11. The measurement rule for inventories, mandated by AASB 102 : 2102203
11. The measurement rule for inventories, mandated by AASB 102 Inventories, is:
a. lower of fair value and selling price;
b. lower of cost and net realisable value;
c. higher of initial cost and realisable value;
d. higher of completion costs and replacement costs.
12. ‘Net realisable value’ of inventory is defined as the net amount that an enterprise expects to realise from the sale of the inventory:
a. in the ordinary course of operations less estimated costs of completion and costs necessary to make the sale;
b. plus the estimated costs of completion plus the estimated costs necessary to make the sale;
c. in a forced sale;
d. plus the estimated costs of completion.
13. Net realisable value of inventories may fall below cost for a number of reasons including:
I Product obsolescence.
II Physical deterioration of inventories.
III An increase in the expected replacement costs of the inventory,
IV An increase in the estimated costs of completion.
a. I, II and IV only;
b. I, III and IV only;
c. II, III and IV only;
d. I and II only.
14. When determining the net realisable value of inventory, estimates must be made of the following:
I Estimated costs of completion (if any).
II Expected replacement cost.
III Expected selling price.
IV Estimated selling costs.
a. I, II, III and IV;
b. I, II and III only;
c. II and IV only;
d. I, III and IV only.
15. AASB 102 Inventories requires that when inventories are written down to net realisable value, they are written-down:
a. on a class-by-class basis;
b. on the basis of industry segment;
c. on an item-by-item basis;
d. according to geographical segment within the entity.