IAS 2– INVENTORY

418/23 kno
IAS 2– Inventory Hang tor .

Principles

Inventories are valued at the lower of cost and net

realisable value (NRV).
 IAS 2– Inventory
Costs of inventory

Cost is the cost of bringing items of inventory to their

present location and condition (including cost of purchase
and costs of conversion).

-cost of conversion :
chi ph'chugen doi
 IAS 2– Inventory

·
gor khi
gra 2
• purchase price including
mua
hang import duties, transport
Cost of
handling costs, and any
purchase
comprises other directly attributable
costs, less trade discounts,
rebates and subsidies.
 IAS 2– Inventory

Cost of conversion comprises:

 costs which are specifically attributable to units of
production, e.g.
 direct labour, direct expenses and subcontracted work
 production overheads, which must be based on the
normal level of activity (nin
~
. thic teexpected -> tinh the expected
 other overheads, if any, attributable in the particular
circumstances of the business to bringing the product
or service to its present location and condition.
 o
VD : Sxchung disch
.

IAS 2– Inventory

gago
inventory
chip?the
Charged as expenses:
• abnormal waste
• storage costs chiphe who bas quan on Iho
Long
him

, .

• administrative overheads which do not contribute to

bringing inventories to their present location and
condition
• selling costs.
NRV net realisable value
:

IAS 2– Inventory

NRV is the estimated selling price, in the ordinary

course of business, less the estimated costs of
completion and the estimated costs necessary to
make the sale.

• actual unit cost specific identification

Valuation
• first in, first out (FIFO)
methods
• weighted average cost (AVCO).
 IAS 2– Inventory
Inventory valuation methods

the FIFO method

the AVCO method
 IAS 2– Inventory

Disclosure requirements
• accounting policy adopted, including the cost formula
used
• total carrying amount, classified appropriately
• amount of inventories carried at NRV
• amount of inventories recognised as an expense during
the period
• details of any circumstances that have led to the write-
down of inventories to their NRV.
NRV < grago -> chon NRV
 IAS 2– Inventory-Q1

High Co. manufactures component for TV

production.
Cost of raw materials per unit $100 but supplier
offered 15% trade discount
has
Import duty (raw materials) 5%
the "whap
~
Labour costs per unit $25 chi ph han Long .

Production overheads $400,000

Expected (normal) output 50,000 units
Actual output 40,000 units
What is the cost per unit of the component?
· Direct material =
100 - 100x15 +
85x5%
=89 25 unit
&
.

per .

labour 25 unit
·
Direct per
·

Production overhead
= 400 ,
000/50 000 .
= 8
permit
sinh theo mic x bth ) expected)
89 25 +25 8
.

·
cost per unit of the component
= .

- 122 25 .
 IAS 2– Inventory-Q2

Which of these costs may be included in inventories of

manufactured cars for resale?
a/Import duties
chi pheban
hig
Hoa hing cho daily↑
b/Selling commissions to agents 
chiphe"sx
"(T)
&

c/Fixed production overheads (nam

d/Interest
e/Administrative overheads 
f/Transport costs

tih vai trac

importduties va transport cost
vis do sy val
tip' vas at lin -> gian tip ,
 IAS 2– Inventory – Q3

Which of these costs may be included in the cost of

inventories of raw materials and purchased
components?
a/ Import duties thre n
b/ Transport costs chi La has
chuge.
e
c/ Interest
d/ Variable production overheads
chiet Khan khi mua whin
e/ Quantity discounts received
me

trade discounts .

d . Vat birch X nin ? chi phix

 IAS 2– Inventory
Question 1:
Caminas has the following products in inventory at the year end.

Product Quantity Cost Selling price Selling cost

A 1,000 $40 $55 $8

B 2,500 $15 $25 $4

C 800 $20 $23 $5

At what amount should total inventory be stated in the statement of financial

position? * thuc
NRU= selling price-selling cost ling .

~
as
ghi ther thap him
quia cost va NRV
 selling NRU Total cost
Product Quantity cost selling
price cost *

A 1000 $40 $55 $84740x1000

$2500 $15$25$421 15x1500

c 800 $20 $CS $51818x800

 IAS 2– Inventory
a normal level -
phai actual level
Question 2:
.

Which of the following statements about IAS 2

Inventories are correct? Chiphesx
->
a/Production overheads should be included in cost on the
basis of a company's actual level of activity in the period.
b/In arriving at the net realisable value of inventories,
settlement discounts must be deducted from the expected
selling price. ↳ trade discounts .

c/In arriving at the cost of inventories, FIFO and weighted

average cost formulas are acceptable.
d/It is permitted to value finished goods inventories at
materials plus labour cost only, without adding production
o the so
overheads. ~

bo th without
 I

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O

O
-

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-
·
Chiphe'bas tri ,
bas dong the
en (Maintenance
expl
-> thi I
chiphisx chung
"has hav wha X
plant depreciation may
:

inward chi phivan oh' vecho

carriage
:

let fish au chi phr

I

supervisor's wage hising q :

·
xchung .
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