IAS 2 Requires That Inventory Is Valued At

question 45

Multiple Choice

IAS 2 requires that inventory is valued at:

• A)the lower of cost and recoverable value, on an item-by-item basis where practicable.
• B)cost or fair value for classes of assets and services that are defined as inventories.
• C)the lower of cost and net realisable value, on an item-by-item basis where practicable.
• D)cost or deprival value, whichever is the lower, for classes of inventories.

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Definitions:

Consumption

The use of goods and services by households, referring to the final purchase of products for direct use or ownership.

Externalities

Costs or benefits that affect parties who did not choose to incur that cost or benefit.

Produced

Refers to goods or services that have been created as a result of a manufacturing or production process.

Coase Theorem

An economic theory proposing that under conditions of no transaction costs, parties can negotiate and arrive at efficient resource allocation and solution to externalities regardless of initial property rights allocation.