Ind AS Tit-bits #2- Ind AS-2 Treatment of Fixed Costs

1. Para 13 speaks about the treatment of Fixed overhead in the cost of the inventories
2. Fixed overheads shall be absorbed at normal capacity of production facilities
3. After absorbing fixed overheads at normal capacity, any unabsorbed fixed overhead shall be recognised as an expense
4. On the other hand, if

Actual production > Normal capacity,

only the actual fixed overheads included in cost.

In the next post, let's discuss about the treatment of joint and by-products in the cost of inventories.