The Inventory Record of Palm Springs Plc Shows 1000 Surf

question 16

Multiple Choice

The inventory record of Palm Springs Plc shows 1000 surf boards on stock that cost €50 each.During the last stocktake,the accountant noted 100 old style surf boards with net realisable amount of €15.What journal entry would be required of Palm Springs to comply with IAS 2?

• A) \[\begin{array} { | c | l | l | l | }
• \hline \mathrm { Dr } & \text { Ending inventory } & 1500 & \\
• \hline \mathrm { Cr } & \text { Cost of sales } & & 1500 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | l | l | l | }
• \hline \mathrm { Dr } & \text { Ending inventory } & 1500 & \\
• \hline \mathrm { Cr } & \text { Asset revaluation reserve } & & 1500 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | l | l | l | }
• \hline \mathrm { Dr } & \text { Impairment loss } & 1500 & \\
• \hline \mathrm { Cr } & \text { Ending inventory } & & 1500 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | l | l | l | }
• \hline \mathrm { Dr } & \text { Impairment loss } & 1500 & \\
• \hline \mathrm { Cr } & \text { Asset revaluation reserve } & & 1500 \\
• \hline
• \end{array}\]

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Definitions:

Formal Operations

The stage of cognitive development, according to Piaget, starting around age 12, where individuals develop the ability to think abstractly, logically, and systematically.

Moral Development

A process that continues throughout a person's life, concerning the formation and understanding of what is right and wrong, and the application of this understanding to real-life situations.

Kohlberg's Theory

A theory of moral development proposed by Lawrence Kohlberg, suggesting that individuals progress through a series of stages in understanding right from wrong.

Conventional Level

A stage of moral development in Kohlberg's theory where individuals' moral reasoning is based on conforming to social rules and norms.