Cost or net realisable value: which to use
Inventory is valued at the lower of cost and net realisable value, one line at a time. Work both out and pick the right one.
Task 1The lower of the two3 questions
Inventory is valued at the lower of its cost and its net realisable value. It must never be shown at more than it will bring in.
- Cost
- what was paid to buy the goods and get them to the business
- Net realisable value
- the expected selling price, less any costs still to be paid to make the sale
Fernbank's 20 toasters cost £18 each. Their boxes were damaged by damp. They can be sold for £16 each, but only after re-boxing at £3 each.
Task 2Line by line, not in total3 questions
Task 3What goes into cost3 questions