Inventories Flashcards
Assets held for sale in ordinary course of business, in the process if production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services
Inventories
One that buys and sells goods in the same form purchased.
Trading concern.
Generally applied to goods held by a trading concern
Merchandise inventory
One that buys goods which are altered or converted into another form before they are made available for sale.
Manufacturing concern
What are included in the inventories of manufacturing concern?
Finished goods, Goods in process, raw materials and factory supples
Where does purchase price belongs?
Cost of purchase
Expressly provides that cost of inventories shall be determined by using either:
1. First in, First out
2. Weighted average
PAS 2 paragraph 25
True or False. In FiFo, the inventory is thus expressed in terms of recent or new prices while the cost of goods sold is representative of earlier or old prices.
True
Means that specific costs are attributed to identified items of inventory
Specific Identification
Determined by simple multiplying the units on hand by the actual unit cost
Cost of inventory under specific identification
Provides that this method is appropriate for inventories that are segregated for a specific project and inventories that are not ordinarily interchangable
PAS 2 paragraph 23
Provides that inventories shall be measured at the lower of cost and net realizable value
PAS 2 Paragraph 9
The measurement of inventory at the lower of cost and net realizable value is known as_____
LCNRV
The estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost of disposal
Net Realizable Value
The writedown of inventory to NRV is accounted for using the____
Allowance method
