Based on the fundamental principle of IAS2, identify two (2) circumstances where the NRV of inventory might be lower than its cost? (2 mks)

Recognition: Items should be recognized in the financial statements when they meet the criteria for recognition.

Measurements: Items should be measured at their fair value.

B.

Massy Distribution Center (MDC) had 500 boxes of IGA Cornflakes at 30 September 2022 in inventory. The product had been purchased at list price of $18 per box and normally sells for $24 per box.

Additional information relating to the units in inventory: VAT 10%; wharehousing cost - $0.55 per unit; purchase discount - $0.40 per unit; carriage inwards - $0.60 per unit.

Recently , due to poor handling and storage, several boxes appeared less than presentable, however the contents were not compromised and MDC can still sell this item at $24 per unit, provided that some rectification/re-packaging work is undertaken at a cost of $3 per unit.

Required:

At what amount would these IGA Cornflakes be required to be stated on 30 September 2022?

Provide detailed analysis to support your answer. (6 marks)