6.5 A retailer has the following purchases and sales of a particular product line:

Units Purchase Units sold Selling price purchased price per unit per unit EUR EUR 2 December 100 500 60 530 16 December 60 503 80 528 30 December 70 506 50 526 14 January 50 509 70 524 28 January 80 512 50 522 11 February 40 515 40 520 On 28 February the inventory was 150 units. The cost of inventories is determined on a FIFO basis. Selling and distribution costs amount to 5 per cent of selling price and general administration expenses amount to 7 per cent of selling price.

(a) State three reasons why the net realisable value of inventory may be less than cost.

(b) Calculate to the nearest euro the value of inventory at 28 February:

(i) at cost

(ii) at net realisable value

(iii) at the amount to be included in the financial statements in accordance with IAS 2 – Inventories.