The following information pertains to inventory held by a company on December 31, 2011. What amount of inventory should be reported under IFRS?

Question

The following information pertains to inventory held by a company on December 31, 2011.  What amount of inventory should be reported under IFRS?

Quizplus · Accepted Answer

Under IFRS, inventory should be valued at the lower of cost or net realizable value. The cost of inventory in this case is $27,000 ($15,000 beginning inventory + $30,000 purchases - $18,000 cost of sales), which is also lower than net realizable value of $28,000 (selling price of $40,000 - selling cost of $12,000). Therefore, the inventory should be reported at $27,000.

The Following Information Pertains to Inventory Held by a Company