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Intermediate Accounting (Kieso)
Found in: Page 499

Short Answer

Assume that Darcy Industries had the following inventory values. Inventory cost (on December 31, 2017) $1,500 Inventory market (on December 31, 2017) $1,350 Inventory net realizable value (on December 31, 2017) $1,320 Under IFRS, what is the inventory carrying value on December 31, 2017? (a) $1,500. (b) $1,570. (c) $1,560. (d) $1,320

The correct option is “d.”

See the step by step solution

Step by Step Solution

Step1: Estimation of inventory value

(d) The inventory cost is $1,500, and the net realizable value is $1,320. Hence inventories will be reported at the net realizable value, as it is the lowest compared to the inventory cost.

Step2: Explanation of wrong options

(a) Inventories carrying value will not be equal to the cost, as market value and NRV is below the original cost.

(b) $1,570 incorrectly estimated.

(c) $1,560 incorrectly estimated.

Thus, the correct option is $1,320.

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