Question
A retailer holds seasonal fashion inventory purchased at
₹20 lakh. At year-end, expected selling price is ₹25 lakh, but estimated selling costs are ₹7 lakh because of heavy discounting and promotional spend required. The inventory has not yet been marked down. What is the correct carrying amount?Solution
Inventories are measured at the lower of cost and NRV. Here cost = ₹20 lakh, NRV = 25 – 7 = ₹18 lakh. Carrying value = ₹18 lakh since NRV is lower.
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