Capital 8:

Question 1

What can be included in the purchase price?

Answer 1

• Directly attributable auxiliary costs
• subsequent acquisitioncosts (e.g. attributable overhead costs, development costs)
  + Reductions of purchase price (discounts, rebates

Not iincluded:
- indirect costs: non-attributable
- FInance costs: exceptions: interest on advance payments

Question 2

What are the two cost basis approaches?

Answer 2

Partial costs
- Direct material costs (e.g. commodities)
- Direct production costs (e.g. wages and auxiliary costs)
- Special direct costs (e.g. draft costs)

=Partial costs (attributable costs)

Full costs
+ further production overheads (e.g. general administrative costs)
+ Social costs

= upper limit of production costs (full costs incl. more than attributabke costs

Question 3

What is prohibited in general from the cost base?

Answer 3

• Distribution costs
• finance costs

Question 4

How do partial and full cost bases impact an increase of stocks?

Answer 4

• Partial costs: Immediate expense
  → low profit.
• Full costs: Expenses become part of the cost of goods
  → high profit.

Question 5

What happens to profit when stocks are sold or decreased under each cost basis?

Answer 5

• Partial costs: Low costs per unit
  → high profit
• Full costs: High costs per unit
  → low profit.

Question 6

What is the impact of partial or full costs on total profit?

Answer 6

• Annual profit is impacted
• Total profit remains unaffected.

Question 7

What are the simplified determination of cost value of stocks?

Answer 7

• LiFo
• FiFo
• Weighted average:

Question 8

How does the LiFo method affect expenses and balance sheet value if prices are rising?

Answer 8

Expenses: Current prices
→ high expenses.

• Balance sheet value: Historic prices → undervalued

Question 9

What happens to expenses and balance sheet value under the FiFo method when prices are rising?

Answer 9

• Expenses: Historic prices
  → low expenses
• Balance sheet value: Current prices → contemporary valuation

Question 10

How are expenses and balance sheet values determined under the weighted average method?

Answer 10

Both expenses and balance sheet values are based on average prices.

Question 11

Rank the methods (LiFo, FiFo, and Weighted Average) based on profit when prices rise.

Answer 11

1.LiFo: Highest expenses
→ lowest profits.
2.FiFo: Lowest expenses
→ highest profits.
3.Weighted average: In between

Question 12

What is the pool method of depreciation?

Answer 12

Aggregation of assets belonging to the same asset class (e.g. all tangible fixed assets with an economic lifetime between 5 and 9 years)

Basis for depreciation: Acqisition costs of all assets minus selling price of sold assets

Question 13

What is the item by item method in depreciation?

Answer 13

Basis for depreciation: acquisition costs (acquired assets) or production
costs (self-created assets)

Methods:
- Straight line:
- Declining balance: