Problem
Question I
1. The International Financial Reporting Standard (IFRS) prohibits the use of the last-in, first-out (LIFO) formula to measure the cost of inventories.
Explain the reasons why the use of the LIFO formula is prohibited by IFRS.
2. According to IAS 2, inventories should be measured at a lower of cost and net realizable value.
Critically assess whether the net realizable value (NRV) of work in progress should be considered.
Question II
Borrowing costs are interests and other costs incurred on funds borrowed.
Discuss the rules relating to commencement, suspension, and cessation of capitalization of borrowing costs on qualifying assets in accordance with IAS 23 borrowing costs.