PAS 2 Inventories

It 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”

• Present Value

• Fair Value

• Net Realizable Value

• Face Value

Fair value refers to the net amount that an entity expects to realize from the sale of inventory in the ordinary course of business.

• TRUE

• FALSE

Net realizable value for inventories may equal fair value less costs to sell.

• TRUE

• FALSE

The amount of write-down is recognized as ____________.

• Asset

• Liability

• Income

• Expense

If the cost of an inventory is $7 while its net realizable value is $10 the amount of write-down is $3.

• TRUE

• FALSE

The best evidence of net realizable value for raw materials is _________ cost.

• Purchase

• Conversion

• Replacement

• Storage

Reversals of inventory write-downs shall not exceed the amount of the original write-down.

• TRUE

• FALSE

Which of the following does not

belong to the group?

• A. Abnormal costs

• B.Conversion costs

• C. Administrative costs

• D. Selling costs

Conversion cost includes the import duties, transport, handling and other costs directly attributable to the acquisition of the inventory.

• TRUE

• FALSE

It refers to the costs necessary in converting raw materials into finished goods. It includes the costs of direct labor and production overhead.

• A. Selling cost

• B. Cost of purchase

• C. Other costs

• D. Conversion cost