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Series 2, Episode 6 - Inventory Valuation – FIFO, AVCO & IAS 2
In this episode of Debit, Credit, Done! we’re tackling inventory valuation — a key area of the AAT Level 3 Financial Accounting: Preparing Financial Statements module.
We’ll cover:
Why accurate inventory valuation matters for profit and assets
IAS 2 rules: lower of cost and net realisable value (NRV)
FIFO (First-In, First-Out) explained with examples
AVCO (Average Cost) worked through step by step
How to apply NRV adjustments when values fall
A full worked example combining purchases, sales, and NRV
You’ll also get AAT exam tips on spotting NRV adjustments, showing full workings, and avoiding common traps.
🎙 Challenge: Try the FIFO example at the end of the episode to check your understanding before Monday’s release!
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By Dean QuartermaineIn this episode of Debit, Credit, Done! we’re tackling inventory valuation — a key area of the AAT Level 3 Financial Accounting: Preparing Financial Statements module.
We’ll cover:
Why accurate inventory valuation matters for profit and assets
IAS 2 rules: lower of cost and net realisable value (NRV)
FIFO (First-In, First-Out) explained with examples
AVCO (Average Cost) worked through step by step
How to apply NRV adjustments when values fall
A full worked example combining purchases, sales, and NRV
You’ll also get AAT exam tips on spotting NRV adjustments, showing full workings, and avoiding common traps.
🎙 Challenge: Try the FIFO example at the end of the episode to check your understanding before Monday’s release!