ICANFinancial AccountingInventories (IAS 2)2023

Which of the following costs should be EXCLUDED from the cost of inventories under IAS 2?

AImport duties paid on raw materials purchased from a foreign supplier
BFreight costs incurred in transporting raw materials to the factory
CStorage costs of finished goods awaiting delivery to customersCORRECT
DDirectly attributable variable production overheads
AI
Toaster Teacher
Why the answer is C, and why the others tempt you.
IAS 2 paragraph 16 explicitly excludes storage costs from the cost of inventories, unless those storage costs are necessary in the production process before a further production stage. Storage costs of finished goods awaiting delivery are not part of the production process and must be expensed as incurred. Import duties, freight-in, and directly attributable production overheads are all included in the cost of inventories under IAS 2.
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