FRA stock valuation.please help
meibaker
Registered Posts: 481 Dedicated contributor 🦉
Q: a suplies has 500 large ring binders at the end of fiancial year, cost price £2.20 per ring, selling £4.00 each, as the ring haven't sold well, he decided to overprint them which cost £1.00 per binder and selling for £3.00, what's the stock valuation for 500 rings? the answer is 1,000. please anyone who can explain why? many thanks
may
may
0
Comments
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Hello,
Stock should be valued at the lower of cost and Net Realisable Value so therefore :
Cost = £ 2.20
NRV = £ 3.00 - £ 1.00 = £ 2.00
As NRV is lower than cost the stock is valued as 500 x £ 2.00 = £ 1,000.00
Remember that Net Realisable Value means selling cost less any costs incurred to bring the item to their saleable status.0 -
oh, i see. thanks very much for you help. very much appriciated!!
best regards
may0
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