... the inventories. By applying the prudence concept, NRV will be used if it is lower than the "cost" of inventories. Inventories comprises: Inventory comprises by goods of purchase and held for re-sale; work-in-progress; finished goods. In case of services provider, inventories include the cost of services. Cost of Inventories Cost of inventories should be including all cost of purchase; cost of conversation and other costs. All cost of purchase: Cost of purchase mean purchase price, transportation charges, import duties, insurance fee, legal fee and other cost can directly applied to the acquisition of finished goods, materials and services, less trade discounts, rebates and other similar items. Cost of conversation: In a manufacturing environment, the concept of cost is rather complicated. Cost of conversion as costs directly related to the units of production, e.g. direct labour, direct expenses, sub-contracted work. Systematic allocation of fixed and variable production overheads, e.g. depreciation and maintenance of factory equipment. Fixed production overheads are allocated ...

See this essay or coursework document in full right now