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At 31 March 20X7 Tentacle had 12,000 units of product W32 in inventory, included at cost of $6 per unit. During April and May 20X7 units of W32 were being sold at a price of $5.40 each, with sales staff receiving a 15% commission on the sales price of the product.
At what amount should inventory of product W32 be recognised in the financial statements of Tentacle as at 31 March 20X7?
Ans: NRV – (12,000 × (5.4 × 85%)) = $55,080
Does this mean that a fall in NRV and commission charges after the reporting date qualifies as an adjusting event because I don’t understand what’s happening here, sir?
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