IFRS Defines Net Realizable Value for Lower-Of-Cost-Or Net Realizable Value

question 40

Multiple Choice

IFRS defines net realizable value for lower-of-cost-or net realizable value as

• A)estimated selling price less costs to complete and sell.
• B)estimated selling price in the normal course of business.
• C)net market value.
• D)replacement cost less costs of disposal.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable costs are subtracted, showing what's left over to cover fixed costs and generate profit.

Sales Volume

This refers to the total number of units of a product or service sold over a specific period.

Account Analysis

A method for analyzing cost behavior in which an account is classified as either variable or fixed based on the analyst’s prior knowledge of how the cost in the account behaves.

Mixed Cost

An expense that contains both fixed and variable components, changing in total with the level of activity though containing a constant element.