FRS 2: Inventories

FRS 2: Inventories

Didn't find your answer?

Wonder if anybody could help me with this problem.

Client uses FIFO for stock control.

1) Buys 100 units for $100/unit on 1st Jan.

2) Sells 100 units on 1st Feb.

3) Buys 100 units for $50/unit on 1st Mar

4) Sells 100 units on 1st Apr

5) Stock (100 units) sold on 1st Feb is returned.

What is the valuation of the stock on the balance sheet?

Is it $10,000 or $5,000?

Thanks in advance.

Sorry to hear about the London subway blast today, hope the incident didn't ruin too many lives. May God guide those killed in the blast to heaven.
Yet Kek Hong

Replies (3)

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By listerramjet
12th Jul 2005 07:18

volatility
with such a widely fluctuating price you would have to question the validity of FIFO

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By AnonymousUser
08th Jul 2005 19:32

ditto
The goods are not faulty, they could have made a wrong order.

That's what I think the value ($5,000) should be also. However my boss, who's a qualified CA, thinks it's $10,000.

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By User deleted
08th Jul 2005 14:56

FRS2: Inventories
£Nil- as the inventory has been returned it may be faulty!!

But on a more serious note, one would think £10,000 as that is the price of the actual stock now held, however, NRV would have to be considered and hence a more reasonable current price of £5,000 should be applied.

A purpose of FIFO is to help ensure that the stock valuation reflects the most current valuation.

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