FNST practice assessment 3

NpsNps Experienced MentorPosts: 782Registered
Hello,

Would anyone have a spare few minutes to try and explain the answer to FNST question 1.4 on practice assessment 3 please? I can't see how the answer can be £1543

3 products in inventories. According to IAS 2, what value should be recorded in the financial statements?

Product 1.
Costs incurred to date - 400
Estimated costs of completion - 180
Expected selling price - 562

Product 2.
Costs incurred to date - 572
Estimated costs of completion - 210
Expected selling price - 798

Product 3.
Costs incurred to date - 615
Estimated costs of completion - 173
Expected selling price - 762

Thanks very much

Comments

  • SpamkebabSpamkebab Well-Known Posts: 233Registered
    IAS 2 states that inventories should be valued at the lower of cost or NRV

    NRV= Expected selling price less Estimated costs of completion, once you have deducted the estimated costs figure out which is the lower of costs incurred to date and NRV you should get: product 1 = 382, product 2 = 572 and product 3 = 589 totalling 1543.

    HTH

    Neil
  • NpsNps Experienced Mentor Posts: 782Registered
    Thanks very much.

    I was adding the estimated costs of completion to the costs already incurred, and then comparing to the selling costs. D'oh!
  • SpamkebabSpamkebab Well-Known Posts: 233Registered
    Glad to be of help, i actually enjoyed that. It's been a couple of months since i sat FNST and there were only 2 CBTs if i remember correctly. I might have a crack at the 3rd later on, just for a laugh.

    Seriously though, them IASs and IFRSs will stick if you read em enough, then you can't get rid of em and nobody wants to go for a drink with you because you've turned into an accountant lol.
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