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Inventory IAS 2

The document contains 5 questions regarding inventory valuation in accordance with IAS 2 Inventories. Question 1 asks to value inventory at the lower of cost or net realizable value. Question 2 asks to calculate cost of goods sold using two inventory cost flow methods. Question 3 asks to value incomplete and complete inventory items. Question 4 asks to calculate inventory value including an allocation of production overheads. Question 5 asks to value raw materials, finished goods and damaged finished goods applying IAS 2 principles.

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Alowe Essel
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196 views2 pages

Inventory IAS 2

The document contains 5 questions regarding inventory valuation in accordance with IAS 2 Inventories. Question 1 asks to value inventory at the lower of cost or net realizable value. Question 2 asks to calculate cost of goods sold using two inventory cost flow methods. Question 3 asks to value incomplete and complete inventory items. Question 4 asks to calculate inventory value including an allocation of production overheads. Question 5 asks to value raw materials, finished goods and damaged finished goods applying IAS 2 principles.

Uploaded by

Alowe Essel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Question 1

An enterprise has three products in its inventory as follows;

Product Cost(GHC) NRV(GHC)

A 10,000 12,000

B 11,000 15,000

C 12,000 9,000
33,000 36,000

Required: At what value should the inventory be stated in the statement of Financial Position in
accordance with IAS 12.

Question 2

Purchases of a certain product during the month of January,2014 were

January 1 100kgs@ GHc 10.00


12 100kgs@ GHc 9.80
15 50kgs@ GHc 9.60
20 100kgs@ GHc 9.40

Units sold during the period were:

January 10 80kgs
14 100kgs
30 90kgs

Required: Assuming no opening inventories, determine the cost of goods sold for January 2014
under the two methods

Question 3

Esinam Ltd has the following products in inventory at the end of 2016
Units Cost per unit(ghc)
Ahomka(completed) 5400 22
Adonko(part completed) 2800 26

Each product normally sells at GHC34 per unit. Due to the difficult trading conditions, Esinam intends
to offer a discount of 15% per unit and expects to incur Ghc4 per unit in selling costs. Ghc10 per unit
is expected to be incurred to complete each unit of Adonko

Required: In Accordance with IAS 2 Inventories, at what amount should inventory be stated in the
financial statements of Esinam Ltd as at 31 December,2016.
Question 4

Calculate the cost of inventory in accordance with IAS 2 Inventories from the following data relating
to Kakum Ltd for the year ended 31, may 2014

GHC

Direct cost of can opener per unit 1

Direct labour cost of can opener per unit 1

Direct expenses cost of can opener per unit 1

Production overheads per year 600,000

Administration overheads per year 200,000

Selling overheads per year 300,000

Interest payment per year 100,000

There were 250,000 units of finished goods at the year end. You may assume that there were no
finished goods at the start of the year. The normal level of production is 750,000 can openers, but in
the year ended 31 May 2014, only 450,000 were produced because of labour dispute.

Determine the value of the finished goods.

Question 5

Alpha Ltd makes one standard article. You have been given the following information. The inventory
sheet at the year-end showed the following items.

Raw material: 100 tons of steel. Cost per ton is GHC 140. Present price per ton is GHC130

Finished goods:
100 finished units: cost of materials is GHC 50 per unit, cost of labour is GHC150 per unit and selling
price is GHC500 per unit

10 damaged finished units: costs to rectify the damage GHC200 per unit and selling price is GHC 500
per unit when rectified.

Manufacturing overheads are 100% labour costs, selling and distribution expenses are GHC 60 per
unit

Required: From the information in notes 1 and 2, state the amount to be included in the Statement
of Financial position of Alpha in respect of inventory. State the principles you have applied.

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