Under IFRS, what inventory accounting method(s) / cost flow assumption(s) is/are Island Solutions allowed to use and prohibited from using?
- Under IFRS, what inventory accounting method(s) / cost flow assumption(s) is/are Island Solutions allowed to use and prohibited from using?
- The following data is available for the month of September for two items of inventory that might soon be render obsolete for Island Solutions.
Inventory balances at September 1, 2023, were as follows:
USB-C (TA3) Hub – 200 @ $400 ea.
USB-C (TB3) Hub – 600 @ $800 ea.
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USB-C (TA3) HUB |
USB-C (TB3) HUB |
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Date |
Purchases |
Sales |
Date |
Purchases |
Sales |
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|
|
Sep 5 |
500 @ $450 |
|
Sep 10 |
600 @ $900 |
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|
|
|
10 |
|
500 @ $540 |
19 |
300 @ $950 |
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|
|
|
15 |
400 @ $475 |
|
25 |
|
900 @ $1080 |
|
|
|
20 |
|
400 @ $570 |
28 |
500 @ $1000 |
|
|
|
|
25 |
300 @ $500 |
|
30 |
|
600 @ $1140 |
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|
|
|
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- Assume that Island Solutions uses a periodic inventory system under the FIFO method, determine the cost of ending inventory and cost of goods sold at September 30, 2023, for the individual items and in total. (Show all workings).
- Assume that Island Solutions uses a periodic inventory system under the average cost method, determine the cost of ending inventory and cost of goods sold at September 30, 2023, for the individual items and in total. (Round to 2 decimal places).
- What is the purpose of the
current ratio ? Assume that Island Solutions want to compute its current ratio, which inventory method (FIFO or Average Cost) would give a more meaningful current ratio. Explain.
- Island Solutions has discovered that all of its competitors are using another inventory method and is worried. Can the company change its inventory accounting method, on what grounds? Discuss two (2) trade-offs for the company.
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3.
What is the purpose of the
4.
Island Solutions has discovered that all of its competitors are using another inventory method and is worried. Can the company change its inventory accounting method, on what grounds? Discuss two (2) trade-offs for the company.
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