CERTYNEX IFRS ACADEMY

Automobiles Ardoise sells used vehicles, each identified by its serial number and acquired at a price negotiated individually with private sellers. To simplify inventory record-keeping, its finance director proposes measuring all vehicles at weighted average cost. Which position should be taken?

Accept, because weighted average cost is a formula permitted by the standard for all inventories without distinction.

Use FIFO instead, since the oldest vehicles are in practice often sold first.

Assign the cost of each vehicle by specific identification.

Measure all vehicles at the lowest purchase price observed during the year, for prudence.