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Financial Reporting and Analysis Q235

0. Nathan Scott is an accountant at Dan Motors Limited. The company prepares its accounts in accordance with IFRS. The inventory cost at year end is 29, 000, while the estimated selling price is $34,000. If the costs necessary to make the inventory worthy of being sold are 6,000, the inventory recorded will be closest to:

  • Option : A
  • Explanation : The inventory is recorded at lower of the cost or the net realizable value. The net realizable value is the difference between estimated selling price and the costs incurred to bring the inventory into a saleable condition. Thus, the inventory is recorded at $34,000 - $6,000 = $28,000.
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