Under IAS 2 (Inventories), how must inventory balances be valued on the balance sheet?
ALower of Cost and Net Realizable Value (NRV)
BHistorical Cost only
CReplacement Cost
DFair Value less Cost to Sell
Explanation
* IAS 2 mandates inventory valuation at Lower of Cost and Net Realizable Value (NRV).
* NRV = Estimated Selling Price minus Estimated Completion & Selling Costs.
* Reflects conservatism principle: write-down is recognized immediately if NRV falls below cost.
Exam Relevance
- Topic: Financial Accounting
- Subtopic: Inventories (IAS 2)
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