IFRS for SMEs Inventory and Cost Flashcards

Under IFRS for SMEs, which cost formula is NOT permitted for measuring inventory?

Answer: LIFO (Last-In, First-Out)

IFRS for SMEs prohibits the use of the LIFO cost formula for inventory measurement.

Under IFRS for SMEs, inventory is measured at the lower of:

Answer: Cost and net realizable value

Section 13 of IFRS for SMEs requires inventory to be measured at the lower of cost and net realizable value.

Which costs are included in the cost of inventories under IFRS for SMEs?

Answer: Purchase price plus import duties and conversion costs

The cost of inventories includes purchase costs (including import duties and non-refundable taxes) and conversion costs.

Under IFRS for SMEs, abnormal waste of materials in production should be:

Answer: Excluded from the cost of inventories and recognized as an expense

Abnormal amounts of wasted materials, labor, and other production costs are excluded from inventory cost and recognized as expense in the period incurred.

How does IFRS for SMEs require an entity to account for a write-down of inventory to net realizable value?

Answer: Recognize as an expense in the period the write-down occurs

Under IFRS for SMEs Section 13, write-downs of inventory to net realizable value are recognized as an expense in the period.

Which of the following is NOT included in the cost of purchase of inventory under IFRS for SMEs?

Answer: Trade discounts received

Trade discounts and rebates are deducted in arriving at the cost of purchase, so they are not included in inventory cost.