F3 Flashcards
Dollar Vale LIFO Method
CY base-PY base
increase in inventory occurred during the current year, the increase is marked up to current year prices
Dollar value LIFO is the prior year ending inventory value , plus the value of the layer added to inventory in the current year
Dollar-value LIFO ending inventory is the dollar value base layer plus the current year base layer times the conversion factor.
R & D costs -how is it accounted
Under U.S. GAAP, the only acceptable method of accounting for research and development costs is a direct charge to expense, except for materials, equipment, or facilities that have alternate future uses that are capitalized and depreciated over their useful lives.
When is consigment sales recognised
Goods slod Third party
When is R & D recognised
Before technological feasibility is established
Costs excluded from R & D
1.Design changes to old products
2.Troubleshooting in production
3.Marketing reasearch
4.Quality control testing
5.Software for internal use unrelated to production
Included in inventory cost
Transit inurance -necessary to bring goods to location
Expenses do not add time or place utility are excluded from inventory cost
Lower of cost or market
Market is middle of
1.relpacement
2.NRV
3.NRV-profit margin
Goodwill expensed or capitalised
Goodwill is capitalized only when incurred in the purchase of another entity. Costs incurred for maintaining or developing goodwill are expensed.
Goods held on consignment
Goods held on consignment are the inventory of the consignor, not the consignee
Consignor includes consigned goods in the hands of the consignee (potential buyer) at consignor’s cost plus shipping costs to the consignee.
Amortization of capitalised software costs
Greater of
straight line amortization or
sales revenue from software for period/total projected sales
Unit of Production depreciation
Service potential declines with use
Impairment conditions
1.CA >FV
2.CA not receoverable
Impairmet loss= BV-FV
LIFO conformity rule-LIFO used for tax purpose which accounting standard will require LIFO to be used for financial statement purpose
US Gaap
