Deck #7 (F3) Flashcards
what are the four times of inventories
- retail
- raw materials
- WIP
- Finish Goods
what is the difference between FOB shipping point and destination
shipping point - freight in, title passes to buyer when the seller delivers goods to a common carrier
destination - freight out, title passes to the buyer when the buyer receives the goods from the common carrier
what does inventory have to be stated at according to GAAP
stated at its cost (including freight in). this applies to everything except precious metals (which is stated at NRV)
difference between IFRS and GAAP (inventory write down reversals)
GAAP - prohibited
IFRS - allowed
when is lower of cost and net realizable value used?
All IFRS / GAAP (FIFO and Weighted Average)
when is lower of cost or market used?
US GAAP (LIFO and Retail)
what is net realizable value?
and items net selling price less the costs to complete and dispose of the inventory
generally, what is market value?
the current replacement cost
generally, how is market value determined?
it is the median value of an inventory item’s replacement cost, market ceiling (NRV), and market floor (NRV - profit)
how is COGS calculated under a periodic inventory system
Beginning Inv \+ purchases = Cost of goods available - Ending inventory (per count) = COGS
JE:
to record a sale under periodic method
DR: Cash
CR: Sales
JE:
to record a sale under perpetual method
DR: Cash
CR: Sales
DR: COGS
CR: Inventory
JE:
to record purchase of inventory under periodic method
DR: Purchases
CR: Cash
JE:
to record purchase of inventory under perpetual method
DR: Inventory
CR: Cash
how is weighted average calculated
total COGS / total units AFS = cost per unit
