A kitchen appliance store prepares its financial statements in accordance with IFRS. The store has 500 mixer-grinders in its inventory. Each unit is sold at a price of $150. The store paid on an average of $140 per unit to the manufacturer of the appliance. Sale of appliances has been slow in recent months. The store estimates it can sell each mixer-grinder for $130 if it announces a sale for a limited period along with free shipping at the cost of $5 per mixergrinder. The manufacturer has also lowered the price to $100 because of the low demand. The total carrying amount of the 500 mixer-grinders on the store’s balance sheet would be closest to:
A. $62,500. B. $65,000. C. $70,000.
Now since this is IFRS where we recognize at lower of cost or NRV ,shouldnt the cost be taken as $100?In which case the cost comes to 50,000 while NRV is 62,500 .But the answer took $140 as the cost.Why is this the case?Thanks for helping in advance!