Where inventories in an industry are measured by reference to historical cost, which of the following measurement rules applies subsequent to initial measurement:
A) Historical cost
B) Discounted cash flow
C) Lower of cost and net realisable value
D) Replacement cost

Question

Quizplus · Accepted Answer

When inventories in an industry are measured by reference to historical cost, subsequent to initial measurement the lower of cost and net realisable value (LCNRV) applies as the measurement rule. It means that inventories are stated at the lower of cost and net realizable value. This implies that the inventory is valued at its cost, but this cost should not exceed the net realizable value.

Where Inventories in an Industry Are Measured by Reference to Historical