Simple example. Property developer building one house which is sold just after year end with majority of costs in first year.
Should Work In Progress merely be at "lower of cost or NRV", or including overhead allocation or should attributed profits be included ?
If profits should be included on what basis ? Time, Pro-rata to build costs?
Note no actual stage valuations were carried out.
If WIP is on lower of cost or NRV then a loss will be made in the first year and all the profits in the second year so does this really present a "true and fair view" ?
Any comments welcome.