CIMA BA3 · Chapter 9 · Question 5 of 10
At the year end a business holds three product lines: Product X: cost $4,200, selling price $4,500, selling costs $450 Product Y: cost $2,600, net realisable value $3,100 Product Z: cost $1,900, selling price $1,700, selling costs $100 At what amount should inventory be measured under IAS 2 Inventories?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $8,250
Explanation
Each line is measured at the lower of cost and net realisable value (NRV = selling price less costs to sell). X: NRV $4,050 < cost $4,200, so $4,050. Y: cost $2,600 < NRV $3,100, so $2,600. Z: NRV $1,600 < cost $1,900, so $1,600. Total = $8,250.
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