IAS 2 Inventories PAS 2 Quiz and Flashcards

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Questions and Answers

IAS 2 provides guidance on the cost formulas used to assign costs to inventories. These cost formulas include all of the following except

Last-in first-out (LIFO) (correct)
Specific identification
First-in first-out (FIFO)
Weighted average cost

According to IAS 2, inventories should be measured at

The higher of cost and net realisable value (correct)
The average of cost and net realisable value
Net realisable value
Cost

The objective of IAS 2 is to prescribe the accounting treatment for

Intangible assets
Fixed assets
Accounts receivable
Inventories (correct)

IAS 2 applies to annual periods beginning on or after

1 January 2005 (A) Signup and view all the answers

Inventories include assets held for sale in the ordinary course of business, such as

All of the above (D) Signup and view all the answers

Which of the following is NOT considered an inventory according to IAS 2?

Assets held for investment purposes (A) Signup and view all the answers

Which of the following costs should be included in the calculation of inventory cost according to IAS 2?

Purchase cost and conversion costs (D) Signup and view all the answers

Under IAS 2, what is the basis for allocating fixed overheads to inventory?

On a systematic and consistent basis (A) Signup and view all the answers

According to IAS 2, how should inventories be measured?

At the lower of cost or net realizable value (A) Signup and view all the answers

What is the objective of IAS 2?

To prescribe the accounting treatment for inventories (C) Signup and view all the answers

Flashcards

IAS 2 Inventory Measurement

Inventories are measured at the lower of cost or net realizable value (NRV).

IAS 2 Inventory Cost Formula

Cost formulas include first-in, first-out (FIFO), weighted average, and specific identification. Cost formulas that are not included are LIFO (last-in, first-out).

Inventory Definition (IAS 2)

Assets held for sale in the ordinary course of business, including raw materials, work-in-progress, and finished goods.

Inventory Cost Elements

Includes purchase cost, conversion costs (labor, manufacturing overhead), and other costs directly attributable to bringing inventory to its current condition and location.