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Could anyone confirm answer, please. I get A. thanks
MJ sell three products – Small, Medium and Large. The following information was available at the year end:
Small Medium Large
$ per unit $ per unit $ per unit
Original cost 5 10 15
Estimated selling price 8 13 18
Selling and distribution 2 4 6
units units units
Units in inventory 250 100 150The value of inventory at the year end should be:
A $4,500
B $3,950
C $4,200
D $2,700The answer is B.
They should each be valued at the lower of cost and net realisable value.
For the small product, the cost is the lower. For the other two products, the net realisable value is the lower.Our free lectures on inventories will help you.
(Our free lectures are a complete course for Paper F3 and cover everything you need to be able to pass the exam well)
Sorry i know could you explain the answer for this. thanks
Bianca bought an asset on 1st January 20X6 for $335,000. She has depreciated it at 25% using the straight line method. On 1st January 20X9, Bianca revalued the asset to $450,000.
What double entry should Bianca post to record the revaluation?
A Dr Non-current assets cost $115,000
Dr Accumulated depreciation $251,250
Cr Revaluation reserve $366,250B Dr Non-current assets cost $450,000
Dr Accumulated depreciation $251,250
Cr Revaluation reserve $701,250C Dr Revaluation reserve $586,250 Cr Non-current assets cost $335,000
Cr Accumulated depreciation $251,250D Dr Revaluation reserve $450,000 Cr Non-current assets cost $335,000
Cr Accumulated depreciation $115,000I am working through them and questions
I thought I was ready for the ffa test 2 weeks ago but failed big time!! 27%
So now I have started again….. test in 3-4 weeksI will answer this question, but two things:
First, if you want me to answer in future, then you must ask in the Ask the Tutor Forum – this forum is for students to help each other 🙂
Second, you must start a new thread when the question is on a different topic (so that all students can benefit from the answer).When we revalue we always change the cost to the new value, and reduce the accumulated depreciation to zero.
Since the cost is 335,000 and is being changed to 450,000, we need to debit the cost account with the difference of 115,000.
Therefore the answer has to be A, and in the exam you would be wasting time doing anything else because none of the other options ‘work’.
However, just in case there was another choice with the cost being debited with 115,000 (when you would then need to do more work, here the accumulated depreciation will be 3 years at 83,750 per year (25% x 335,000) – so a total of 251,250. So to remove the credit balance of 251,250 we debit accumulated depreciation with 251,250.
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