Inventory

Question 1

What are inventoriable costs? (capitalized costs for inventory)

Answer 1

Inventoriable costs are costs that can be allocated towards inventory. Some of these costs include:
Raw materials
Direct materials
Factory overhead

Question 2

What inventory costing method is not allowed for IFRS?

Answer 2

LIFO is not an acceptable method for IFRS

Question 3

When inventory is shipped to a consignee, what costs are capitalized?

Answer 3

The consignor recognizes the cost of the inventory and the cost of shipping it to the consignee.

Question 4

How is dollar value LIFO calculated?

Answer 4

Uses a “conversion index” to determine inventory value for LIFO layer added in the current year.
Ending Inventory in CY dollars/ending inventory in base year dollars
Then multiply that to convert current year prices to base year prices.

Question 5

What is the inventory equation?

Answer 5

Beg Inv
\+Purchases
=Goods available for sale
(Ending inventory)
=COGS

Question 6

How does IFRS require inventory to be reported?

Answer 6

IFRS requires inventory to be reported at the lower of cost or net realizable value (NRV)
NRV= Sales price - Costs to complete the units and costs required to sell the unit.