Measurement of Product M2K in Accordance with Financial

School: Baptist Bible College - Course: GEOL 119 - Subject: Accounting

REVISION FOR FINAL MAB1053 INVENTORIES 1. Alexies Bhd is a company manufacturing automotive component for local and foreign market. As at 31 December 2018, the company has 1,000 units of product M2K in its list of inventories. The following information relates to the 1,000 units of product M2K: RM Cost of material purchased100,000 Cost of conversion120,000 Estimated selling price280,000 Estimated cost to be incurred to sell the product10,000 a.Determine the measurement of product M2K as at 31 December 2018 in accordance with the relevant Malaysian Financial Reporting Standards. (6 marks) b.List THREE (3) conditions that may lead to company writing down its inventories to net realisable value. (3 marks) c.Define net realisable value of inventory in accordance with MFRS102 Inventories. (3 marks) 2.A. Define 'cost' as applied to the valuation of inventory (provide examples) b.What is meant by the term 'net realisable value'? Is this the same as fair value? If not, why not? C. Explain the concept of lower of cost and net realisable value for inventory d. Total inventory at 31 December is RM 20 million. This includes damaged goods worth RM 3 million that now can be sold off at RM 1 million. Calculate the adjusted closing inventory value at 31 December. e. Cost of sale (shown in trial balance)RM 834,500 Closing inventoryRM 500,000 This includes RM 240,000 of slow-moving inventory that is expected to be sold for a net of RM 95,000. Show how will the above be reflected in the financial statement.

3. LNM buys pre-owned boats, recondition them and sells them, At the end of year 2, the following information is provided: BOAT XBOAT Y Cost of purchase5000030000 Cost incurred on reconditioning the boats1200025000 Cost yet to be incurred for the boats to be insaleable conditions (cost to complete) 1400014000 Selling price of reconditioned boats10000060000 Estimated selling expenses50004000 Required: Calculate the value of the boats as will be disclosed in the financial statements. 4. Basic buys and sells a number of finished goods. As at the of the year a stock take was done and the following stock take was done and the following data was obtained. ItemGroupsCostEstimated sellingpriceEstimated cost to sell RMRMRM 1A10018010 2A1501005 3B23027015 4B25038020 5C36030020 6C27044040 7C24026040 8D36038040 9D37036010 Required: Compute the value of inventory that will be disclosed in the statement of financial position