PRC-1 · Chapter 7 · Question 25 of 100
Which of the following situations dictates that raw materials should NOT be written down below their cost?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) When the finished products in which they will be incorporated are expected to be sold at or above their cost.
Explanation
Under IAS 2, materials held for use in production are not written down below cost if the finished products they will be used to produce are expected to be sold at or above cost.
More IAS 2: Inventories MCQs
- Q27How should refundable sales taxes (e.g., input VAT) paid on the purchase of raw materials be treated?
- Q28A business has 200 units of stock. The units cost Rs. 22 each. What is the value of the closing stock?
- Q29In a manufacturing entity, which of the following items is considered 'Work in Progress' (WIP)?
- Q30Which inventory valuation method assumes that the items of inventory that were purchased or produced first are sold first?
- Q31Which of the following is NOT a disclosure requirement specified in IAS 2?