W&T plc specialises in graphics tablets. W&T plc reported 28,000 units of inventory at 120 cost...

 

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W&T plc specialises in graphics tablets. W&T plc reported 28,000 units of inventory at £120 cost per unit using the actual activity to allocate fixed production overheads on 31 March 2021. However, if the normal (planned) activity had been used, the unit cost of inventory on 31 March 2021 would have decreased to £105. At the reporting date 31 March 2021, W&T plc assessed the valuation of the inventory and the selling price of inventory was considered to go down to £100 per unit from £150. W&T pays 5% commission on selling price to its agents for the sales of inventories (graphics tablets). Required: Discuss and show how W&T plc should report the above transaction in its financial statements on 31 March 2021 in accordance with IAS 2 Inventories. W&T plc specialises in graphics tablets. W&T plc reported 28,000 units of inventory at £120 cost per unit using the actual activity to allocate fixed production overheads on 31 March 2021. However, if the normal (planned) activity had been used, the unit cost of inventory on 31 March 2021 would have decreased to £105. At the reporting date 31 March 2021, W&T plc assessed the valuation of the inventory and the selling price of inventory was considered to go down to £100 per unit from £150. W&T pays 5% commission on selling price to its agents for the sales of inventories (graphics tablets). Required: Discuss and show how W&T plc should report the above transaction in its financial statements on 31 March 2021 in accordance with IAS 2 Inventories.

Answer rating: 100% (QA)

WT should report the transaction as a loss on inventory valuation of E280000 28000 units x E120 E100 ... View the full answer