IAS- 2 Inventory, allows?

False. IAS2 Inventory. Exchange rate gain/loss arise on purchase of inventory does not effect the inventory valuation. 

Exchange differecences arising on purchase of inventory will be reported in Income statement. It will not be included in CGS but it will be appear in Income statement after gross profit .

False.Mr .A Mutaz Bakry Sidahmed, clearly explained. I would like to support the same 

ie: Foreign exchange difference should not affect the valuation of inventory as per IFRS.

Regards,

Joshi Mathew

CIA

if inventory if purchase from foreign country it must be translated at the date of purchase in the balance sheet.if suppose company is due to pay in the next three month the double entry is

Dr inventory

Cr payable

suppsoe the company year end is dec and payment is  due to be made on31 jan. any exchange difference at year end.. then doulbe entry will be

if xchange lose arise

Dr P&L

cr payable

if xchange gain arise

Dr payable

Cr P&L

IAS23 Borrowing Costs identifies some limited circumstances where borrowing costs (interest) can be included in cost of inventories that meet the definition of a qualifying asset. [IAS2.17 and IAS23.4]

Inventory cost should not include: [IAS2.16 and2.18]

abnormal waste

storage costs

administrative overheads unrelated to production

selling costs

foreign exchange differences arising directly on the recent acquisition of inventories invoiced in a foreign currency

interest cost when inventories are purchased with deferred settlement terms.

False. IAS2 specify that (the cost of inventory should not include: the foreign exchange differences arising on the recent aquisitin of inventories invoiced in a foreign currency) and there are other items also

True we can add the the Exchange differnces in purchsing the Inventory cost.