CERTYNEX IFRS ACADEMY

The accountant of Verrerie Ambrine, which applies FIFO, calculated the cost of sales for the month as follows: opening inventory of 1,000 bottles at 6, purchase of 1,000 bottles at 8, sales of 1,200 bottles; cost of sales used = 1,000 × 8 + 200 × 6 = 9,200. What error did he make?

No error: valuing issues at the most recent prices complies with FIFO.

He applied LIFO logic, which is not permitted; under FIFO, cost of sales is 7,600.

He should have valued all issues at the latest purchase price of 8, that is 9,600.

The error only concerns disclosure: the formula used remains permitted provided it is applied consistently.