Ask Question
23 January, 09:22

At the end of the year, Ian Co. determined its inventory to be $258,000 on a FIFO (first in, first out) basis. The current replacement cost of this inventory was $230,000. Ian estimates that it could sell the inventory for $275,000 at a disposal cost of $14,000. If Ian's normal profit margin for its inventory was $10,000, what would be its net carrying value?

+5
Answers (1)
  1. 23 January, 10:11
    0
    Value of closing inventory = $230,000

    Explanation:

    Closing inventory as assessed = $258,000 based on FIFO

    Replacement cost of this closing inventory = $230,000

    Selling Price of this inventory = $275,000

    For which disposal cost = $14,000

    Net sales revenue from this inventory = $275,000 - $14,000 = $261,000

    Less: Regular operating margin = $10,000

    Value as per sales = $261,000 - $10,000 = $251,000

    Closing inventory as per IFRS is to be valued at cost or Net Realizable Value, or Replacement Value whichever is less:

    Here, least value = $230,000 which is replacement value.

    Final Answer

    Value of closing inventory = $230,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “At the end of the year, Ian Co. determined its inventory to be $258,000 on a FIFO (first in, first out) basis. The current replacement cost ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers