Toey Ltd has provided the following information about the total production cost and estimates of realisable value of three lines of shoes they produce within the same class of inventory:

Packaging and freight are necessary in order to be able to sell the shoes. What is the value of the inventory in accordance with AASB 102?
A) $34,000
B) $40,000
C) $32,000
D) $24,000
E) None of the given answers.

Question

Toey Ltd has provided the following information about the total production cost and estimates of realisable value of three lines of shoes they produce within the same class of inventory:

Packaging and freight are necessary in order to be able to sell the shoes. What is the value of the inventory in accordance with AASB 102?
A) $34,000 
B) $40,000 
C) $32,000 
D) $24,000 
E) None of the given answers.

Quizplus · Accepted Answer

According to AASB 102, the inventory value should be calculated as either the cost or net realisable value (NRV), whichever is lower. 
For Line A, the cost is $6,000, whereas the NRV is $5,000, so the inventory value is $5,000. 
For Line B, the cost is $10,000, whereas the NRV is $14,000, so the inventory value is $10,000. 
For Line C, the cost is $20,000, whereas the NRV is $12,000, so the inventory value is $12,000. 
Adding up the inventory value for all three lines gives a total of $27,000. However, packaging and freight costs need to be added to this value. Adding these costs ($5,000+$3,000+$4,000) gives a total of $12,000. Therefore, the total value of the inventory is $27,000 + $12,000 = $32,000, which is option C.

Toey Ltd Has Provided the Following Information About the Total