The prudence concept

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February 8, 2021 at 12:45 am #609613
DanetteS7872
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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 1250

Applying the prudence concept , what should be the valuation of this inventory in the balance sheet of the business?

Any assistance is welcome, thank you
February 8, 2021 at 9:29 am #609638
John Moffat
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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.
February 8, 2021 at 4:56 pm #609693
DanetteS7872
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How do you access the free lectures?
February 9, 2021 at 8:02 am #609765
John Moffat
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Click on ‘ACCA’ on the top bar. A new bar then appears and click on ‘FA’.

That will take you to a page listing all of our free resources for Paper FA.
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