FSLC Test 2
sophie_612
Registered Posts: 136 Dedicated contributor 🦉
Hi,
Please can someone explain where they got the closing inventories figure from please?
Thanks
Sophie
Please can someone explain where they got the closing inventories figure from please?
Thanks
Sophie
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Comments
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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.1 -
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
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Sophie, as above!
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