IFRS for SMEs) IFRS for SMEs Inventory and Cost

Question 1

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

Accepted Answer

LIFO (Last-In, First-Out)

Answer

FIFO (First-In, First-Out)

Answer

Weighted average cost

Answer

Specific identification

Question 2

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

Accepted Answer

Cost and net realizable value

Answer

Cost and fair value

Answer

Fair value and replacement cost

Answer

Net realizable value and replacement cost

Question 3

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

Accepted Answer

Purchase price plus import duties and conversion costs

Answer

Purchase price only

Answer

Selling and distribution costs

Answer

Administrative overhead only

Question 4

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

Accepted Answer

Excluded from the cost of inventories and recognized as an expense

Answer

Included in conversion costs

Answer

Added to prime costs

Answer

Deferred until the inventory is sold

Question 5

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

Accepted Answer

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

Answer

Defer the loss until the inventory is sold

Answer

Record as a direct reduction in equity

Answer

Capitalize as part of cost of goods sold

Question 6

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

Accepted Answer

Trade discounts received

Answer

Import duties

Answer

Non-refundable purchase taxes

Answer

Freight and handling costs