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Hi dear tutors,
?AS 2 demand that we value the inventroy less NRV and cost.
Example: The company have goods in the amount of 200$ (cost) on 31.12.2019
. But its sale price is 205$. and it need that 10$ repair expenses for sale.We must valued inventory 195$ (NRV).
My question is that how we account this expense. How would be the double entry.on 31.12.2019?DR – expense (or COGS) —- CR – inventory –10$ ???
DR – expense (or COGS) —– CR inventory allowance 10$ ???If the company repairs the good for 10$ on 28.02.2020. how we must treat this operation.
DR – repair expense — CR – cash —- 10$ ???Does not it couse DOUBLE EFFECT?
The inventory is valued, and then it is the correct value that is input into the accounts.
I explain all the entries and the valuation in my free lectures on inventory.
The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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