FAR09-Inventory

Question 1

During periods of rising prices, a perpetual inventory system would result in the same dollar amount of ending inventory as a periodic inventory system under which of the following inventory cost flow methods?

Answer 1

FIFO

El Sistema periodico o perpetuo en FIFO al final va a ser igual

Question 2

Tabla importante sobre los efectos de FIFO Y LIFO cuand hay Rising Prices

Answer 2

LIFO—- higuer CGS
FIFO —- Produce el efecto opuesto

Question 3

Cuando tienes Merchandise out on consignment at a Slaes price includin 40% Margin

Para poder arrancarle el 40%
NO dividas

Come la venta ejemplo $14000 x 40% = 5600

Question 4

FOB Destination CUIDADOOOO

Cuando el vendedor hace FOB destination el asume todos los costos de transportar el producto asi que no puedes anadirlo como parte del inventario Asi que solo te quedas con el price

Question 5

Under LCM Method the Replacemet cost would be use as the designated value

Answer 5

Market = Curren Repl cost
si y solo si
1. Market no exede NRV of an item
2. Market no puede esta por debajo de NRV menos normal profit

Question 6

LOWER OF COST OF MARKET RULE

Answer 6

Based on the conservatism and matching principles, a company compares its ending inventory with market or net realizable value (NRV), depending on which valuation rule applies. If the value is less than cost (eg, due to obsolete goods, price declines), a loss is recorded and the inventory is written down (Choice D).

If LIFO or the retail inventory method is used, then the lower of cost or market (LCM) rule is applied. For all other inventory methods, a simplified lower of cost or NRV (LCNRV) rule is used. LCM compares cost (ie, purchase price) with current market value. Although market value is usually a replacement cost, it is subject to a ceiling and floor limitation.

The ceiling or NRV (Sales price − Costs required to complete the inventory and any disposal costs) is the maximum amount that may be reported as market.

The floor (NRV − Profit margin) is the lowest amount that may be reported as market.

Note: A shortcut to determine market value is to arrange the replacement cost, ceiling, and floor in numerical order and select the value in the middle.

Question 7

FORMULA LCM
Se usa solo cuando LIFO o retail Inv method es usado

Question 8

FORMULA LCNRV

Question 9

REINSTATEMENT AND RECOVERY AR