ExpertEasy2 marksMultiple Choice
ACCA · Question 09 · Recording transactions and events
According to IAS 2 Inventories, how should inventory be valued?
According to IAS 2 Inventories, how should inventory be valued?
Answer options:
A.
At the lower of cost and net realizable value
B.
At the higher of cost and net realizable value
C.
At historical cost only
D.
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.
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