Inventories
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Questions and Answers

Which of the following is considered an inventory asset?

  • Cash
  • Raw materials (correct)
  • Accounts payable
  • Buildings

    • What is net realizable value?

  • The estimated value of a liability
  • The estimated profit from a sale
  • The estimated selling price of an asset (correct)
  • The estimated cost to realize a sale

    • When do grapes become inventory for the wine company?

  • After the wine's bottles are sold
  • Before the harvest
  • Never, they are always considered biological assets
  • During the one-year process cycle (correct)

    • According to IAS 2, which method is recommended for evaluating inventory of interchangeable goods?

    <p>FIFO</p> Signup and view all the answers

    In the FIFO method, which quantities are the first to be sold or used in production?

    <p>Oldest purchased or produced quantities</p> Signup and view all the answers

    When is the LIFO (Last In First Out) method applicable for evaluating inventory?

    <p>Under IFRS</p> Signup and view all the answers

    When should a new category be created for inventory evaluation?

    <p>When there is a new price</p> Signup and view all the answers

    Which method of inventory evaluation is NOT allowed by IAS 2?

    <p>LIFO</p> Signup and view all the answers

    What is the main purpose of the journal entry at the end of the year?

    <p>To represent the difference between the beginning and end inventories in profit and loss</p> Signup and view all the answers

    What is the difference between IAS 2 and OIC 13 in terms of allowed evaluation methods?

    <p>IAS 2 allows specific costs and weighted average cost, while OIC 13 allows FIFO and LIFO</p> Signup and view all the answers

    According to IAS 2, which of the following is NOT considered as an inventory?

    <p>Raw materials</p> Signup and view all the answers

    According to IAS 2, when should inventories be recognized?

    <p>When risks and rewards of ownership have transferred</p> Signup and view all the answers

    According to IAS 2, how should inventories be evaluated?

    <p>At the lowest between cost and net realizable value</p> Signup and view all the answers

    According to IAS 2, what does net realizable value represent?

    <p>The expected selling price for partially finished and finished products</p> Signup and view all the answers

    Which method is used to value inventory in this example?

    <p>Weighted average cost</p> Signup and view all the answers

    When is an impairment recorded for inventories?

    <p>When inventories become damaged or obsolete</p> Signup and view all the answers

    How is the net realizable value (NRV) of inventories calculated in this example?

    <p>By considering the selling prices of inventories</p> Signup and view all the answers

    What is the reason for recording an impairment of Euro 120 in this example?

    <p>The net realizable value (NRV) of inventories has decreased</p> Signup and view all the answers

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