IFRS for SMEs) IFRS for SMEs Inventory and Cost 1

Question 1

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

Accepted Answer

LIFO (Last-In, First-Out)

Answer

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

Question 2

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

Accepted Answer

Cost and net realizable value

Answer

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

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

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

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

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

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

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

IFRS for SMEs (IFRS for Small and Medium-sized Entities (SMEs)) Practice Test

IFRS for SMEs (IFRS for Small and Medium-sized Entities (SMEs)) Practice Test

IFRS for SMEs) IFRS for SMEs Inventory and Cost 1