文档介绍：Valuation Bases
LO 2 Explain panies value inventories realizable value.
Special Valuation Situations
Departure from LCNRV rule may be justified in situations when
cost is difficult to determine,
items are readily marketable at quoted market prices, and
units of product are interchangeable.
mon situations in which NRV is the general rule:
Agricultural modities held by broker-traders.
Valuation Bases
LO 2 Explain panies value inventories realizable value.
Agricultural Inventory
Biological asset (classified as a non-current asset) is a living animal or plant, such as sheep, cows, fruit trees, or cotton plants.
Biological assets are measured on initial recognition and at the end of each reporting period at fair value less costs to sell (NRV).
Companies record gain or loss due to changes in NRV of biological assets in e when it arises.
NRV
Valuation Bases
LO 2 Explain panies value inventories realizable value.
Agricultural Inventory
Agricultural produce is the harvested product of a biological asset, such as wool from a sheep, milk from a dairy cow, picked fruit from a fruit tree, or cotton from a cotton plant.
Agricultural produce are measured at fair value less costs to sell (NRV) at the point of harvest.
Once harvested, the NRV es cost.
NRV
Valuation Bases
LO 2 Explain panies value inventories realizable value.
Illustration: Bancroft Dairy produces milk