TAILIEUCHUNG - Lecture Intermediate accounting (IFRS 2nd edition): Chapter 9 - Kieso, Weygandt, Warfield

Chapter 9 - Inventories: Additional valuation issues. After completing this chapter you should be able to: Describe and apply the lower-of-cost-or-market rule, explain when companies value inventories at net realizable value, explain when companies use the relative sales value method to value inventories, discuss accounting issues related to purchase commitments. | PREVIEW OF CHAPTER Intermediate Accounting IFRS 2nd Edition Kieso, Weygandt, and Warfield 9 Determine ending inventory by applying the gross profit method. Determine ending inventory by applying the retail inventory method. Explain how to report and analyze inventory. After studying this chapter, you should be able to: Inventories: Additional Valuation Issues 9 LEARNING OBJECTIVES Describe and apply the lower-of-cost-or-net realizable value rule. Explain when companies value inventories at net realizable value. Explain when companies use the relative standalone sales value method to value inventories. Discuss accounting issues related to purchase commitments. A company abandons the historical cost principle when the future utility (revenue-producing ability) of the asset drops below its original cost. LOWER-OF-COST-OR-NET REALIZABLE VALUE (LCNRV) LO 1 Net Realizable Value Estimated selling price in the normal course of business less estimated costs to complete and estimated costs to make a sale. LCNRV ILLUSTRATION 9-1 Computation of Net Realizable Value LO 1 ILLUSTRATION 9-2 LCNRV Disclosures Net Realizable Value LCNRV LO 1 Illustration of LCNRV: Jinn-Feng Foods computes its inventory at LCNRV (amounts in thousands). LCNRV ILLUSTRATION 9-3 Determining Final Inventory Value LO 1 Methods of Applying LCNRV LCNRV ILLUSTRATION 9-4 Alternative Applications of LCNRV LO 1 In most situations, companies price inventory on an item-by-item basis. Tax rules in some countries require that companies use an individual-item basis. Individual-item approach gives the lowest valuation for statement of financial position purposes. Method should be applied consistently from one period to another. Methods of Applying LCNRV LCNRV LO 1 Cost of goods sold (before adj. to NRV) €108,000 Ending inventory (cost) 82,000 Ending inventory (at NRV) 70,000 Inventory (€82,000 - €70,000) 12,000 Loss Due to Decline to NRV 12,000 Inventory 12,000 Cost of Goods Sold 12,000 Loss Method COGS Method .

• Kế toán - Kiểm toán
• Intermediate accounting
• Lecture Intermediate accounting
• Additional valuation
• Gross profit method
• Retail inventory method
• Valuation bases
• Financial Accounting
• Accounting process
• Accounting equation
• Accounting processing cycle
• Stock issuance
• Estimating reserves
• Liquidating dividends
• Accounting changes
• Error corrections
• Accounting choices
• Theoretical structure
• Accrual accounting
• Financial accounting environment
• Accounting for leases
• Leasing environment
• Accounting by lessee
• Special accounting problems
• Cash versus accrual accounting
• International standard setting
• Accounting standards
• Accounting assists
• The challenges facing accounting
• Income taxes
• Accounting for income taxes
• Deferred tax liabilities
• Error analysis
• Accounting policy
• Accounting estimate
• Accounting policies
• Financial reporting
• Accounting information system
• Measurement issues
• Characteristics of accounting
• Capital allocation process