PRC-1 · Chapter 7 · Question 51 of 100
According to IAS 2, how is 'Net Realizable Value' (NRV) defined?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Explanation
NRV is formally defined by IAS 2 as the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
More IAS 2: Inventories MCQs
- Q53What is the underlying assumption of the First in, First out (FIFO) cost formula?
- Q54How should fixed production overheads be allocated to inventory if the actual production level is abnormally low during a period?
- Q55How must the cost of abnormal wastage of materials and labor be treated under IAS 2?
- Q56On 31 December 2015, a company has partly-completed inventory with a cost to date of Rs. 26,300. It is expected that further costs of Rs…
- Q57Using the data from the previous question (Cost = Rs. 26,300, NRV = Rs. 36,600), at what value should this inventory be reported in the…