The following movements occurred in inventories of clasps for necklaces and bracelets in the financial year 20X1 (in the following all prices plus VAT):dateQuantityPrice EUR /closureAWAY01.01.20X11.1250,50FebruaryAprilAccess8750,40departure1.000AccessSeptemberDecember2500,80departure375The closing inventory on 12/31/20X1 is 875 closures. The market price on the balance sheet date is EUR 0.50 plus VAT. Which of the following statements is/are correct?When using the permanent LIFO method and taking into account the information.the closing balance is valued at EUR 437.50 in the closing balance sheet.the consumption in April is valued higher than according to the permanent average price method.hidden reserves arise.O a write-down to the lower market price is required on the balance sheet date.

Name: The following movements occurred in inventories of clasps for necklac
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Description: The following movements occurred in inventories of clasps for necklaces and bracelets in the financial year 20X1 (in the following all prices plus VAT):dateQuantityPrice EUR /closureAWAY01.01.20X11.1250,50FebruaryAprilAccess8750,40departure1.000Acce

Answered: Access February 875 0,40 departure…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following movements occurred in inventories of clasps for necklaces and bracelets in the financial year 20X1 (in the following all prices plus VAT):
date
Quantity
Price EUR /
closure
AWAY
01.01.20X1
1.125
0,50
February
April
Access
875
0,40
departure
1.000
Access
September
December
250
0,80
departure
375
The closing inventory on 12/31/20X1 is 875 closures. The market price on the balance sheet date is EUR 0.50 plus VAT. Which of the following statements is/are correct?
When using the permanent LIFO method and taking into account the information.
the closing balance is valued at EUR 437.50 in the closing balance sheet.
the consumption in April is valued higher than according to the permanent average price method.
hidden reserves arise.
O a write-down to the lower market price is required on the balance sheet date.

Expert Solution

Step 1

Last in First Out Method (LIFO)

Under the last in first out method at the time of sales it uses to taken the last come materials in accordance with this to calculate the closing inventory as well. Last in First out method is more cost effective in the inventory valuation as well.

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