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	45,500
Cost of repair to date	18,200
Cost of further repairs before sales	4,000
Expected sale proceeds	70,000

What is the inventory value of the machine in Amit's statement of Financial Position at 30 November ?

ACCA FA2 inventory value

Suggested Solution.

	$
Cost of machine	45,500
Cost of repair to date	18,200
Cost of Inventory based on cost	63,700

	$
Sales Proceed	70,000
Cost of further repairs before sales	4,000
Net realisable value	66,000

The answer is $63,700 based on the lower of cost or net realisable value.