PRC-1 · Chapter 7 · Question 100 of 100
Which of the following items is explicitly prohibited by IAS 2 from being included in the cost of inventories?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The cost of abnormal wastage of materials and labor.
Explanation
IAS 2 explicitly states that abnormal amounts of wasted materials, labor, or other production costs cannot be capitalized as inventory cost and must be recognized as expenses in the period they occur.
More IAS 2: Inventories MCQs
- Q2When calculating the Net Realizable Value (NRV) of an inventory item, which of the following is correct?
- Q3When inventory is sold, how is its carrying amount treated in the financial statements?
- Q4Which of the following statements correctly distinguishes between the periodic and perpetual inventory systems?
- Q5An entity suffered a loss of stock worth Rs. 80,000. It recovered 70% of the value in cash from its insurance company. Under a perpetual…
- Q6Which of the following cost measurement formulas is explicitly NOT permitted under IAS 2?