SR Ltd makes finished good MP from raw material RP. Cost of MP is ₹27 per unit (material ₹12 + labour ₹8 + fixed overhead ₹7). Selling price of MP is ₹22 per unit; replacement cost of RP is ₹11.50 per unit. Closing stock: MP 4,200 units, RP 4,000 units. At what value should the closing raw material RP be carried, and why?

1. AS 2 says raw materials are written down below cost only if the finished goods in which they are used are expected to sell at or below cost. 2. Here MP's NRV (₹22) is below its cost (₹27), so RP must be written down. 3. The relevant measure is replacement cost, so RP is valued at ₹11.50 per unit. _Source: ICAI BoS CA Intermediate Paper 1 (Advanced Accounting), Sept 2025 — Q.1(b), AS 2 Valuation of Inventories._