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Goodnight sir,
I came across this question and need some help.
A retail business has the following two items of inventory at its year end.
Item Cost Net Realisable Value
$ $
X 1600 1660
Y 1400 1250Applying the prudence concept , what should be the valuation of this inventory in the balance sheet of the business?
Any assistance is welcome, thank you
We always value inventory at the lower of cost and net realisable value.
Therefore X is values at $1,600 and Y is valued at $1,250
This is all explained in my free lectures on inventory. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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