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Sir how can this be an adjusting event?
Inventory valued at a cost of $800 in the year end accounts was sold for $ 650 on 11 January 20X9
Accounts year ended on 30 September 20×8
Approved on 12 January 20X9
Issued on 20 February 20X9
My question is the inventory is already sold in the lower of cost, so why this is to be adjusted? It doesn’t makes sense?
Inventory should always be valued at the lower of cost and net realisable value.
It has been valued at 800, but should only have been valued at 650 (because it had not been sold at 30 September, but it only had a NRV of 650).
I use inventory as one of my examples in the lecture explaining about adjusting and non-adjusting events.