ACCA FA2 INVENTORY VALUE
Amit buys machines, which he repairs and then sells. He has the following information about a machine which is being repaired at 30 November.
$ | |
Cost of machine | 58,500 |
Cost of repair to date | 23,400 |
Cost of further repairs before sales | 7,000 |
Expected sale proceeds | 90,000 |
What is the inventory value of the machine in Amit's statement of Financial Position at 30 November ?
Suggested Solution.
$ | |
Cost of machine | 58,500 |
Cost of repair to date | 23,400 |
Cost of Inventory based on cost | 81,900 |
$ | |
Sales Proceed | 90,000 |
Cost of further repairs before sales | 7,000 |
Net realisable value | 83,000 |
The answer is $81,900 based on the lower of cost or net realisable value.
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