Inventory

Question 1

What is inventory

Answer 1

Inventories include material or supplies waiting to be used, products in the process of being manufactured, and finished goods (purchased or manufactured) that are ready to be sold.

Question 2

Types Inventory

Answer 2

Merchandise inventory- for resale

Manufacturing inventory

Question 3

What is included in Merchandize

Answer 3

• cost of purchase
• shipping costs to receive the merchandise
• import duties and any other unrecoverable taxes

Not included
Storage and shipping costs to the customer are explicitly excluded from inventory.

Question 4

What is included in manufacturing inventory

Answer 4

raw material
direct labour
manufacturing overhead(heat, electricity, depreciation, insurancr, indirect labour
DL and MOH are called conversion costs

Question 5

What is included in MOH

Answer 5

Variable costs-change based on production volume

Fixed Costs- Stay consisted despite production volume

Question 6

what are the differences in Inventory treatment for IFRS and ASPE

Answer 6

IFRS requires the capitalization of borrowing costs, as directed under IAS 23 Borrowing Costs.
ASPE does not require borrowing costs to be capitalized; rather, it allows companies to either capitalize borrowing costs or expense them.

Question 7

How is inventory carried on the Balance sheet

Answer 7

Inventory is carried on the balance sheet at the lower of cost or net realizable value (NRV).
NRV is the value that the company could realize through an ordinary sale of the inventory. It equals proceeds less selling costs.

Question 8

To look out for

Answer 8

Over and under allocation of MOH. Multiply the FOH with the batches and determine and under or overallocation

Question 9

What IAS and ASPE

Answer 9

IAS 23 and ASPE 3031