Measuring inventory Flashcards
1
Q
What must the carrying value of inventory be?
A
lower than its cost price or net realisable value
2
Q
Why does measuring inventory at cost require a cost flow assumption?
A
because inventory can be purchased at different times at different cost prices
3
Q
2 cost assumptions (permitted under IFRSs)
A
○ First-in, First-out (FIFO)
○ Weighted average
4
Q
What is the net realisable value of inventory?
A
the expected selling price, less the expected costs associated with getting the inventory to a saleable state, plus the costs of marketing, selling and distribution