The measurement rule for inventories, mandated by AASB 102 Inventories, is:
A) lower of fair value and selling price;
B) lower of cost and net realisable value;
C) higher of initial cost and realisable value;
D) higher of completion costs and replacement costs.

Question

Quizplus · Accepted Answer

AASB 102 requires inventories to be measured at the lower of cost and net realisable value. This means that inventories should be valued at the cost of acquisition or production, or at the selling price less any further costs to be incurred in making the sale, whichever is lower. This rule ensures that inventories are not overvalued on the balance sheet, which could lead to misleading financial statements.

The Measurement Rule for Inventories, Mandated by AASB 102 Inventories