Calculate to the nearest euro the value of inventory

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Reference no: EM131341000

A retailer has the following purchases and sales of a particular product line:

	Units purchased	Purchase price per unit EUR	Units sold	Selling price per unit EUR
2 December	100	500	60	530
16 December	60	503	80	528
30 December	70	506	50	526
14 January	50	509	70	524
28 January	80	512	50	522
11 February	40	515	40	520

On 28 February the inventory was 150 units. The cost of inventories is determined on a FIFO basis. Selling and distribution costs amount to 5 per cent of selling price and general administration expenses amount to 7 per cent of selling price.

(a) State three reasons why the net realisable value of inventory may be less than cost.

(b) Calculate to the nearest euro the value of inventory at 28 February:

(i) at cost

(ii) at net realisable value

(iii) at the amount to be included in the financial statements in accordance with IAS 2 - Inventories.

Reference no: EM131341000

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