A.Based on the fundamental principle of IAS2, identify two (2) circumstances where the NRV ofinventory might be lower than its cost?:B.Massy Distribution Center (MDC) had 500 boxes of IGA Cornflakes at 30 September 2022 ininventory. The product had been purchased at list price of $18 per box and normally sells for$24 per box.Additional information relating to the units in inventory: VAT - 10%; wharehousing cost - $0.55per unit; purchase discount - $0.40 per unit; carriage inwards - $0.60 per unit.Recently, due to poor handling and storage, several boxes appeared less than presentablehowever the contents were not compromized and MDC can still sell this item at $24 per unit,provided that some rectification/re-packaging work is undertaken at a cost of $3 per unit.Required:At what amount would this IGA Cornflakes be required to be stated on 30 September 2022?Provide detailed analysis to support your answer. (.

The fundamental principles of IAS 2 are: 1) Recognition: Items should be recognized in the financial…

Answered: Based on the fundamental principle of…

Based on the fundamental principle of IAS2, identify two (2) circumstances where the NRV of inventory might be lower than its cost?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 2MC: Moore Company uses the LIFO cost flow assumption and carries Product A in inventory on December 31,...

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

A.
Based on the fundamental principle of IAS2, identify two (2) circumstances where the NRV of
inventory might be lower than its cost?:
B.
Massy Distribution Center (MDC) had 500 boxes of IGA Cornflakes at 30 September 2022 in
inventory. The product had been purchased at list price of $18 per box and normally sells for
$24 per box.
Additional information relating to the units in inventory: VAT - 10%; wharehousing cost - $0.55
per unit; purchase discount - $0.40 per unit; carriage inwards - $0.60 per unit.
Recently, due to poor handling and storage, several boxes appeared less than presentable
however the contents were not compromized and MDC can still sell this item at $24 per unit,
provided that some rectification/re-packaging work is undertaken at a cost of $3 per unit.
Required:
At what amount would this IGA Cornflakes be required to be stated on 30 September 2022?
Provide detailed analysis to support your answer. (.

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