1. avatar says

    Please can you explain how 2950 is the right answer for this question?

    An inventory record shows the following details for the month of February;

    Feb 1: 50 units in stock at a cost of $40 per unit.
    Feb 7: 100 units purchased at a cost of $45 per unit
    Feb 14: 80 units sold
    Feb 21: 50 units purchased at a cost of $50 dollars per unit
    Feb 28: 60 units sold.

    what is the value of closing inventory at 28 feb using the fifo method?

    • Profile photo of John Moffat says

      LIFO is not allowed (IAS 2)

      In example 5, I have calculated it using FIFO (first-in-first-out) and using average cost.
      Both methods are allowed by IAS 2, and in the exam you can be asked for calculations using either of the two ways.

      Have you downloaded the Course Notes that go with the lectures? There you will find headings for FIFO and for Average methods (and as well as going through them in the lecture, the answers are at the back of the Course Notes).

  2. avatar says

    I have a question plz.

    — if the closing inventory have been understated in the year by 22500, what will be the effect on the profit this year and next year ?

    a) the current year’s profit will be OVERSTATED and next years’ profit will be understated
    b) the current year’s profit will be UNDERSTATED and next years’s profit will be overstated

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