A retailer has the following purchases and sales of a particular product line:
|
|
Units purchased
|
Purchase price per unit EUR
|
Units sold
|
Selling price per unit EUR
|
|
2 December
|
100
|
500
|
60
|
530
|
|
16 December
|
60
|
503
|
80
|
528
|
|
30 December
|
70
|
506
|
50
|
526
|
|
14 January
|
50
|
509
|
70
|
524
|
|
28 January
|
80
|
512
|
50
|
522
|
|
11 February
|
40
|
515
|
40
|
520
|
On 28 February the inventory was 150 units. The cost of inventories is determined on a FIFO basis. Selling and distribution costs amount to 5 per cent of selling price and general administration expenses amount to 7 per cent of selling price.
(a) State three reasons why the net realisable value of inventory may be less than cost.
(b) Calculate to the nearest euro the value of inventory at 28 February:
(i) at cost
(ii) at net realisable value
(iii) at the amount to be included in the financial statements in accordance with IAS 2 - Inventories.