Take This Quiz & Predict Your Score in the coming CA CS or CMA Exam!
  • How important it is for you to pass the exam in this attempt?
  • What percentage of course you have finished well so far roughly?
  • How many hours you study in a day?
  • How many times you have revised the topics you have finished
  • Have you taken online or pen drive or live class from a renowned faculty?
  • What percentage of the classes you have watched?
  • Have you attempted mock tests or practice tests yet?
  • Are you planning to attempt mock tests conducted by external bodies- ICAI, ICSI, ICMAI or other institute?
  • How many tests you have taken?
  • Did you manage to finish the test papers on time?
  • Are you strictly following study material provided by the exam conducting authority such as ICAI/ICSI/ICMAI/Other Body?
  • How is your health in general?
  • How is your food habit?
  • Any interest in yoga or exercise or play sports regularly?
  • Planning to sleep well nights before the exams?
  • Planning to have light food and water before exams?

Distinguishing between capital goods and inventory

Distinguishing between capital goods and inventory

Inventory includes the following:

  • Goods for sale, including merchandise of a wholesaler and finished goods of a manufacturing company;
  • Goods in the course of production, called work in process;
  • Goods to be consumed directly or indirectly in the course of production, for instance raw materials and supplies.

In general, when categorizing an asset as a fixed asset, the following factors should be considered:

  • The purpose for which the asset is acquired should be taken into account;
  • The useful life of the asset should be longer than a year;
  • Future economic benefits associated with the asset are probable and;
  • Associated costs related to the asset can be measured reliably.

For instance, if a company purchases a computer for its administrative staff and expects it to be in use for several years, such computer is likely to be classified as a fixed asset. However, if an entity trades in computers, then the purchased computer will be considered inventory intended for sale.

When it is still not clear how to categorize an asset (fixed assets or inventory), professional judgement should be used and the concept of materiality should be applied. For instance, miscellaneous spare parts can be categorized as inventory; however, an engine functioning only with a particular machine type would be included in fixed assets. Other examples where judgment should be involved include small furniture, pallets, etc.

Distinguishing between capital goods and inventory

At CAKART you will get everything that you need to be successful in your CA CS CMA exam – India’s best faculty video classes (online or in pen drive) most popular books of best authors (ebooks hard copies) best scanners and all exam related information and notifications.Visit and chat with our counsellors any time. We are happy to help you make successful in your exams.


Click Here to download FREE CA CS CMA Text Books.

Leave a comment

Your email address will not be published. Required fields are marked *