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Chapter 19 – Inventory (example 1)

This topic has 1 reply, 2 voices, and was last updated 3 years ago by Stephen Widberg.

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February 9, 2022 at 5:14 pm #648377
abhishek2102
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Hi,
Why don’t we take the $500 conversion costs when calculating the NRV? Doesn’t it form part of cost to complete? Because it should go through the conversion costs (2nd stage) in order to acquire the finished product. Or am i misunderstanding and the $500 already forms part of the $1450 selling price?
Thanks
February 11, 2022 at 12:57 pm #648471
Stephen Widberg
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Not quite clear about your question.
The example makes the assumption that the business can either sell FINISHED PRODUCT or PART-FINISHED PRODUCT.
In each case it has calculated both cost and NRV
Don’t spend too long here as it’s more of a Financial Accounting question
🙂
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