IAS 2 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Net realisable value test, write-down and reversal: Damaged Kids bicycles
Closing: net realisable value, firm contract, materials and reversal
Section 1 of 9
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IAS 2 workpaper
- Level
- Advanced
- Estimated time
- ≈ 40 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Cycléo SA (a fictitious entity) manufactures and sells electrically assisted bicycles. At 31 December 20X3, competition has lowered the prices of some models, water damage has affected part of the inventories and the price of aluminium has fallen. You are testing the measurement of inventories for the financial statements for the year ended on that date; the financial statements have not yet been authorised.
Assignment
Net realisable value and write-down workpaper.
Purpose of the workpaper
Estimate net realisable value item by item from the most reliable evidence, taking into account the purpose for which the inventory is held, compare it with cost, determine the additional write-down or the reversal for the period and record the entries.
Questions of the file covered by this workpaper
- How do you split the inventories for the net realisable value test?
- Calculate the net realisable value of each item.
- Determine the measurement of each item and the total of the inventories tested.
- Calculate the write-downs required at the reporting date.
- Calculate the reversal of the write-down of the Trail bicycles.
- Record the closing entries.
Documents in the file
Open the documents to pick out the relevant information.