Question Tag: Lower of Cost and NRV

b. Bala PLC prepares its financial statements on December 31, 2023. At the end of the year, Bala PLC holds three different inventory items. The following information is available for each item:

• Item A:
  Cost as at December 31, 2023: ₦1,500,000
  Estimated selling price: ₦1,800,000
  Estimated costs of completion, disposal, and selling expenses: ₦200,000
• Item B:
  Cost as at December 31, 2023: ₦2,250,000
  Estimated selling price: ₦2,000,000
  Estimated costs of completion, disposal, and selling expenses: ₦300,000
• Item C:
  Cost as at December 31, 2023: ₦3,000,000
  Estimated selling price: ₦3,200,000
  Estimated costs of completion, disposal, and selling expenses: ₦400,000

Required:

i. Calculate the total lower of cost and NRV adjustment required for inventory of Bala PLC. (2 Marks)

ii. Prepare the necessary journal entry to adjust the inventory to its lower of cost and NRV. (3 Marks)