Accounting Statement-2 (Revised)This accounting standard is mandatory. It was made effective from 01.04.1991. Thestudents are required to have the knowledge of this accounting standard. The AS-2(R)is being explained stepwise have as under:ScopeItems such as expenses, revenues or book debts, can be recorded in the books ofaccounts with a fair degree of accuracy. However, an element of subjectivity is involvedin the measurement of items such as depreciation or inventory value. Methods of valuinginventory may vary between different businesses and even between differentundertakings within the same trade or industry. Taking all these significant aspects intoaccount, this Standard deals with:

(a) the determination of value at which inventories are carried until related revenuesare recognised(b) ascertainment of cost thereof, and the(c) circumstances in which carrying amount of inventory is written down below cost.Inventories - definedInventories are assets(a) held for sale in the ordinary course of business,(b) in the process of production for such sale : or(c) in the form of materials or supplies to be consumed in production process or inthe rendering of services.The definition implies that .intangible. items of inventory, such as software heldfor sale, are also included.