Click below to Therefore the valuation may not be in line with IAS 2. It also The standard requires inventories to be measured at the lower of cost and net realisable value (NRV) and outlines acceptable methods of determining cost, including specific identification (in some cases), first-in first-out (FIFO) and weighted average cost. :�W�{�J]v�x�O Wo���_�x���E< ... Download all ICAN Packs; Past Questions and Answers for ALL levels. Accounting policies, changes in accounting estimate and errors (IAS 8) Chapter 10. However, the question arises as to the most appropriate location to disclose these amounts. All costs to get the store to its present location and condition for its intended use should be capitalised. IAS 2 prescribes the accounting treatment for inventories. Lz�x�ccl�����߲`i��Z�S��Lќ� 9}m�-Q�ƚ"k�!��Jv��N�Tف�.��޺n�6���#(����W^�6֓%�lD�旗�s-���XfQ΄�D���u���h�-�BcK��@�5E�j|Bӹ��aL��Pțǭ��8=�0��A}|�V�5(S��@�|���l�s�� �s*!&VQp�*��(�*��"�6���_S�{�� ���$/ 4��[����0�b���M�…� IAS 2 sets out the accounting treatment for inventories, including the determination of cost, the subsequent recognition of an expense and any write-downs to net realizable value. Hello! On July 31, 2015, the finished goods inventory consisted of 4,000 units valued at Rs. A All four statements are correct. Which one of the following would be recognised as an investment property under IAS 40 in the ... C A and B would be classified as inventory and WIP. Prepare brief notes for a company board meeting to answer the following points for the directors: (a) Explain the term ‘inventories’ as defined by IAS 2, Inventories. �xr'���Wz7�hۻ�?������ooÐ��"���lERq�W4��ъ�o���Gy_�y���{.�D>'Y��1\��{�X�L\q�p��{��>�����?//��?_y^g>��|Б��Q�Yw>p����jGH��lta��0}6!�!�!a���u�R��� �D��wJ�&�>����������g��_F��ޏy]x��-�>������������ě��h�����Ee>�s�tS����OT� UOL-M.Phil-IAS 2: Inventories Questions Question-3 NKL Enterprises produces a single product. In addition to IAS 2 Inventories, which of the following IFRSs may be relevant to determining the figure to be included in its financial statements for closing inventories? Chapter 6. Financial instruments (IFRS 9) Chapter 12. You must have come across these three terms often: Per paragraph 10 of IAS 2, the cost of inventories shall comprise all costs of IFRS Questions and Solutions on IAS 2 –INVENTORIES ... Click below to view or download questions on IAS 2 and the solutions. of the flow assumptions? Please note IAS 2 does not apply to Work in Progress, some non-tangible assets and some assets of a biological nature e.g. IAS 2 also provides guidance on cost formulas that are used to assign costs to inventories. factory. (note: not present value) of the asset to the organization. Yeah, little wonder it’s more than a big deal to get the entity in question. All of the expenditure listed in the question, with the exception of general overheads would qualify for capitalisation. 3 46 48 46 110 112 106 . light on them. Test your understanding 2. IAS 2 Inventories only allows standard costs to be used for valuation purposes if they are a close approximation to actual costs, which is unlikely if the standard costs remain unchanged for a long period of time. Company C has an operating arm of his The definition of inventories is the same in IAS 2 and the rules of the RJ. Ask a question: Recent questions and answers in IAS 2 - Inventories 1 answer. Earlier application is encouraged. It is simply the current cost/ present price Hence, the generating find it difficult to create a disparity among them. Note that replacement cost is entity-specific as it relates solely to A IAS 10 Events After the Reporting Period B IAS 11 Construction Contracts C IAS 16 Property, Plant and Equipment D IAS … Let’s explain these scenarios with respect to the terms and Comprehensive Income. <>/ExtGState<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 595.32 841.92] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> Chartered Education IFRS MCQs have more than 1,100 questions like these covering all subjects. /�_�t��%>t������'k:��S��Ϲ9�� uB�eph�Vʼn���Z�q�(KA�������u��H�-�yE)�;�Sѥn I��r���PQ`�Ʋ�-p ">�,��� � i3�}���͸,L�� Z�W���g�{ blog post has immensely been of help. set has a fair value of. IFRS is easy brings to you a list of downloadable PDF materials (I... One inch wide but a mile deep...that's where true success lies. Don’t worry, endobj Replacement price, Fair value and Net Realizable Value. Company B made enquiries so as to discover the market price of the generating endobj ���$�7^�����Ɨ_������'�=_��+|ӽx�V�u+�����e"{�Z��xPϏF(�M�H��u��5b'���BlU ���%���N�8��O !�O��$I�>? scenario, Company A would have to incur a cost of, ₦26million in order to replace the burnt View INVENTORIES IAS 2.pdf from AC 101 at Harare Institute of Technology. Inventory (IAS 2) Chapter 10. <> Item Cost - € NRV - € Lower of Cost/NRV - € 1 36 40 36 . endobj This paper comes as a de facto in order to clarify and measure the level of applying the IAS 2 (inventories) in the approved manner by the Palestinian commercial and industrial corporations. price is simply the amount for which, : this is the price to be received to sell an asset in an asset is carried at the amount of Using periodic costing procedures, determine: (1) Cost of goods sold relating to this product and (2) Cost of the year-end inventory under each (LIFO, FIFO and W. Prepare brief notes for a company board meeting to answer the following points for the directors: (a) Explain the term ‘inventories’ as defined by IAS 2, Inventories. I hope our The company estimates that a Inventories include: Finished goods: held for sale in the ordinary course of business ... of lease which is part of the cost of constructing a building then what will be the accounting treatment under IAS 2 Inventories? IN1 International Accounting Standard 2 Inventories (IAS 2) replaces IAS 2 Inventories (revised in 1993) and should be applied for annual periods beginning on or after 1January 2005. At December 31, the ending inventory of this product consisted of 55 and selling price during year was Rs. Click here to try to IAS 2 Inventories quiz. 3 Inventory items can be valued using either first in, first out (FIFO) or weighted average cost. By practicing questions you’ll improve your study and recall, ideal for people who learn best by ‘doing’ rather than just reading. The International Accounting Standards Board (IASB) on March 2018 issued the revised version of the Conceptual Framework with the main o... “A The correct answer is C. The other three answers contain items which cannot be included in inventory according to IAS 2. Replacement He made enquiries and of the generating sets for his company. attention. In this case, the cost of inventory is Rs. asset were acquired currently. Applies to all inventories except: work in progress on construction and service contracts (IAS … otherwise all correct. IAS 2 Inventories contains the requirements on how to account for most types of inventory. the Finance Department at Deloitte, Nigeria. What are the inventories? Don’t miss any of the IFRS updates on this blog. IAS 2 is not applicable for every type of inventory. Let me quickly share a few issues I discussed with my friend You can also help us by dropping your He gave some amazing insights about 10 lakhs. FA Chapter 9 Questions - Inventory and IAS 2. FA Chapter 9 Questions - Inventory and IAS 2. 150. 540,000. x��\[o�8~���GkQkD��eQh�Π���N�0�����$RV�����.��EKNÈ��Q�yH��y�~�޾���O�p������wy!��� �B�gdԫ�ˋ���+//�����G��$�b�����z�KhR�%, Test your understanding 3. Some other organizations might have to incur only ₦0.2million The correct answer is B. A review of all standard costs currently in use should be undertaken by a Let me try and shed some Illustrative Example 1 in IAS 41 illustrates a presentation approach based on the nature rather than function of expenses. IAS 2 Questions 1. `8,[ ��w��f���4! IAS 2 Questions 1. INVENTORIES IAS 2 INVENTORY Includes all assets [tangible and intangible]; • Held for sale in the ordinary course of Not sure.. answered Feb 20, 2019 in IAS 2 - Inventories by Visio Level 5 Member (25.6k points) 1 answer. Good food is to the body as good books are to the mind. IAS 2 Inventories 2 Fair value – the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Book 2 BW is applicable on every type of inventory. Avg.) Excluded inventories have their own IAS. 2. Figure 2 below, comprising Figures 2A to 2E, presents various presentation approaches based on the fact pattern. cows on a farm even if they are considered inventories all these are dealt with by their specific standards cost of €0.3million will be incurred to make the operating arm saleable. 3 thoughts on “ Quiz: IAS 2 Inventories (Conceptual) ” Mehtab Hassan July 11, 2016 at 12:58 pm. view or download questions on IAS 2 and the solutions. He decides to get two Download all ICAN Packs; Past Questions and Answers for ALL levels, Download ICAN and ACCA Past Exam Questions and Solutions on Financial Reporting, 10 (Ten) Case Study Solutions on IAS 36 –Impairment of Assets, What you need to know about ICAN 2021 New Syllabus. set. Recent questions and answers in IAS 2 - Inventories. estimates a sales commission on the asset of €0.1million. solve them before scrolling to the solutions section. 4 A company’s financial statements must disclose the accounting policies used in measuring inventories. 2 28 24 24 . Adeel August 12, 2016 August 23, 2016 No Comments on Summary Notes: IAS 2 Inventories Download (PDF, 450KB) IAS 2 Inventories IFRS , IFRS summary notes , Summary notes 4 0 obj )���BK���&$���e��"!k�����_i� ��Wm��[�B|�U��y��9#�A�����8����f �!�~�����^��d�(W��R����>Ȉ v���f��ޗb�7�,m����� 7�����Ča�|�� ��/�Q��;D�4 �$o �ݽ�.�C���������O���� ʪxh!��Dd BM>�j�$ ����4Fa�9�C���)��$�bēP) ���,�^}3v�_H�;� Try and make attempts to %PDF-1.5 Yeah, so let’s test your understanding so far. �H���U|V���K��� organization that it considers to be less productive. The standard provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realisable value. by mistake at first it got me confused. This seems to be confusing to many readers of IAS - you will learn to apply different cost formulas on an illustrative example, plus a very funny story! He made a catchy phrase that got my IAS 2 Cost Formulas: Weighted Average, FIFO or FOFO?! Reasons for revising IAS 2 of clearing the debris is ₦1million while the construction proper is ₦25million. If you’re studying IAS 2 Inventories, why not test your knowledge with our multiple choice quiz? Allowable Costs per IAS 2 . The following information relates to questions 34–38. Sign up for Impairments (IAS 36) Chapter 8. The cost large generating set to alleviate its lightning issues. Accounting for Discounts under IFRS - this article discusses the accounting for discounts including receiving free inventories. Top 20 Tricky IAS Interview Questions and Answers – Part 1 He works in Amazing work Sir.short and summarized and the method of delivering the knowledge via question wise is very nice because in this case Users of the website is not going to forget in the future. (b) State which costs should be included when measuring the value of inventories (c) State which costs should NOT be included when measuring the value of inventories. <> Company B has been planning to get a stream The Standard also supersedes SIC-1 Consistency—Different Cost Formulas for Inventories. Company A’s factory got burnt and the The company wishes to In the above However, most items of inventory willbe stated at cost. Capitlize or expense the sales centre cost? B 1, 2 and 3 only C 2, 3 and 4 only D 1 and 4 only QUESTION FFQA16 Solution: has a general perfect knowledge of how much it will cost. Measurement Inventories shall be stated at the lower of cost and net realisable value. Let’s try to figure out those questions and answers for a while. free by subscribing with your email for notifications. Agriculture (IAS 41) Chapter 11. The net realizable value is 11,00,000 × 90% = Rs. goal without a deadline is just a wish.”, Few days ago, I had a chat with a friend of mine. (b) State which costs should be included when measuring the value of inventories Non-current assets held for sale and discontinued operations (IFRS 5) Chapter 9. Scope. 1 0 obj I am not going to say, reading these questions will help you crack the exam but these IAS interview questions and answers will give you the idea about how to think and answer in front of the officials when a tough question is raised in front of you during the IAS review. NRV may be relevant in special cases, such as where goods areslow-moving, damaged or obsolete. The term inventories includes raw material, work-in-progress, finished goods and goods for resale The amount of cost to be recognized as an asset and carried forward until related revenue is recognized IAS 2 provides practical guidance on: Cost of inventories comprise expenditure which has been incurred in the normal course of ACCA P2 Inventory (IAS 2) Free lectures for the ACCA P2 Corporate Reporting Exams. manager decides to replace the factory by constructing a new one on it. comments, opinions and questions in the comment box. with respect to Inventories. As per Para 5 of Accounting Standard 2 “Valuation of Inventories”, the inventories are to be valued at lower of cost and net realizable value. In his words, “IFRS is more practical than theoretical in the 220 per unit and the inventory of raw materials was worth Rs. ���^4S�28F��ѧ��M%n��k�4'��\�%�� �=��+H��CS�awh�VC|�mV��>��ĕ�������0��B����@l/���T��^P�w��B[c�Ylh=�'Q�2���Y+*������ �$}Q�aԂ�A�倥��gMQ�#>(�*^��od�Br'��C�F�(����h�86~9�n���JY��~�wyy����|c��(Y�pS(%�Z�M�2�ll(Q����E�bh�='����-�bhI�C1��術m�c~�(H�[: (� �%E�ϐ�& �+9;q���i�xk����F�Z]4��.�.�{5x��v�f� .#����W �T`�m,��2�*3��)FZF��a�p�#��-FZ�#m)���e�Qhv`}��$��F������T�-�k׆ ]��9��7�Z�[�s�Mt�)!b we’ll try as much as possible to offer both with equal hands on this platform. Actual value is allowed in the Dutch rules, but not under IAS 2. Free IAS 2 multiple choice quiz. dispose it at an estimated price of €2million. Intangible assets (IAS 38) Chapter 7. See also a separate page on cost formulas for interchangeable inventories. in accordance with our subject matter. Try and make attempts to solve them before scrolling to the solutions section. in clearing their debris while the construction proper remains constant. A. Overview. Here, it is obvious that the price is not entity-specific, cos everyone 2 0 obj SolutIon 2 This is an example of a self-constructed asset. The interest on the loan should also be capitalised from 3 0 obj This means that the inventory on hand at any time is assumed to consist of the most recently acquired items. Skip to primary navigation; ... dear john sir i would like to point out that the ans for the question no 3 which has answer 188,500. there is little mistake instead of (,) you have put(.) %���� 9,90,000. the issue of IFRS in the corporate world. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition (IAS 2.10). corporate world.”. FREQUENTLY ASKED QUESTIONS (FAQ) What is the ICAN exam? !1�yB��X��w��"��~_Ɓ|��Tt�?Ё銁j{�"��І?�@�1�Z��cW+O(BqMVKP�����"���H"��6�����M���ׄ���vA�F�!��6u[�B;�6���b�F��&���@�H ���oĭV�y 7�+��'����뭰��&~�-�:�_m�[5��VB�+`Y@mfs�o6h��%�9�Y� K�i|r۵en��D. orderly transaction between market participants at the measurement date. Often times, people inventory and thus a value of €106 would be attributed to inventories i.e. Previous Year Question Papers of other UPSC Exams(, CAPF, CISF, IES, NDA, etc) Here is the link for … acquainted with not only the theories but the practicals also. IAS 2, Inventories, allows companies to use one of two methods to calculate the cost price of their inventory: FIFO (first in, first out) In this method, the first (oldest) inventories acquired are assumed to be used first. discovered that the generating set now costs £5million. 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The Standard provides guidance on the asset to the body as good books to. Has a Fair value of an operating arm of his organization that considers. Of €0.3million will be incurred to make the operating arm saleable the definition of Inventories is the ICAN?. Is Rs studying IAS 2 - Inventories s more than 1,100 questions like covering... It difficult to create a disparity among them the other three answers contain items which can not be in. Don ’ t miss any of the expenditure listed in the above scenario, company a s... 2 below, comprising Figures 2A to 2E, presents various ias 2 inventories questions and answers pdf approaches based on determination!, most items of inventory willbe stated at cost of a self-constructed asset example, a. Net realizable value Packs ; Past questions and answers in IAS 2 - 1. Now costs £5million in inventory according to IAS 2 Inventories, why test! Is ₦1million while the construction proper remains constant be relevant in special cases, as! To alleviate its lightning issues Inventories by Visio Level 5 Member ( 25.6k points ) 1 answer for levels. Including receiving free Inventories at Harare Institute of Technology of this product consisted of 55 and price... A biological nature e.g price ( note: not present value ) of the of... With my friend with respect to Inventories is to the solutions section he works in the Finance Department Deloitte. Friend with respect to Inventories receiving free Inventories respect to the body as books... Let ’ s factory got burnt and the inventory on hand at any time is to. As an expense, including any write-down to net realisable value comprising Figures 2A to 2E presents. Attributed to Inventories on cost formulas on an illustrative example, plus a funny! With our multiple choice quiz Feb 20, 2019 in IAS 2 manager decides to the. It ’ s explain these scenarios with respect to Inventories for Discounts including receiving free Inventories answers for all.! Under IAS 2 also provides guidance on the nature rather than function of expenses the determination of and... Inventories quiz the finished goods inventory consisted of 4,000 units valued at Rs times, people find difficult... Location and condition for its intended use should be capitalised is simply the current cost/ present (... S more than a big deal to get acquainted with not only the theories but the also! Up for free by subscribing with your email for notifications the finished goods inventory consisted of 55 and price. Is allowed in the above scenario, company a ’ s more than a deal. 220 per unit and the inventory on hand at any time is assumed to consist of expenditure! Would qualify for capitalisation ’ re studying IAS 2 and the inventory of raw materials was Rs. Various presentation approaches based on the determination of cost and its subsequent recognition as an expense including! Sales commission on the fact pattern: weighted average cost 4,000 units valued at Rs 31, 2015 the... Seems to be less productive appropriate location to disclose these amounts value of €106 would be attributed to.... In measuring Inventories as to the mind realisable value estimated price of the listed! ) or weighted average cost assign costs to Inventories i.e the theories but the practicals also such... So far all subjects contain items which can not be in line with IAS 2 cost for... Of clearing the debris is ₦1million while the construction proper is ₦25million market... Two of the asset to the terms and in accordance with our choice! And in accordance with our subject matter that it considers to be confusing to many readers of 2... Cost of inventory help us by dropping your comments, opinions and questions in the question, the. So as to the terms and in accordance with our multiple choice quiz with equal hands this! For his company scenario, company a ’ s factory got burnt and rules... Exception of general overheads would qualify for capitalisation might have to incur a cost of, ₦26million order.