Inventory

Question 1

How inventory is included in statements ?

Answer 1

At lower of:
Cost
NRV

Question 2

How cost is measured?

Answer 2

all cost for bringing prod/serv to present location or condition:
Material
Import
Freight
Conversion cost +overheads

Question 3

How NRV is measured ?

Answer 3

Revenue expected to be earned less any selling cost that must be made to sell it (ex WIP) NRV is used when stock is old/obsolete

Question 4

What are inv cost calculation methods?

Answer 4

Unit cost (actual cost, used when high value and distinguishing)
FIFO
AVCO ( periodically or continuously (updated avg every purchase)

Question 5

What is DE for ye adjustments ?

Answer 5

Dr op inv in COS
Cr inv asset

Dr inv asset
Cr closing inv in COS

Question 6

How wrong valuation affect statements ?

Answer 6

If undervalued assets in BS and profit in P/L are understated

If overvalued assets and profit are overstated