Chapter 12 - Inventories and IAS 10 Events after the reporting period Flashcards

1
Q

What are inventories?

A

They are assets that are:
held for sale in the ordinary course of business (finished goods)
in the process of production (work in progress)
materials that will be used in the production process (raw materials)

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2
Q

What must inventories be valued at?

A

Lower of cost or net realisable value

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3
Q

What is the cost of inventory?

A

Cost of purchase, costs of conversion and costs to bring inventory to present location and condition

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4
Q

What is the net realisable value of inventory?

A

Estimated selling price, less cost to completion and costs to sell

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5
Q

What is an event after the reporting period defined as?

A

A material event occurring between the reporting date and the date on which the financial statements are authorised for issue

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6
Q

What are some examples of adjusting events?

A

Discovery of errors or fraud
Adjustment to valuations of inventory
Major customers going into liquidation
Completion of an insurance claim
Completion of a court case

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7
Q

What are some non-adjusting events?

A

Fluctuations in tax/exchange rates
Issue of shares
Acquisition/disposal/merger of business
Fires or floods
Plans for restructuring
Equity dividends declared after the reporting period

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8
Q

What should we disclose about a non-adjusting event at the end of the reporting period?

A

The nature of the event
An estimate of the financial effect
The date the directors approve the financial statements

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