,00,000, and the fact that valuation method has changed to be disclosed in the financial statement.
(D) The value of inventory will be - 8,80,000, and full disclosure with the amount the valuation method has changed to be disclosed in the financial statement.

Suggested Answer and Working Notes:

Correct Answer: Option (D)

The value of inventory will be - 8,80,000, and full disclosure with the amount the valuation method has changed to be disclosed in the financial statement.

Topics: AS 3

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