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Chapter 9: Q4ISTQ (page 499)

Assume that Darcy Industries had the following inventory values. Inventory cost (on December 31, 2017) \(1,500 Inventory market (on December 31, 2017) \)1,350 Inventory net realizable value (on December 31, 2017) \(1,320 Under IFRS, what is the inventory carrying value on December 31, 2017? (a) \)1,500. (b) \(1,570. (c) \)1,560. (d) $1,320

Short Answer

Expert verified

The correct option is 鈥渄.鈥�

Step by step solution

01

Estimation of inventory value

(d) The inventory cost is $1,500, and the net realizable value is $1,320. Hence inventories will be reported at the net realizable value, as it is the lowest compared to the inventory cost.

02

Explanation of wrong options

(a) Inventories carrying value will not be equal to the cost, as market value and NRV is below the original cost.

(b) $1,570 incorrectly estimated.

(c) $1,560 incorrectly estimated.

Thus, the correct option is $1,320.

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