Accounting CBE Practice Exam 2026 – All-in-One Guide to Mastering Your Certification!

Under IFRS, inventories are measured at the lower of cost and net realizable value. Cost includes all costs of purchase (such as the price, import duties, and non-refundable taxes) and costs of conversion, plus other costs to bring the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business minus reasonably predictable costs of completion and costs to make the sale. Because of this, if NRV is lower than cost, a write-down to NRV is required. IFRS does not permit LIFO; acceptable methods for cost are FIFO or weighted average. This combination—lower of cost and NRV, with cost including purchase and conversion costs, and LIFO not allowed—matches the correct option. The other choices are inconsistent with IFRS, since market/fair value is not used here, and LIFO is not permitted.