Acca financial Accounting (FA) Study Text ac ca (FA)

Test your understanding 4 

 

Cole’s business sells three products X, Y and Z. The following 

information was available at the year-end: 

 

X Y Z 

 $ 

$ 

$ 

Cost 

7 10 19 

Fair value less further costs to sell (NRV) 

10 

8 

15 

Units 

100 200 300 

What was the value of the closing inventory? 

A $8,400 

B $6,800 

C $7,100 

D $7,200 

 

 

Test your understanding 5 

 

In what circumstances might the fair value less further costs to sell 

of inventory be lower than its cost? 

 

 

 

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Inventory 

104

 

KAPLAN PUBLISHING

 

 

Test your understanding 6 

 

Storm, an entity, had 500 units of product X at 30 June 20X5. The 

product had been purchased at a cost of $18 per unit and normally sells 

for $24 per unit. Recently, product X started to deteriorate but can still be 

sold for $24 per unit, provided that some rectification work is undertaken 

at a cost of $3 per unit.