ACCA FR · Chapter 4 · Question 1 of 6
Under IAS 2 Inventories, how should inventories be measured?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) At the lower of cost and net realisable value
Explanation
IAS 2 measures inventories at the lower of cost and net realisable value (NRV). NRV is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs needed to make the sale. Measuring at fair value less costs to sell applies to biological assets under IAS 41, not to inventory in general.
More Inventories and agriculture MCQs
- Q3Which of the following costs can be included in the cost of inventory under IAS 2?
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- Q5Under IAS 41 Agriculture, how should a biological asset be measured at each reporting date, assuming fair value can be measured reliably?
- Q6At 1 January Meadow Farm Co owned a dairy herd of 100 cows with a fair value of $900 each. At 31 December their fair value was $1,000…