# Kaplan FNST help

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Registered Posts: 7 New contributor 🐸
Hiya just wondering if anyone can help me please!!

I'm studying FNST at Kaplan and going through their class notes as we were told to complete a question at home which is Atok limited page 37, incase anyone is also studying with Kaplan. But i am completly stuck please help!

I can't work out the closing inventory and i am given this to help:

Inventory at 30 june 20x9 ammounted to £1560,000 at cost. items which has cost £80,000 and which would normall sell for £120,000 were found to have deteriorated. Redemial work costing £20,000 would be needed to enable the items to be sold for £90,000.

Im not looking for anyone to give me the answer just give some advice on how to work it out.

Thanks everyone

• Registered Posts: 56 Regular contributor ⭐
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I think we may follow the principle that "stocks should be valued at lower of cost and net realisable value".

Here we have stock costing £80,000 plus further £20,000 (£100,000). Net realisable value however is £90,000. This is the figure that will be used to record the inventory value as it is the lower figure.

So you need to adjust the innitial figure of £1,560,000 by £80,000 then add back the £90,000. New inventory figure £1,570,000.

I think so anyway, so hope this helps. Not doing FNST and certainly not with Kaplan.
• Registered Posts: 72 Regular contributor ⭐
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I agree with Henry, that valuation rule of lower of cost and NRV should be followed, but in terms of the figures I think it should be....

current valuation £1,560,000 (includes £80,000 - lower of £80,000 & £120,000)

£80,000 needs to be adjusted to £70,000 (£90,000 - £20,000)

so new valuation = £1,560,000 - £80,000 + £70,000 = £1,550,000

I'm not studying with Kaplan either and haven't started Level 4 yet, so I may be wrong.......
• Registered Posts: 7 New contributor 🐸
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Thank you! Hopefully it's right will find out tomorrow. Having so much trouble with it! Do you knwo what it ment by a loan note? I've tired googling it but cant seem to get to grips with that either

Thankkkks x
• Registered Posts: 56 Regular contributor ⭐
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Please do report back and let us know which version of these answers are correct (I believe mine is but then...). I cannot say I have ever heard the term "loan note" before but here is a link that explains it: http://www.investopedia.com/terms/l/loan-note.asp#axzz1Q15QTwV8
• Registered Posts: 7 New contributor 🐸
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hiya

just to let you know henry you were right the answer was as follows :

closing inventories 1560000
items already included at cost (80000)
items to be included at nrv 70000
1550000