Question

The inventory of a motor vehicle dealer presents the following information at the end of the accounting period:

Cost Estimated costs before Expected selling price

of the sale

€€€

Vehicle 1 Vehicle 2 Vehicle 3 Vehicle 4

16,200 1,250 17,500 1,000 11,900 1,240 10,600 2,760

18,000 20,000 14,000 15,000

Dealer salespeople are paid a commission when they sell the vehicle. The commission is determined as 5% of the sale price.

Required: Determine the value at which each vehicle will be presented in the dealer's financial statements under IAS 2.

Answer 1

Vehicle 1	Vehicle 2	Vehicle 3	Vehicle 4
Estimated Selling Price	18,000	20,000	14,000	15,000
Less: Cost to Sells (5%)	900	1,000	700	750
Less: Cost to Complete	1,250	1,000	1,240	2,760
Net Realizable Value	15,850	18,000	12,060	11,490
Original Cost	16,200	17,500	11,900	10,600
Inventories the lower of cost or net realizable value per unit	15,850	17,500	11,900	10,600