Inventories - My flashcards
1
Q
How to evaluate inventory when cost is seems to be irrecoverable for both IFRS & US GAAP ?
A
- Lower of cost or NRV ( IFRS all - US GAAP Fifo & weighted average ) where NRV = Selling prices - Cost to sell.
- Lower of Cost or Market where market price is the median of :-
A) NRV
B) NRV - profit ( profit = selling price X Profit % )
C) Replacement Cost
NEVER FORGET TO COMPARE THE MARKET TO THE ORIGINAL COST AND CHOOSE THE LOWER
2
Q
How to account for inventories in precious metals and agriculture industries ?
A
-NRV Selling price - cost to sell
3
Q
what is the journal entry for loss on inventory revaluation ?
A
Dr. Inventory revaluation loss
Cr. Inventory
4
Q
which inventory accounting approach includes Purchases account ?
A
Periodic System
When purchasing
Dr. Purchases
Cr. A/P
