Question 1:

Kidz Party & Co. (KPC) manufactures and sells toys. Following information is available regarding four
of its inventory items as on 31 December 2017:

Items Units Cost per Normal

unit selling price
(Rs.) per unit (Rs.)
Toy cars 10,000 1,250 1,200
Doll houses 5,000 1,800 2,700
Stuffed toys 1,850 1,200 1,900
Minion costumes 870 1,500 2,500

Following information is also available:

(i) A sales order for 3,000 toy cars @ Rs. 1,100 per unit is in hand. The remaining
units can be sold at normal selling price after incurring selling cost of Rs. 150 per
unit.
(ii) Doll houses include 1,000 defective units with no scrap value. 20% of the remaining doll
houses are damaged and can be sold at 50% of cost.
(iii) Stuffed toys costing Rs. 420,000 were accidentally damaged and are beyond repair. KPC
plans to sell these toys as scrap. Proceeds from such sale are estimated at Rs. 175,000 and
the sale would require transportation cost of Rs. 6,300.
(iv) All minion costumes have manufacturing faults and can be sold in present condition at
Rs. 1,350 per unit. However, 60% of the units can be rectified at a cost of Rs. 200 per
unit after which they can be sold at Rs. 1,600 per unit.

Required:
Calculate the amount at which above inventory items should be carried as on 31 December 2017 in
accordance with IAS 2 ‘Inventories’.

Question 2:
Hammad Limited (HL) imports and supplies three products, Alpha, Gamma and Beta. The opening
balances and transactions for the month of June 2014 are as follows:

Items Opening balance Units purchased Units Sold during the

during the month month
Qty. value (Rs.) Qty. Invoice Qty. value (Rs.)
Alpha 20 60,000 360 920,000 350 1,820,000
Gamma 100 4,800,000 50 2,375,000 70 4,060,000
Beta 30 120,000 490 1,820,000 400 1,640,000

The following information is also available:

(i) HL’s bank charges a commission of 0.5% of invoice value for opening the letter of credit.
(ii) Import taxes and duties were 23% of the invoice value out of which 40% are
refundable/adjustable.
(iii) The transportation charges are Rs. 1,500 per trip. 20 units of Alpha, 2 units of Gamma or 15
units of Beta can be transported in each trip.
(iv) All goods are repacked after import. The cost of packing per unit was Rs. 300, Rs. 1,500 and
700 respectively.
(v) HL values its stock on first-in, first-out basis.
(vi) Average selling costs per unit are Rs. 700, Rs. 1,500 and Rs. 400 respectively.

Required:
Compute the value of stock of each product as at 30 June 2014 in accordance with IAS-2 ‘Inventories’.