The Following Inventory Information Was Taken from the Records of GlobeKom

question 21

Multiple Choice

The following inventory information was taken from the records of GlobeKom Ltd.: $\begin{array}{lr}\text { Historical cost } & \$ 12,000 \\\text { Replacement cost } & \$ 9,000 \\\text { Expected selling price } & \$ 10,000 \\\text { Expected selling cost } & \$ 500 \\\text { Normal profit margin } & 10 \% \text { of selling price }\end{array}$
-Under IAS 2, what should the balance sheet report for Inventory?

• A)$9,000
• B)$8,500
• C)$9,500
• D)$10,000

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Definitions:

Stock Dividend

A form of dividend payment made in shares rather than cash, which increases the number of shares held by each shareholder.

Retained Earnings

The portion of a company's accumulated net income that is not distributed to shareholders as dividends but is kept as reserves for reinvestment in the business operations.

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash.

Fair Value

An estimate of the price at which an asset could be bought or sold in a current transaction between willing parties, not in a forced or liquidation sale.