Diego Corporation values its inventory at the lower of cost or net realizable value as required by IFRS. Diego has the following information regarding its inventory Historical cost $100,000 Estimated selling price 98,000 Estimated costs to complete and sell 3,000 Replacement cost 90,000 What is the amount for inventory that Diego should report on the balance sheet under the lower of cost or net realizable value method? a.$95,000 b.$97,000 c.$98,000 d.$100,000

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Business

Francis Pruitt

9 October, 23:42

Diego Corporation values its inventory at the lower of cost or net realizable value as required by IFRS. Diego has the following information regarding its inventory Historical cost $100,000 Estimated selling price 98,000 Estimated costs to complete and sell 3,000 Replacement cost 90,000 What is the amount for inventory that Diego should report on the balance sheet under the lower of cost or net realizable value method? a.$95,000 b.$97,000 c.$98,000 d.$100,000

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Kael Sampson · Answer 1

a.$95,000

Explanation:

Under IAS 2, Inventory must be carried at the lower of Cost and Net Realisable Value.

Cost = Purchase Cost + Conversion costs + All cost of bringing Inventory in the location and condition of sale

Net Realisable Value is Estimated selling price in the course of ordinary business less estimated cost of completion and estimated cost to sell inventory