Week 3 - IAS2 Inventories Flashcards
1
Q
How must inventory be valued according to IAS2?
A
At the lower of cost and net realisable value.
2
Q
What is included in the cost of inventories?
A
The cost of materials and the costs incurred in bringing the inventories to the current location and condition.
3
Q
Name 2 reasons NRV could be lower than costs
A
- Damage
- Obsolescence - out of date/fashion
- Increase in material/labour/overhead costs
- Exchange rate movements
- Seasonal reasons
- Loss leader strategy - supermarket strategy
4
Q
Regarding production overheads included in the cost, what level of output are production overheads based upon?
A
The normal level of output.
5
Q
What is NRV?
A
Estimated selling price less costs to get to a saleable condition.
