AASB 102 Inventories Requires That When Inventories Are Written Down

question 27

Multiple Choice

AASB 102 Inventories requires that when inventories are written down to net realisable value, they are written-down:

• A) on a class-by-class basis;
• B) on the basis of industry segment;
• C) on an item-by-item basis;
• D) according to geographical segment within the entity.

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Definitions:

Ordering Costs

The expenses associated with placing orders for additional inventory, including administrative costs and transportation.

Carrying Costs

The total cost of holding inventory, including storage, insurance, taxes, and opportunity costs.

Cycle Counting

A method of inventory verification where a select portion of the stock held in a particular area is tallied on a predetermined day.

Inventory Records

Documentation of the quantities, locations, and statuses of products or materials that a company holds in stock.