M3 - Inventory

Question 1

Who retains the title of goods when consigned?

Answer 1

The seller or consigner, revenue is recognized when goods are sold by the agent to a third party

Question 2

What types of inventory are required to be valued at net realizable value?

Answer 2

Gold, silver when fixed at monetary value
Agricultural, mineral, etc meeting criteria of immediate marketability, unit interchangeability, inability to determine appropriate costs

Question 3

Net realizable value

Answer 3

Items selling price minus costs to complete and dispose of inventory, same as the market ceiling in LCM

Question 4

Lower of cost and net realizable value

Answer 4

Used for all inventory not costed using LIFO or retail inventory method - when utility is no longer as great as cost or departure from cost is required

Question 5

Lower of cost or market

Answer 5

Used when inventory is costed using LIFO or retail inventory method

Question 6

Market value

Answer 6

Replacement cost