The measurement rule for inventories, mandated by IAS 2 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

IAS 2 mandates that inventories should be measured at the lower of cost and net realisable value. This means that the cost of acquiring or producing the inventory should be compared to the estimated selling price of the inventory, less any estimated costs necessary to make the sale, and the lower of the two should be used as the inventory value.

The Measurement Rule for Inventories, Mandated by IAS 2 Inventories