Page 15 - FINAL CFA I SLIDES JUNE 2019 DAY 8
P. 15
LOS 28.g: Describe the measurement
Session Unit 8:
of inventory at the lower of cost and
28. Inventories
net realisable value., p. 191
IFRS:
Lower of cost and NRV ($225-$22 = $203)
Write down $7 to Income statement ($210-203)
tanties
US GAAP
Write down $13 to income statement ($210-$197)
US GAAP:
Lower of Cost or market, where:
Market = replacement cost as long as Replacement Cost ($197) < NRV ($203) and > NRV
less normal profit margin (191 = $203 - $12).
• If RC > NRV, then market is NRV
• If RC < NRV less normal profit margin, then market is NRV minus normal profit margin.
