Sir could you please explain the treatment of fair value in SPL
- inventory of $800,000 had a fairvalue of $1m. All of this had been sold by 30/09/X6.
why is the fair value amount (200,000) added to the calculation of Cost of sales?
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Q384-LAUREL (KAPLAN EXAM KIT)
4y ago#1Hi,
The inventory is adjusted to fair value on acquisition, hence we need to increase its value/cost from the $800,000 to the $1,000,000. This involves and increase of $200,000, being the difference, and is taken to C'o'S as that is where we record the cost of inventory.
Thanks
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