AAT Level 3 - Preparing Financial Statements

JimmyP

Can anyone help with the following question and answer please as I don't understand where AAT's answer of £14 is coming from in the Mock 2 practice?

Jars retail for £20 each and cost £10 each. Three are damaged and will cost £40 to repair. They will then be offered for sale at a 10% discount. What is the total inventory value for these three jars?

Is it not £18, I.e. 3 x £20 - £40 x 90%?

crispy

Hello,

Inventory should be measure at lower of cost or Net Realisable Value:

Cost:
£ 10 * 3 = £ 30

NRV:
Selling Price £ 20 less 10 % discount = £ 18

Selling Price £ 18 * 3 = £ 54
Less: Repair cost £ (40)
NRV £ 14

Therefore Inventory valued at £ 14

anony123

@JimmyP
This didn’t come up in my exam and still to this day I don’t even understand that question on the AAT mock online. My teacher got it incorrect as well.
Do I wouldn’t worry on this to much, just make sure you learn the accruals and prepayments and the partnerships. The partnership question in the real one is pretty much the same as in the mock I think it was task 4 but obvs with different figures.
I know this is of topic, but just to help you as best can be.

JimmyP

Thank you both for your input.