Forums › ACCA Forums › ACCA FR Financial Reporting Forums › Sept.December 2019. Past paper FR
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- AuthorPosts
- November 15, 2020 at 4:39 pm #595125
Hi there,
Hope you are all safe,I have an issue with the question 31 a of the past paper September December 2019 about the inventory adjustments.
It states:
Inventory adjustment
The disposal of the inventory at a discounted price would be classified as an adjusting event in accordance with IAS® 10 Events
After the Reporting Period.
Retail price of the inventory $1·5 million; GP margin 20% = $0·3 million
Closing inventory (currently credited to SOPL) $1·2 million
A write down to NRV would require a $0·6m charge to cost of sales thereby increasing it to $70·6 million and reducing profit
from operations to $12·56 million. In the statement of financial position, inventory is written down to $3·36 million and
retained earnings will be adjusted to $32·28 million.I am not so sure how do they find this NRV amount and how do they find this 0.6M to be charged in the SPL. I only assume that the question said: inventory were sold at 50% of what it had cost so then I would assume the 1.2 M at 50% gives me 0.6M.
If someone could explain it more in details?
Thanks - AuthorPosts
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