The financial statements of Eastern Platinum Limited (Eastplats) are presented in Appendix A at the end of this book.

Instructions

(a) What amounts did Eastplats report for total inventories in its statement of financial position at the end of 2010 and 2009?

(b) Calculate the change in the dollar amount of total inventories between 2010 and 2009 and the percentage change. Next calculate inventory as a percentage of current assets for each of the two years. Comment on the results.

(c) Eastplats uses the average cost formula. What guide lines do you think influenced Eastplats's choice of cost formula?

(d) Refer to Note 8, Inventories to the financial statements. Did Eastplats write down its inventories to net realizable value in either 2010 or 2009? If so, reproduce the journal entry that Eastplats likely made.