(i)
Ind AS 2 deals with the subsequent recognition of cost/carrying
amount of inventories as an expense, whereas the existing AS 2 does not provide
the same (refer paragraphs 1 and 34 of Ind AS 2).
(ii)
Ind AS 2 provides explanation
with regard to inventories of service providers whereas the existing AS 2 does
not contain such an explanation (refer paragraphs 8, 19 and 29 of Ind AS 2).
(iii)
The existing AS 2 explains that
inventories do not include machinery spares which can be used only in
connection with an item of fixed asset and whose use is expected to be
irregular; such machinery spares are accounted for in accordance with
Accounting Standard (AS) 10, Accounting for Fixed Assets. Ind AS 2 does
not contain specific explanation in respect of such spares as this aspect is
covered under Ind AS 16.
(iv)
Ind AS 2 does not apply to
measurement of inventories held by commodity broker-traders, who measure their
inventories at fair value less costs to sell.
However, this aspect is not there in the existing AS 2. Accordingly, Ind AS
2defines fair value and provides an explanation in respect of distinction
between ‘net realisable value’ and ‘fair value’. The existing AS 2 does not contain
the definition of fair value and such explanation.
(v) Ind AS 2 provides detailed guidance in
case of subsequent assessment of net realisable value (refer paragraph 33 of
Ind AS 2). It also deals with the reversal of the write-down of inventories to
net realisable value to the extent of the amount of original write-down, and
the recognition and disclosure thereof in the financial statements. The
existing AS 2 does not deal with such reversal.
(vi) Ind AS 2 excludes from
its scope only the measurement of inventories held by producers of agricultural
and forest products, agricultural produce after harvest, and minerals and
mineral products though it provides guidance on measurement of such inventories
(refer paragraphs 4 and 20 of Ind AS 2). However, the existing AS 2 excludes
from its scope such types of inventories.
(vii) The existing AS 2
specifically provides that the formula used in determining the cost of an item
of inventory should reflect the fairest possible approximation to the cost
incurred in bringing the items of inventory to their present location and
condition whereas Ind AS 2 does not specifically state so and requires the use
of consistent cost formulas for all inventories having a similar nature and use
to the entity. Ind AS 2also explains this aspect (refer paragraphs 25 and 26).
(viii) Ind AS 2 requires
more disclosures as compared to the existing AS 2 (refer paragraph 36 of the
Ind AS 2).