CAF-8 · Chapter 9 · Question 1 of 10
During the year-end inventory count, an auditor identifies several boxes of finished goods that are covered in thick dust and appear damaged. Which assertion is primarily at risk?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Valuation and Allocation
Explanation
Dusty and damaged inventory suggests the items may be obsolete or unsellable. Under IAS 2, inventory must be valued at the lower of cost and net realizable value (NRV). This addresses the Valuation assertion.
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