According to IAS 2 Inventories, how should inventory be valued?

Answer options:

At the lower of cost and net realizable value

At the higher of cost and net realizable value

At historical cost only

At fair value less costs to sell

How to approach this question

Recall the fundamental measurement principle of IAS 2.

Full Answer

A.At the lower of cost and net realizable value✓ Correct

IAS 2 Inventories states that inventory must be measured at the lower of cost and net realizable value (NRV). This ensures that inventory is not overstated on the statement of financial position.

Common mistakes

Confusing inventory valuation with fair value accounting.

Question 08 All questions Question 10

Practice the full ACCA FA — Financial Accounting Practice Exam 2

65 questions · hints · full answers · grading

More questions from this exam

Q01BioGenix Ltd, a biotech startup, is deciding whether to disclose a highly uncertain contingent li...Easy Q02Which of the following bodies is primarily responsible for issuing International Financial Report...Easy Q03Which of the following are the primary responsibilities of the directors of a limited liability c...Medium Q04Titanium Forge Co, a heavy manufacturing firm, recently incurred the following costs: 1. $50,000 ...Medium Q05A company makes a 1 for 4 bonus issue of shares. The nominal value of the shares is $1. The compa...Medium

View all 65 questions →