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# MGT401 Financial Accounting II Assignment 01 Fall 2020 Solution / Discussion

MGT401 Financial Accounting II Assignment 01 Fall 2020 Solution / Discussion

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MGT401 Assignment#01 Solution

MGT401_Assignment_No_01_Solution_Fall_2020

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MGT401-Assignment-No. 1-2020

MGT401 Assignment#01 Solution Fall 2020

MGT401_Assignment_No_01_Solution_Fall_2020

MGT401 Financial Accounting II
Assignment #01
Due date 8th December, 2020 Marks: 10

Question # 01

From the following information of a company you are required to calculate the NRV of the inventory and answer the questions mentioned in requirement.

• Partially completed inventory item at the year end.
• Expected selling price of the item when completed is Rs. 2,600.
• A further cost of Rs. 500 is required to complete the item
• Expected selling cost of the item is Rs. 100

Required:

1. What will be the carrying value of the inventory item if the cost incurred to date is Rs. 1,000?
2. What will be the carrying value of the inventory item if the cost incurred to date is Rs. 4,500?

Question # 2

Keeping in mind the disclosure requirements of IAS 02, you are required to enlist the methods of stock valuation.

# MGT401 Financial Accounting-II Assignment 1 solution, Fall 2020, virtual university vu ,

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MGT401 Assignment#01 Solution

MGT401_Assignment_No_01_Solution_Fall_2020

# MGT401 Assignment Solution # 1 Fall 2020

MGT401 Assignment No. 1 2020

Question No.1
What will be the carrying value of the inventory item if the cost incurred to date is
Rs. 1,000.

Stock is cost or NRV which ever is lower

So,
Cost = 1,000

Net realizable value (NRV) = 2,600-(500+100) = 2,000

So,

Value of stock = 1,000 as cost is lower of NRV

What will be the carrying value of the inventory item if the cost incurred to date is
Rs. 4,500.

Stock is cost or NRV which ever is lower

Cost = 4,500

Net realizable value (NRV) = 2,600-(500+100) = 2,000

So,

Value of stock = 2,000 as NRV is lower of cost

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