IAS 2 – Inventories – Theory – 3

Under which of the following circumstances cannot the cost of inventories be recoverable?

When inventories are sold, the carrying amount of those inventories shall be recognised as __________ in the period in which the related revenue is recognised.

The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, shall be recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

Which of the following shall be disclosed in the entity’s financial statements regarding inventories?

Which of the following is not a common classification of inventories?

The accountant of the entity X tries to calculate the amount of the year-end inventories. The following information is available regarding the Product A:

Cost:                                                      $100

Realisable value:                                 $120

Expected selling expenses:                 $35

Which of the following is the value of closing inventory for Product A?

Entity Y buys and sells pens. The following information about Y’s purchases is available:

Quantity           Price per unit

8 December               100                  $4

20 December               130                  $3

On 31 December Y sold 170 pens. Which of the following represents the amount of Y’s closing inventory as at 31 December, provided that the entity applies FIFO method to its inventories?

1. $180
2. $206
3. $210
4. $240

Nail Corp. buys and sells nails. The following information about Nail Corp’s purchases is available:

Quantity           Price per unit

15 December               270                $0.26

25 December               350                $0.18

On 31 December Nail Corp. sold 300 nails. Which of the following represents the amount of Nail Corp’s closing inventory as at 31 December, provided that the entity applies weighted average method to its inventories?