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    Question

    A manufacturing entity has a stock of finished goods

    with a total Historical Cost of ₹12,00,000. Due to a market slowdown in early 2026, the estimated selling price of this stock is ₹11,50,000. The entity expects to incur a 5% brokerage commission on the sale and ₹20,000 in specialized packaging costs to ship the goods to the buyer. What should be the value of inventory in the Balance Sheet as per Ind AS 2? 
    A ₹12,00,000 Correct Answer Incorrect Answer
    B ₹11,50,000 Correct Answer Incorrect Answer
    C ₹10,92,500 Correct Answer Incorrect Answer
    D ₹10,72,500 Correct Answer Incorrect Answer
    E ₹11,30,000 Correct Answer Incorrect Answer

    Solution

    As per Accounting standards, inventory must be valued at the Lower of Cost or Net Realizable Value (NRV).   Cost: Given as ₹12,00,000.   Calculating NRV: ·        Estimated Selling Price: ₹11,50,000 o   Less: Estimated costs necessary to make the sale: 5% of 11,50,000 = ₹57,500 o   Less: Estimated costs of completion (Packaging): ₹20,000 Thus, NRV = 11,50,000 - 57,500 −20,000 = 𝟏𝟎 , 𝟕𝟐 , 𝟓𝟎𝟎 . Since NRV (₹10,72,500) is lower than Cost (₹12,00,000), the inventory is recorded at ₹10,72,500. 

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