Where the Net Realisable Value of Inventories Falls Below Cost

question 5

Multiple Choice

Where the net realisable value of inventories falls below cost, AASB 102 Inventories requires that:

• A) inventories continue to be carried in the statement of financial position at cost.
• B) inventories be written down to net realisable value.
• C) no adjustment be made, but the difference between net realisable value and cost be disclosed in the notes to the financial statements.
• D) the difference be added to the carrying amount of the inventories.

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Definitions:

System-1 Decision

Fast, automatic, intuitive responses or decisions, as categorized by dual-process theory in cognitive psychology.

Deliberating

The process of thoughtfully considering various aspects or options before making a decision.

System-1 Thinking

A fast, automatic, intuitive, and emotional way of thinking and decision-making, contrasted with more deliberate and logical System-2 thinking.