Question 1

**Section A**

Quantum Computing Ltd has 500 units of a specific microchip in inventory. The original cost was $120 per unit. Due to a recent technological advancement, these chips can now only be sold for $105 per unit. To sell them, Quantum must spend $10 per unit on repackaging and $5 per unit on delivery.

What is the total value of this inventory to be included in the financial statements? (Enter numbers only)

Accepted Answer

Calculate the Net Realizable Value (NRV) per unit: Selling price minus costs to sell. Compare NRV to Cost. Value inventory at the lower of Cost and NRV, then multiply by the number of units.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Valuing at cost ($60,000) or forgetting to deduct the delivery costs from the selling price.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 1

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