ACCA FA2 INVENTORY VALUE
Amit buys machines, which he repairs and then sells. He has the following information about a machine which is being repaired at 30 November.
| $ | |
| Cost of machine | 26,000 |
| Cost of repair to date | 10,400 |
| Cost of further repairs before sales | 8,000 |
| Expected sale proceeds | 40,000 |
What is the inventory value of the machine in Amit's statement of Financial Position at 30 November ?
Suggested Solution.
| $ | |
| Cost of machine | 26,000 |
| Cost of repair to date | 10,400 |
| Cost of Inventory based on cost | 36,400 |
| $ | |
| Sales Proceed | 40,000 |
| Cost of further repairs before sales | 8,000 |
| Net realisable value | 32,000 |
The answer is $32,000 based on the lower of cost or net realisable value.
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