Lesson Plan

• Describe the main challenges businesses face when valuing inventory (method choice, NRV, obsolescence, etc.).
• Compare the effect of FIFO, LIFO, weighted‑average and specific identification on COGS and closing inventory.
• Apply the “lower of cost or NRV” test and calculate inventory values using a selected method.
• Analyse how different valuation choices influence key financial ratios such as gross profit margin and current ratio.
• Justify the most appropriate valuation method for a given business scenario.

• Projector and screen
• Printed handout of the valuation methods comparison table
• Calculators
• Worksheet with practice inventory calculations
• Case‑study cards (different business contexts)
• Excerpt from IAS 2 (inventory standards)
• Whiteboard and markers

Start with a headline about a major retailer restating profits after an inventory write‑down to hook interest. Ask students what they already know about cost of goods sold and why inventory valuation matters for financial statements. Explain that by the end of the lesson they will be able to identify valuation difficulties, choose an appropriate method, and perform the required calculations.

1. Do‑Now (5') – Quick quiz on basic inventory terms (stock, COGS, NRV).
2. Mini‑lecture (10') – Present the eight key difficulties and the four main valuation methods using the handout.
3. Guided Practice (12') – Work through the FIFO vs. weighted‑average example on the board; students replicate calculations on worksheets.
4. Group Activity (15') – In small groups, each receives a case‑study card; decide which valuation method fits, justify the choice, and apply the lower‑of‑cost‑or‑NRV test.
5. Check for Understanding (5') – Each group shares their decision; teacher asks probing questions and clarifies misconceptions.
6. Application to Ratios (8') – Demonstrate how the chosen valuation affects gross profit margin and current ratio; students update a sample income statement.
7. Recap & Exit Ticket (5') – Students write one difficulty they found most challenging and one strategy to address it on a sticky note.

Summarise the key difficulties and remind students how the valuation method influences both profit measurement and balance‑sheet presentation. Collect exit tickets to gauge understanding, and assign the worksheet for homework to reinforce calculations and method justification.