Eko Retailers Limited has the following inventory data at its year-end: Cost ₦320,000; Estimated selling price ₦380,000; Estimated costs to complete ₦30,000; Estimated selling costs ₦25,000. In accordance with IAS 2, at what value should the inventory be reported in the statement of financial position?

IAS 2 requires inventories to be measured at the lower of cost and net realisable value (NRV). NRV = Estimated selling price – Costs to complete – Selling costs = ₦380,000 – ₦30,000 – ₦25,000 = ₦325,000. Since NRV of ₦325,000 is lower than cost of ₦320,000... actually ₦325,000 > ₦320,000, so the lower is cost at ₦320,000. Re-checking: ₦380,000 – ₦30,000 – ₦25,000 = ₦325,000; cost = ₦320,000; lower of cost (₦320,000) and NRV (₦325,000) = ₦320,000. The correct answer is A (₦320,000), as cost is lower than NRV.