F3M3 Flashcards
Inventories must be
periodically counted
valued
and recorded
Retail inventory
resold substantially the same way it was purchased
Raw materials
held in use for production process
WIP inventory
inventory that is in production, but not complete
Finished goods
production inventory that is complete and ready for sale
General rule for legal title
typically follows possession of goods
FOB shipping point
Freight IN
title passes when delivered to common carrier (UPS truck)
FOB destination
title passes when buyer physically receives goods
Shipment of nonconforming goods
belongs to the seller, never the buyer
consigned goods
owner is owner of the good while the consingee is a selling agent
sales with mandatory buyback
buyer includes in inventory
Valuation of inventory
if cost will be recovered with a normal profit, recognize at cost
even if the replacement cost is lower
Cost includes freight in for inventory
Exceptions to cost basis of inventory
Measured at NRV
metals and farm products
What is the NRV
selling price - costs to dispose
When do you recognize loss in inventory
immediately
can you reverse inventory write-downs?
no
What inventory method for FIFO/WA
LCNRV
What inventory method LCM
LIFO/Retail
Market value
generally means current replacement cost
the middle of the replacement cost, market ceiling, and market floor
Calculate Market Celing
NRV
Calculate market floor
NRV - profit
Inventory disclosure material loss
disclose
record loss
record liability
Periodic inventory
1 PE
Purchases
Determined by physical count at least annually
