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When given closing inventory at Date X. Then given some quantity of inventory that is sold immediately after that date: so you are given the cost price and selling price and selling expense of these items,
How do you calculate the inventory figure to be put in the statement of Financial Position at Date X.
I was attempting a question in the Mock Exam but got it wrong.
Inventory should be valued at lower of cost or net realisable value..
To arrive at NRV you can multiply the selling price in to quantity of inventory sold and minus the selling expenses.. if that value is less than, the cost multiplied by quantity.. the NRV would be selected. If cost is less cost should be used.
If you were given the value of inventory at date X before the sale… then you can adjust that value depending on your calculation of cost and NRV of the inventory sold.
If for instance, NRV is lower.. then we can deduct the inventory at cost and add inventory at NRV to the value given on date X.Had you mentioned figures it could have been easier.. but I hope that helps..
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