FSLC Test 2

sophie_612sophie_612 LondonRegistered Posts: 102
Hi,

Please can someone explain where they got the closing inventories figure from please?

Thanks
Sophie




Comments

  • hal978hal978 LondonMAAT, AAT Licensed Accountant Posts: 166
    Because closing inventories had to be written down by £258,000 (the further information says some inventories that cost £358,000 can only be sold for £100,000).

    Inventories have to be valued at the lower of cost and net realisable value.
    sophie_612
  • Clintm15Clintm15 Well-Known FarehamRegistered Posts: 247
    Included within inventory are some items at cost £358,000 that could only be sold for £100,000. Because inventory has to be sold at the lower of cost or net realisable value (what you can sell it for) we have to calculate a write-down.

    The write down means taking the particular inventory item down from £358,000 to £100,000, this means taking the overall inventory down by £258,000 (£358,000 - £100,000).

    So original closing inventory £3,142,000 - £258,000 = £2,884,000.
    AAT
    Level 2 - 2011
    Level 3 - 2012
    Level 4 - 2013

    ACCA
    F4 - Corporate Law - Dec 2015 (passed)
    F5 - Performance Management - Dec 2014 (passed)
    F6 - Taxation - Dec 2013 (passed)
    F7 - Financial Reporting - Jun 2014 (passed)
    F8 - Audit & Assurance - Dec 2015 (passed)
    F9 - Financial Management - Jun 2015 (passed)
    sophie_612
  • Duchess1Duchess1 MAAT Posts: 51
    Sophie, as above!
Sign In or Register to comment.