On 2 July 20X0 Fluro Paint Ltd received a notice from its primary suppliers that all wholesale prices would be increased by 10 per cent, to be effective immediately.On the basis of the notice Fluro Paint Ltd revalued its 30 June 20X0 inventory to reflect the higher costs.The details of the adjustment were disclosed in the notes to the financial report.The inventory adjustment was material.The auditor of the 30 June 20X0 financial report would issue:

Question

Quizplus · Accepted Answer

The revaluation of inventory based on future price increases is not in accordance with accounting standards, which require inventory to be valued at the lower of cost and net realizable value. This would lead to a qualified opinion due to a material misstatement.

On 2 July 20X0 Fluro Paint Ltd Received a Notice