GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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As per AS - 2, inventory is to be valued at
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The lower of cost, or net realisable value
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Net realisable value
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Actual cost
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Sales value
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Explanation:
Detailed explanation-1: -Inventories should always be valued at cost or net realisable value, whichever is lower. In cases where the inventory is damaged, obsolete, or overvalued as compared to the market, an entity has to write down the inventory to net realisable value.
Detailed explanation-2: -Under GAAP, inventories are measured at Lower of Cost or market, provided that the market value must not exceed the NRV of inventory. Under IFRS, inventories must be valued at Lower of Cost and NRV.
Detailed explanation-3: -5. Inventories should be valued at the lower of cost and net realisable value.
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