Vol. 3 LM2 Inventories and Other Current Assets Flashcards
Define
Inventories
Balance Sheet
Physical products that will eventually be sold to the company’s customers, either in their current form (finished goods), or;
As inputs into a process to manufacture a final product
Balance Sheet
Measurement (under IFRS)
inventories
Balance Sheet
Measured at the lower of cost and net realizable value (NRV)
Balance Sheet
Measurement (under US GAAP)
inventories
Balance Sheet
Measured at the lower of cost and NRV, unless LIFO method has been adopted
Balance Sheet
Define ( under US GAAP)
Market value
Balance Sheet
Current replacement cost given that:
(1) the recorded value cannot exceed NRV
(2) the recorded value cannot be lower than NRV – normal profit margin
Balance Sheet
Reporting as what
The cost when inventory is sold
Balance Sheet
Expense, “cost of goods sold”
Balance Sheet
Define
Other current assets
Balance Sheet
Reflect assets that are individually not material enough to require a separate line item on the balance sheet, so they are aggregated into a single amount
Balance Sheet
Classification
Reflect assets that are individually not material enough to require a separate line item on the balance sheet, so they are aggregated into a single amount
Balance Sheet
Other current assets
Balance Sheet
Define
prepaid expenses
Balance Sheet
Normal operating expenses that have been paid in advance that may not necessarily be available for conversion back to cash
Balance Sheet
Fill in the blank
Because expenses are recognized in the period in which they are incurred—and not necessarily the period in which the payment is made—the advance payment of a future expense creates ____
Balance Sheet
An asset
Balance Sheet
Multiple choice
Prepaid expenses are included in
(1) current liabilities
(2) current assets
(3) non-current assets
(4) other current assets
Balance Sheet
Other current assets
Balance Sheet
