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Which of the following is not a standard method of inventory valuation?

<p>a- First in First out</p> <p>b- Standard Cost</p> <p>c- Average Pricing</p> <p>d- Realizable Value</p> <p> </p>

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Question ajoutée par Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town
Date de publication: 2014/12/10
Lesley Lanag CMA CPA
par Lesley Lanag CMA CPA , Senior Accountant , Takaful Emarat Insurance (P.S.C)

D. Realizable Value (or Net Realizable Value)

The three valuation methods are (1) LIFO (2) FIFO (3)Weighted Average. (use of ACTUAL costs)

Standard cost is used as an alternative to cost layering systems such as LIFO and FIFO (uses ESTIMATED cost)

Inventories should be measured at the lower of cost or net realizable value (NRV). NRV is only a floor/ceiling to be considered in valuing and revaluing inventories.  

Shunmuga Vel Narayanan
par Shunmuga Vel Narayanan , Financial Accounts and Audit Manager , Sabapathy & Dhandapani, Chartered Accountant, Chennaiq

Option A

 

As per IAS2 the two methods allowed for Inventory valuation are FIFO and WAC (Weighted Average Costs). LIFO is not allowed. Standard cost method and Retail cost method may be used for convenience, if the results approximate the actual cost. Net Realisable Value (NRV) is the estimated selling price of the inventory as reduced by the estimated cost of completion and and the estimated cost of sale and this NRV is used for Inventory valuation when the carrying amount of the inventories exceeds it's NRV. In view of all this I think the odd one out from the above4 options is (D) Realisable Value as it's used for inventory valuation only when there's a lower NRV and higher carrying amount. 

 

Thanks Divyesh for the invitation :)

Faraz Sultan
par Faraz Sultan , Audit and Accounts Manager , Abdulla Al Mulla Auditing Of Accounts

D. Realisable Value is not a costing method. It is only the value the inventory should be brought down to in case of impairment , obsoletion and other damage. Hence, it only comes into play when the inventory is inspected for its carrying value.

 

Mir Mujtaba Ali
par Mir Mujtaba Ali , Internal Audit Manager , Confidential

D

 

Mohammed Salim Allana
par Mohammed Salim Allana , Compliance and Assurance Manager , United Arab Bank

D. Realizable value is the sale price of an asset and not the method of inventory valuation.

Syed Raza
par Syed Raza , Senior Staff Accountant , Arhur lawrence

i think average method is not standard method becaUSE mostly firms usess fifo method.

Basit Ali
par Basit Ali , Director of Engineering , Laverda Suites & Villas / Blue Bay Resorts

Option (D) Realizable Value

it's used for inventory valuation only when there's a lower NRV and higher carrying amount. 

d    answer                       - Realizable Value

 

SHAHID IMRAN
par SHAHID IMRAN , Finance Manager , Bilal Industries LLC

d- realizable value

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