As per AS-2 Inventories are to valued at lower of Cost and Net Realizable Value.
Cost
for above purpose includes Cost of Purchase , Cost of Conversion &
Other costs incurred in bringing
inventories to their present location & condition Cost
of conversion includes cost directly related to units i.e. Direct
labour ,direct material , direct expenses. Even the Fixed & Variable
Production Overheads incurred in conversion process are considered as
cost of conversion and allocated to units produced.
So
expenditure for material , ink, covering material etc including royalty
paid are considered for determining value of books held as inventory.
For apportioning royalty paid kindly refer to terms of agreement
determining amount of royalty.
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