Question 1

TechNova holds 1,000 units of a specialized microchip in inventory. The chips cost $50 each to manufacture. Due to a recent technological advancement, these chips can now only be sold for $45 each. To sell them, TechNova must incur packaging and delivery costs of $3 per unit. At what total value should this inventory be stated in the financial statements according to IAS 2?

Accepted Answer

Calculate Net Realizable Value (NRV) per unit, compare it to Cost per unit, select the lower figure, and multiply by the number of units.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Forgetting to deduct the selling costs from the selling price to find NRV, or valuing at cost despite NRV being lower.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 3

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