Question 1

The following information refer to inventory item A of Company XYZ on December 31, Year 1.

Historical cost $200,000

Replacement cost $100,000

Estimated selling price $170,000

Estimated cost to complete and sell $20,000

Normal profit margin (as % of net realizable value) 20%

Instructions:

a) Determine the net realizable value (NRV) for inventory item A. Determine the lower-of-cost-or-net-realizable-value

(LCNRV) under IFRS.