IAS 2 is not making any sense on this question ..

topcattopcat Trusted RegularPosts: 452Registered
I am doing the lower of cost and NRV

so the figures i am adding up are =:

£562
£782
£762

Total £2106

but the answer is £1543?

BwRFM.jpg

Comments

  • Lucy_MLucy_M Feels At Home Posts: 136Registered
    Hi topcat,
    I really hate the way they word these... the only way the figures work is if you take the Completion cost away from the selling price and then choose the lowest, ie: 382, 572 and 589. I'm not convinced that question is right, if anyone else can suggest why it is I would love to hear it?! I guess NRV is selling less costs?
    Good luck!
    Lucy



  • topcattopcat Trusted Regular Posts: 452Registered
    Lucy_M wrote: »
    Hi topcat,
    I really hate the way they word these... the only way the figures work is if you take the Completion cost away from the selling price and then choose the lowest, ie: 382, 572 and 589. I'm not convinced that question is right, if anyone else can suggest why it is I would love to hear it?! I guess NRV is selling less costs?
    Good luck!
    Lucy



    Hi Lucy,

    Blooming good spot just had a look in my book now you have said

    "Net realizable value the estimated selling price less the estimated costs of completion and the estimated costs necessary to make the sale"

    so that would make those figures

    thanks for clearing up that mystery much appreciated :001_smile:
  • Lucy_MLucy_M Feels At Home Posts: 136Registered
    Any time, just hope you can help me when I'm stuck on FP, I'm not sure which I loathe more, ratio's or variances..! x
  • CeeJaySixCeeJaySix Well-Known Posts: 645Registered
    In answer to the why - you can't sell it until it's completed! Therefore the NRV is what you'll eventually get for it, less what it will cost you to get it to that saleable state.
  • Lucy_MLucy_M Feels At Home Posts: 136Registered
    Hi CeeJay, thanks, I realised why as I posted... blonde moment ;)
  • topcattopcat Trusted Regular Posts: 452Registered
    CeeJaySix wrote: »
    In answer to the why - you can't sell it until it's completed! Therefore the NRV is what you'll eventually get for it, less what it will cost you to get it to that saleable state.

    Thanks ceejay that will help me remember this easier now
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