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- October 26, 2014 at 2:45 am #205991
At 31 March Tentacle had 12,000 units of product W32 in inventory, included at cost of $6 per unit. During April and May 20X7 units of W32 were being sold at a price of $5.40 each, with sales staff receiving a 15% commission on the sales price of the product.
At what amount should inventory of product W32 be recognized in the financial statements of Tentacle as at 31 March 20X7?
(a) $55,080
(b) $72,000
(c) $64,800
(d) $61,200Answer per BPP:
NRV- (12,000 * (5.4 * 85%)= $55,080I did use the NRV of $5.40 but I did not minus the sales staff commission.
Why did they minus it? Is that considered to be a cost to make the sale?Thanks!
October 26, 2014 at 8:09 am #205999NET realisable value – sale price less selling costs
OK?
November 4, 2015 at 4:07 pm #280483Hi,
I have a question in above answer, why that’s not taken as per the year end cost of the item.
Thanks,
November 5, 2015 at 5:46 am #280568Because subsequent events after date show that cost is overvalued and we need to go to nrv. These after-date sales are indications that inventory at the year end is overvalued – the sales are adjusting events
November 5, 2015 at 3:12 pm #280617Thanks sir,
November 5, 2015 at 4:06 pm #280682You’re welcome
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