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Why should inventory be valued at net realisable value

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Reference no: EM132319167

Answer the following Question :

Question 1: In a period of falling prices, which inventory method would most closely represent the inventory's replacement cost on the Balance Sheet? Would your answer change for a period of rising prices? Explain your answer.

Question 2: Why should inventory be valued at net realisable value if that value is less than the inventory's cost? In your answer, refer to Conceptual Framework's definition of assets and fundamental qualitative characteristics.

Reference no: EM132319167

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