Accounting help

[ks136]

Q. Stock has been damaged
The stock cost $1200
It wud normally have sold 4 $1800
It can be sold 4 $1700 if repairs r undertaken at a cost of $1600
To replace the stock wud cost $ 1000

At wat price should it be valued

1)1000
2)1100
3)1200
4)1800

Plz someone helpppp!!!

 

[Moiz]

U must have copied the question wrongly, do check the figure for repairs it cant be that high

BTW: The stock is valued at lower of cost or Net Realisable Value(NRV)

NRV= Selling price- repairs expenses

if cost>NRV then stock is valued at NRV
if NRV>cost then it is valued at cost

Note: stock is never valed at replacement cost

 

[Mueez]

u hav copied q wrongly repairs cost is 600 not 1600..
stock should b valued at lower of cost or net realisable value so it would b 1100(1700-600)
stock is never valed at replacement cost

 

[Moiz]

I had already established the answer MUEEz

 

[ks136]

yup its 600...thanks