QUESTION 1 Adekunle Brothers Nigeria Limited (ABNL) is a manufacturing company based in Kano, Nigeria, that produces industrial chemicals. At its financial year-end of 31 December 2023, the company's inventory records revealed the following information: (i) Raw materials held in the warehouse had a cost of N18,500,000. Due to a decline in market conditions, the net realisable value (NRV) of these materials was estimated at N16,200,000. The materials are used in the production of Product X. (ii) Finished goods (Product X) had a total production cost of N42,000,000. The estimated selling price of Product X is N50,000,000. Selling and distribution costs to complete the sale are estimated at N6,500,000. No further processing is required. (iii) Work-in-progress (WIP) had costs incurred to date of N9,800,000. Additional costs to complete the WIP are estimated at N4,200,000. The expected selling price of the completed units is N17,000,000, and selling costs are N1,500,000. (iv) ABNL includes the following in its inventory cost computation: - Direct materials: N5,000,000 - Direct labour: N3,200,000 - Variable production overheads: N1,400,000 - Fixed production overheads (based on normal capacity): N2,100,000 - Selling and administrative overheads: N800,000 - Abnormal wastage: N600,000 - Storage costs for finished goods awaiting delivery: N350,000 Required: (a) Explain the meaning of 'net realisable value' as defined under IAS 2 Inventories, and state TWO circumstances in which inventories should be written down to NRV. (4 marks) (b) Determine the value at which each category of inventory (raw materials, finished goods, and WIP) should be recognised in ABNL's statement of financial position as at 31 December 2023, applying the lower of cost and NRV rule. Show all workings. (9 marks) (c) Using the information in (iv) above, calculate the correct cost of inventory that should be included in ABNL's financial statements, clearly identifying and explaining any items that should be EXCLUDED from inventory cost under IAS 2. (7 marks) (Total: 20 marks)