Raw material "R" to be used for manufacturing of a product "P" cost AED 10. The total cost and selling price of P is AED 45 and AED 65 respectively. NRV of R is AED 7. At what value, R will be valued in financial statements?

Finished Product Cost = AED Forty Five

Finished Product Selling Price = AED Sixty Five

Raw Material Cost = AED Ten

Raw Material NRV = AED Seven

Now as Per IAS2

"Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost."

As Finished Product is expected to be sold above its cost price, we will record Raw Material at Cost i.e., AED Ten.

TEN is the answer for this question.

As per IAS -2 There is an exception to the basic rule "inventory should be valued at lower of cost or NRV"

The exception is given below:

IAS - Two.Thirty Two2.

Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

So in this scenario R would be recorded at cost which is AED ten.

According to IAS2, inventory should be valued at lower of cost or NRV. In this case, "R" should be valued at AED7 for  financial reporting purposes.

It depends on the accounting method, and the company's particular policies within the context of that method.

Or, to put it another way, what do you want it to be?