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an item of inventory was purchased for $80 and requires $5 of further expenditure to get it ready for sale. it is expected to be sold for $95. how much should each item be valued at?
Can someone help me out solving this question pls? I’ve got an answer of $75, but cannot understand why.
My working was – item @ cost -: $80
item @ NRV -: $95-$5 =$90NRV is the lowest with $90.
But unfortunately this wasn’t the correct answer, Can someone explain to me why the answer is $75????
Thanks
If you have typed the question correctly then the answer is certainly not 75.
It should be valued at the lower of cost and net realisable value. The cost is 80 and the net realisable value is 95 – 5 = 90
The lower of the two is 80.
If you are still unclear then watch my lecture in inventories.
Yes Mr. Moffat, my working was exactly like yours having the same answer. The question is typed correctly because i only copied and pasted it here. So maybe the answer that it gave me is wrong. I thought that i was doing something wrong…….
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