Respirico Pty Ltd produces a pharmaceutical product which is used to treat asthma and other breathing difficulties. The product has a life-span of 18 months and is not saleable in any form after it passes its use by date. At the end of the income year, Respirico Pty Ltd has the following amounts of the product on hand:
· 2,000 items, valued at costs @ $40 each, which are within 3 months of their use by date; and
· 1,000 items, valued at cost @ $40 each, which are past their use by date.
Based on past data about the quantities of this stock sold in the preceding years and also combined with industry experience, it is reasonably estimated that only 20% of the 2.000 items, that are within 3 months of their use by date, will be sold before they reach their use by date (after which they cannot be legally sold). What amount should Respirico Pty Ltd show for the closing stock on hand?

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The Answer of Respirico Pty Ltd produces a pharmaceutical product which is used to treat asthma and other breathing difficulties. The product has a life-span of 18 months and is not saleable in any form after it passes its use by date. At the end of the income year, Respirico Pty Ltd has the following amounts of the product on hand:
· 2,000 items, valued at costs @ $40 each, which are within 3 months of their use by date; and
· 1,000 items, valued at cost @ $40 each, which are past their use by date.
Based on past data about the quantities of this stock sold in the preceding years and also combined with industry experience, it is reasonably estimated that only 20% of the 2.000 items, that are within 3 months of their use by date, will be sold before they reach their use by date (after which they cannot be legally sold). What amount should Respirico Pty Ltd show for the closing stock on hand?

Respirico Pty Ltd Produces a Pharmaceutical Product Which Is Used