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

topcat

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?

Lucy_M

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

topcat

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_M

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

CeeJaySix

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_M

Hi CeeJay, thanks, I realised why as I posted... blonde moment

topcat

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