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Dear sir, hope you’re well.
I was solving the question Osier (Mar/June 17) part (i) cost of inventory –
My formulated answer is :
(I) Inventory.
21/1919 = 1.1% material to Total Assets.The inventory to be recognised at lower of cost and NRV. If this is not done then the inventory recognised is overstated and so are the assets.
The costs used for calculation are all based on estimations. The auditor needs to evaluate carefully for sufficient and appropriate evidence.
Evidence.
– notes of discussion with the manager to understand the basis of estimations used for calculationsAnd the answer from the examiner is :
Calculation of COst of Invenotyr is complex. This complexity increases the risk of error in the calculation, which increases the riskofmisstatement. The calculation is subject to a no of estimates, increasing risk of error and manipulation suitable to mgt bias. There is a risk that inventory cost is mistated.Will my answer earn marks or ? Please clear for me the confusion.
I am sorry but you are effectively asking me to mark/grade your answer – I know it is only brief – but if I do so it will open floodgates for similar requests. For marking guidance please refer to the “starred” posts at the top of this forum:
“This was the most productive 1 hour I had in the preparation for the exam!”
“Read the mind of an AAA marker – ESSENTIAL READING”
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