Which of the following statements is correct?
A) Inventories should be shown at the lower of cost and net realizable value
B) Inventories should be shown at net realizable value
C) Inventories should be shown at cost
D) Inventories should be shown at the higher of cost and net realizable value

Question

Quizplus · Accepted Answer

According to the International Accounting Standards (IAS 2), inventories should be shown at the lower of cost and net realizable value. This means that the inventory should be valued at the cost it was acquired or produced up to the point of sale, or at the net realizable value if it is lower than the cost. Net realizable value is the estimated selling price less the estimated costs required to make the sale.

Which of the Following Statements Is Correct