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What is the basic principle for measuring inventories in line with IAS 2?

1. Inventories shall be measured at the lower of fair value and value in use.

2. Inventories shall be measured at the lower of fair value and net realizable value.

 

3. Inventories shall be measured at the lower of cost and value in use.

 

4. Inventories shall be measured at the lower of cost and net realizable value.

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Question ajoutée par Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies
Date de publication: 2016/01/11
Mohammad Iqbal Abubaker
par Mohammad Iqbal Abubaker , Jahaca Pty Ltd - Accounts Administrator , Jahaca Pty Ltd - Accounts Administrator

The basic principle for measuring inventories in line with IAS2 is Inventories shall be measured at the lower of cost and net realizable value.

 

   

Rehan Qureshi
par Rehan Qureshi , Financial Consultant , Self Employeed

option no4 is the correct answer

Shahbaz Hayder
par Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies

Yes...Option4 is the right answer.

Abu Bakar Ashfaq
par Abu Bakar Ashfaq , Senior Consultant , PricewaterhouseCoopers Middle East

4th option is correct one.

Amer Bakodah
par Amer Bakodah , External Audit Intern , Grant Thornton

According to Ias2 Inventories must be recognised lower of cost and NRV

NRV is Sales less cost to sell

Shazia Anees
par Shazia Anees , Assistant Manager Finance , Arham Trading Company

answer no4------------------------------

Ali Diab
par Ali Diab , Finance Director , DH Industries Ltd

No.4

And I would say the answer provided by Vimal Jose is perfect.

santhosh prasanna Gowthaman
par santhosh prasanna Gowthaman , Associate consultant , KPMG

Inventory should be valued either book value or net realizable value, whichever is less.

Saurabh Dugar
par Saurabh Dugar , Derivative Trainee , Mansukh Securities and Finance Limited

4. Inventories shall be measured at the lower of cost and net realizable value.

Vimal Jose
par Vimal Jose , FINANCE MANAGER , BESTER CAPITAL INVESTMENTS

 

As per IAS2: The inventories are should be measured at the “lower of cost and net realizable value”.

 

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

 

The cost of inventoriesshall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

 

(Other cost excludes abnormal wastage, storage cost, administrative over head, foreign exchange difference, interest cost when inventory purchased with differed payment.)

 

Cost Formula: The cost of inventories shall be assigned by using the first-in, first-out (FIFO) or weighted average cost formula. An entity shall use the same cost formula for all inventories having a similar nature and use to the entity.

 

Muhammad Usman Zubair
par Muhammad Usman Zubair , Manager Accounts -Projects , Bahria Town Construction Wing Phase-8

As per IAS2 inventories shall be measured at lower of cost and at Net Realizable Value(NRV)

option #4 

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