Inventory Valuation at Lower of Cost or NRV

Steps:

• Product G: 1000 units total, 100 damaged (value $0), so 900 good units at lower of cost$2.00 or NRV $2.50 =$2.00/unit; 900 × $2.00 =$1800.
• Product H: 800 units at lower of cost $1.50 or NRV$1.20 = $1.20/unit; 800 ×$1.20 = $960.
• Total inventory value: $1800 +$960 = $2760.

Why A is correct:

• Per IAS 2, inventory is valued at the lower of cost and net realizable value; damaged goods have NRV of $0.

Why the others are wrong:

• B: Uses cost for H ($1200) and ignores damaged G, totaling$3000.
• C: Applies NRV to G ($2250) but cost to H ($1200), totaling $3280.

Final answer: A