Page 19 - FINAL CFA I SLIDES JUNE 2019 DAY 8
P. 19
Session Unit 8:
28. Inventories
LOS 28.g: Describe the measurement of inventory at the lower of cost and net realisable
value., p. 191
Action
IFRS Lower of Cost and NRV NRV = Selling prices • Otherwise, write down (use
less estimated valuation allowance a/c) and take
selling and loss to Income statement
completion costs. • Write up and gain to reduce COGS
tanties But you can never write up above
•
write up by more than previous
write down, otherwise you violate
‘lower of cost of NRV’
US GAAP • IF FIFO: Lower of Cost
and NRV
• If LIFO/Retail Method Market equal to Similar action as above!
• Lower of Cost and NRV replacement cost
but cannot NRV or
less than NRP –
normal profit margin
