Chapter 10 Flashcards
1
Q
What is the well known inventory rule?
A
Inventories shall be measured at the lower of cost and net realisable value
2
Q
What are 2 methods of calculating inventory?
A
FIFO
AVCO
3
Q
What are the reason for IAS2 prohibiting LIFO
A
Unreliable representation of actual inventory flow
Usually used to reduce tax payments
LIFO inventories values bear little relation to recent cost levels.
4
Q
What is Net Realisable Value?
A
Estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale
