FA – L1 – Q44 – Inventory Valuation

Calculate inventory value for Bles at 31 Dec 20X9 using lower of cost or NRV.

Question

t 31 December 20X9 Bles had the following items of inventory:

Product	Quantity	Total cost GH₵	Realisable value GH₵	Estimated cost of realisation GH₵
ABC	20	80	200	20
DEF	10	150	120	10
GHI	6	6	7	2
JKL	12	36	12	1

Required
What amount of inventory should be presented in the statement of financial position of Bles at 31 December 20X9.

Answer

Inventory valuation at 31 December 20X9
All items must be valued at the lower of cost or net realisable value (NRV).

Product	Quantity	Cost (GH₵)	NRV (Realisable value – Cost of realisation) (GH₵)	Valuation (Lower of Cost or NRV) (GH₵)
ABC	20	80	200 – 20 = 180	80 (Cost)
DEF	10	150	120 – 10 = 110	110 (NRV)
GHI	6	6	7 – 2 = 5	5 (NRV)
JKL	12	36	12 – 1 = 11	11 (NRV)

Statement of financial position value at 31 December 20X9:
80 + 110 + 5 + 11 = 206 GH₵