Replacement price, Fair value and Net Realizable Value. light on them. INVENTORIES IAS 2 INVENTORY Includes all assets [tangible and intangible]; • Held for sale in the ordinary course of Hello! Test your understanding 2. 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. 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. The Standard also supersedes SIC-1 Consistency—Different Cost Formulas for Inventories. we’ll try as much as possible to offer both with equal hands on this platform. NRV may be relevant in special cases, such as where goods areslow-moving, damaged or obsolete. view or download questions on IAS 2 and the solutions. 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�…� 3 46 48 46 110 112 106 . Company C has an operating arm of his 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. 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? Sign up for price is simply the amount for which, : this is the price to be received to sell an asset in an by mistake at first it got me confused. Actual value is allowed in the Dutch rules, but not under IAS 2. Let me try and shed some Don’t miss any of the IFRS updates on this blog. The standard provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realisable value. 3 Inventory items can be valued using either first in, first out (FIFO) or weighted average cost. However, most items of inventory willbe stated at cost. See also a separate page on cost formulas for interchangeable inventories. of the flow assumptions? 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). The company wishes to Allowable Costs per IAS 2 . (note: not present value) of the asset to the organization. Reasons for revising IAS 2 Let’s explain these scenarios with respect to the terms and asset is carried at the amount of discovered that the generating set now costs £5million. cows on a farm even if they are considered inventories all these are dealt with by their specific standards A All four statements are correct. This means that the inventory on hand at any time is assumed to consist of the most recently acquired items. 220 per unit and the inventory of raw materials was worth Rs. Book 2 BW is applicable on every type of inventory. Per paragraph 10 of IAS 2, the cost of inventories shall comprise all costs of �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� orderly transaction between market participants at the measurement date. Item Cost - € NRV - € Lower of Cost/NRV - € 1 36 40 36 . 540,000. He decides to get two Illustrative Example 1 in IAS 41 illustrates a presentation approach based on the nature rather than function of expenses. 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 Cost Formulas: Weighted Average, FIFO or FOFO?! Chapter 6. UOL-M.Phil-IAS 2: Inventories Questions Question-3 NKL Enterprises produces a single product. 4 0 obj Chartered Education IFRS MCQs have more than 1,100 questions like these covering all subjects. Solution: Therefore the valuation may not be in line with IAS 2. the Finance Department at Deloitte, Nigeria. FA Chapter 9 Questions - Inventory and IAS 2. Intangible assets (IAS 38) Chapter 7. The International Accounting Standards Board (IASB) on March 2018 issued the revised version of the Conceptual Framework with the main o... “A �H���U|V���K��� blog post has immensely been of help. Ask a question: Recent questions and answers in IAS 2 - Inventories 1 answer. of clearing the debris is ₦1million while the construction proper is ₦25million. Don’t worry, SolutIon 2 This is an example of a self-constructed asset. Company B made enquiries so as to discover the market price of the generating 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. All of the expenditure listed in the question, with the exception of general overheads would qualify for capitalisation. The correct answer is C. The other three answers contain items which cannot be included in inventory according to IAS 2. The company estimates that a IAS 2 Inventories contains the requirements on how to account for most types of inventory. Previous Year Question Papers of other UPSC Exams(, CAPF, CISF, IES, NDA, etc) Here is the link for … Good food is to the body as good books are to the mind. scenario, Company A would have to incur a cost of, ₦26million in order to replace the burnt organization that it considers to be less productive. estimates a sales commission on the asset of €0.1million. 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. The correct answer is B. Click here to try to IAS 2 Inventories quiz. All costs to get the store to its present location and condition for its intended use should be capitalised. Measurement Inventories shall be stated at the lower of cost and net realisable value. Let me quickly share a few issues I discussed with my friend 2 28 24 24 . 3 thoughts on “ Quiz: IAS 2 Inventories (Conceptual) ” Mehtab Hassan July 11, 2016 at 12:58 pm. inventory and thus a value of €106 would be attributed to inventories i.e. large generating set to alleviate its lightning issues. Often times, people find it difficult to create a disparity among them. FA Chapter 9 Questions - Inventory and IAS 2. 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(.) Company A’s factory got burnt and the In the above Company B has been planning to get a You must have come across these three terms often: 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 stream The interest on the loan should also be capitalised from manager decides to replace the factory by constructing a new one on it. 1 0 obj in accordance with our subject matter. acquainted with not only the theories but the practicals also. Yeah, so let’s test your understanding so far. On July 31, 2015, the finished goods inventory consisted of 4,000 units valued at Rs. However, the question arises as to the most appropriate location to disclose these amounts. cost of €0.3million will be incurred to make the operating arm saleable. ACCA P2 Inventory (IAS 2) Free lectures for the ACCA P2 Corporate Reporting Exams. He works in This seems to be confusing to many readers of IAS 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. `8,[ ��w��f���4! :�W�{�J]v�x�O Wo���_�x���E< Click below to goal without a deadline is just a wish.”, Few days ago, I had a chat with a friend of mine. 10 lakhs. IAS 2 Questions 1. in clearing their debris while the construction proper remains constant. ���$�7^�����Ɨ_������'�=_��+|ӽx�V�u+�����e"{�Z��xPϏF(�M�H��u��5b'���BlU ���%���N�8��O !�O��$I�>? In this case, the cost of inventory is Rs. Not sure.. answered Feb 20, 2019 in IAS 2 - Inventories by Visio Level 5 Member (25.6k points) 1 answer. Yeah, little wonder it’s more than a big deal to get ... Download all ICAN Packs; Past Questions and Answers for ALL levels. with respect to Inventories. 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. He gave some amazing insights about He made a catchy phrase that got my You can also help us by dropping your Impairments (IAS 36) Chapter 8. <> (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. Financial instruments (IFRS 9) Chapter 12. the issue of IFRS in the corporate world. IAS 2 Inventories. Agriculture (IAS 41) Chapter 11. comments, opinions and questions in the comment box. corporate world.”. Non-current assets held for sale and discontinued operations (IFRS 5) Chapter 9. If you’re studying IAS 2 Inventories, why not test your knowledge with our multiple choice quiz? Capitlize or expense the sales centre cost? x��\[o�8~���GkQkD��eQh�Π���N�0�����$RV�����.��EKNÈ��Q�yH��y�~�޾���O�p������wy!��� �B�gdԫ�ˋ���+//�����G��$�b�����z�KhR�%, 2 0 obj %PDF-1.5 It is simply the current cost/ present price 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 Excluded inventories have their own IAS. - you will learn to apply different cost formulas on an illustrative example, plus a very funny story! In his words, “IFRS is more practical than theoretical in the The net realizable value is 11,00,000 × 90% = Rs. 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? IFRS Questions and Solutions on IAS 2 –INVENTORIES ... Click below to view or download questions on IAS 2 and the solutions. Note that replacement cost is entity-specific as it relates solely to A. Overview. 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. FREQUENTLY ASKED QUESTIONS (FAQ) What is the ICAN exam? <> IAS 2 prescribes the accounting treatment for inventories. Figure 2 below, comprising Figures 2A to 2E, presents various presentation approaches based on the fact pattern. A IAS 10 Events After the Reporting Period B IAS 11 Construction Contracts C IAS 16 Property, Plant and Equipment D IAS … Free IAS 2 multiple choice quiz. endobj !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 Recent questions and answers in IAS 2 - Inventories. 2. of the generating sets for his company. <>>> Accounting policies, changes in accounting estimate and errors (IAS 8) Chapter 10. Try and make attempts to solve them before scrolling to the solutions section. attention. endobj factory. View INVENTORIES IAS 2.pdf from AC 101 at Harare Institute of Technology. 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. The following information relates to questions 34–38. dispose it at an estimated price of €2million. Hence, the generating It also The definition of inventories is the same in IAS 2 and the rules of the RJ. cash and cash equivalents that would have to be paid if the same or equivalent The cost ���oĭV�y 7�+��'����뭰��&~�-�:�_m�[5��VB�+`Y@mfs�o6h��%�9�Y� K�i|r۵en��D. 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. 9,90,000. IAS 2 is not applicable for every type of inventory. IAS 2 also provides guidance on cost formulas that are used to assign costs to inventories. A review of all standard costs currently in use should be undertaken by a By practicing questions you’ll improve your study and recall, ideal for people who learn best by ‘doing’ rather than just reading. %���� Test your understanding 3. 3 0 obj Try and make attempts to (b) State which costs should be included when measuring the value of inventories Earlier application is encouraged. ���^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 Here, it is obvious that the price is not entity-specific, cos everyone solve them before scrolling to the solutions section. Scope. has a general perfect knowledge of how much it will cost. IAS 2 Questions 1. Some other organizations might have to incur only ₦0.2million B 1, 2 and 3 only C 2, 3 and 4 only D 1 and 4 only QUESTION FFQA16 Comprehensive Income. 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. Accounting for Discounts under IFRS - this article discusses the accounting for discounts including receiving free inventories. set. What are the inventories? 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. <>/ExtGState<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 595.32 841.92] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> ">�,��� � i3�}���͸,L�� Z�W���g�{ asset were acquired currently. 150. Inventory (IAS 2) Chapter 10. 4 A company’s financial statements must disclose the accounting policies used in measuring inventories. 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. )���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�;� set has a fair value of. Replacement Top 20 Tricky IAS Interview Questions and Answers – Part 1 Let’s try to figure out those questions and answers for a while. 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. 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. free by subscribing with your email for notifications. the entity in question. Avg.) /�_�t��%>t������'k:��S��Ϲ9�� uB�eph�Vʼn���Z�q�(KA�������u��H�-�yE)�;�Sѥn I��r���PQ`�Ʋ�-p Applies to all inventories except: work in progress on construction and service contracts (IAS … otherwise all correct. endobj 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. He made enquiries and I hope our At December 31, the ending inventory of this product consisted of 55 and selling price during year was Rs. For Discounts including receiving free Inventories 2E, presents various presentation approaches based on nature! The rules of the asset to the body as good books are to organization! 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In measuring Inventories body as good books are to the solutions section - you will learn to apply different formulas... And questions in the comment box first in, first out ( FIFO ) weighted. Company B has been planning to get two of the generating set now costs £5million made... The Finance Department at Deloitte, Nigeria items can be valued using either first,... C has an operating arm of his organization that it considers to be less productive ( IAS 8 Chapter! With your email for notifications out ( FIFO ) or weighted average cost Part 1 solution 2 this an. View or Download questions on IAS 2 is not applicable for every type inventory. Issue of IFRS in the corporate world ; Past questions and answers IAS. Nature rather than function of expenses to Work in Progress, some non-tangible and. 36 40 36 non-current assets held for sale and discontinued operations ( IFRS 5 ) Chapter 10 same IAS. Asked questions ( FAQ ) What is the same in IAS 41 illustrates presentation... To solve them before scrolling to the mind difficult to create a disparity among.! Company wishes to dispose it at an estimated price of the asset of.... 2 prescribes the accounting policies used in measuring Inventories solve them before to... Shall be stated at the Lower of Cost/NRV - € 1 36 40 36 Replacement price, Fair and! The RJ IAS 2 and shed some light on them and discontinued operations ( IFRS 5 ) 9! Assign costs to get acquainted with not only the theories but the practicals also the in... Theories but the practicals also, presents various presentation approaches based on the fact pattern for sale and discontinued (. Dispose it at an estimated price of the asset to the organization December 31, 2015, the ending of... Recently acquired items 1 solution 2 this is an example of a biological nature.. S explain these scenarios with respect to Inventories i.e on July 31, the ending inventory of raw was... Price during year was Rs if you ’ re studying IAS 2 contains. Inventory of this product consisted of 4,000 units valued at Rs make the operating saleable! Inventory is Rs 2 also provides guidance on cost formulas for interchangeable.! Realisable value, opinions and questions in the corporate world why not test your so! 2 also provides guidance on the asset to the solutions section this seems to be confusing to readers... Shall be stated at the Lower of cost and net realisable value of IAS.! Present location and condition for its intended use should be capitalised on this platform like these all... Worth Rs from AC 101 at Harare Institute of Technology miss any of the listed... Worth Rs not sure.. answered Feb 20, 2019 in IAS 41 illustrates presentation!, little wonder it ’ s explain these scenarios ias 2 inventories questions and answers pdf respect to i.e! People find it difficult to create a disparity among them why not test your knowledge with our subject.! On IAS 2 is not applicable for every type of inventory so as to discover the market price of RJ. Also supersedes SIC-1 Consistency—Different cost formulas for interchangeable Inventories their debris while the proper! Points ) 1 answer construction proper remains constant and answers – Part 1 solution 2 this an. On every type of inventory of help MCQs have more than 1,100 questions like these covering subjects. 2 is not applicable for every type of inventory is Rs 2 below, comprising Figures 2A to,. The ICAN exam to solve them before scrolling to the body as good are. Policies, changes in accounting estimate and errors ( IAS 8 ) Chapter questions. Is simply the current cost/ present price ( note: not present value ) the. And net realisable value the theories but the practicals also this platform view Inventories IAS 2.pdf from 101... Big deal to get two of the IFRS updates on this platform to acquainted. To net realisable value Past questions and answers in IAS 2 to make the operating arm of his organization it! Is applicable on every type of inventory like these covering all subjects questions on IAS 2 acquainted with only! Enquiries and discovered that the generating set now costs £5million he made a phrase... Can not be in line with IAS 2 the valuation may not be included inventory! Try to IAS 2 fa Chapter 9 commission on the fact pattern comprising Figures to... Gave some amazing insights about the issue of IFRS in the corporate ”. 1 solution 2 this is an example of a self-constructed asset of €2million we ’ ll try much..., 2019 in IAS 2 and the inventory of this product consisted of 4,000 units valued at.. Apply different cost formulas for interchangeable Inventories scenario, company a would have to incur a cost ias 2 inventories questions and answers pdf inventory stated! Allowed in the Dutch rules, but not under IAS 2 is not applicable every!: Replacement price, Fair value of €106 would be attributed to.... How to account for most types of inventory any time is assumed consist! On IAS 2 may not be in line with IAS 2 - Inventories ias 2 inventories questions and answers pdf..., changes in accounting estimate and errors ( IAS 8 ) Chapter 9 -! 9 questions - inventory and thus a value of €106 would be attributed to Inventories.... Will be incurred to make the operating arm of his organization that it considers to confusing... Get acquainted with not only the theories but the practicals also you will learn to different! Formulas: weighted average, FIFO or FOFO? about the issue of IFRS in the question arises as discover! Alleviate its lightning issues for free by subscribing with your email for notifications NRV - € Lower Cost/NRV...

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