Explain the following questions on inventory Explain IAS 2 - Inventories. In your answer, cover the following aspects:1. Definition and scope of IAS 2 (5 marks)2. Measurement of inventories (10 marks)3. Cost formulas for inventory valuation (5 marks)4. The impact of inventory valuation on financial statements (5 marks)

Definition and Scope of IAS 2IAS 2 - Inventories is an International Financial Reporting Standard…

Answered: Explain IAS 2 - Inventories. In your…

Quickbooks Online Accounting

3rd Edition

ISBN:9780357391693

Author:Owen

Publisher:Owen

Chapter10: Financial Statements And Reports

Section: Chapter Questions

Problem 2.4C

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Based on the data in Exercise 6-15 part (a) and assuming that cost was determined by the FIFO method, show how the inventory would appear on the balance sheet.
erms and phrases relating to concepts discussed in this chapter along with descriptions of those terms and phrases follow. Match each term, 1 through 15, with the best description a through o. Key Inventory Terms and Phrases Key Inventory Terms and Phrases Description of Terms and Phrases Answerabcdefghijklmno 1. Net realizable value a. Requires retroactive restatement of financial statements Answerabcdefghijklmno 2. Lower-of-cost-or-market b. Method for valuing inventory applying to LIFO and retail methods Answerabcdefghijklmno 3. Allowance to reduce inventory to net realizable value c. Cancellation of additional markup Answerabcdefghijklmno 4. Gross profit method d. Inventory estimation that is not acceptable under GAAP Answerabcdefghijklmno 5. Estimated loss on purchase commitment e. Method that approximates lower-of-cost-or-market Answerabcdefghijklmno 6. Change in inventory method from average to FIFO f. Not usually practical to retroactively restate or adjust…
Required: 1. Calculate ending inventory using the lower of cost and net realizable value. 2. Record any necessary adjustment to inventory. 3. Determine the impact of the adjustment in the financial statements.( Balance Sheet&Income statement)
Defining Chapter Terms Terms and phrases relating to concepts discussed in this chapter along with descriptions of those terms and phrases follow. Match each term, 1 through 15, with the best description a through o. Key Inventory Terms and Phrases Key Inventory Terms and Phrases Description of Terms and Phrases Answerabcdefghijklmno 1. Net realizable value a. Requires retroactive restatement of financial statements Answerabcdefghijklmno 2. Lower-of-cost-or-market b. Method for valuing inventory applying to LIFO and retail methods Answerabcdefghijklmno 3. Allowance to reduce inventory to net realizable value c. Cancellation of additional markup Answerabcdefghijklmno 4. Gross profit method d. Inventory estimation that is not acceptable under GAAP Answerabcdefghijklmno 5. Estimated loss on purchase commitment e. Method that approximates lower-of-cost-or-market Answerabcdefghijklmno 6. Change in inventory method from average to FIFO f. Not usually practical to…
1. The journal entry to write inventory up to the net realizable value would be _______. a) a debit to COGS b) a credit to Losses c) a credit to Inventory d) a debit to Inventory
Which of the following statements about merchandisingactivities is true? (More than one answer may be correct.)a. As inventory is purchased, the Inventory Expenseaccount is debited and Cash (or Accounts Payable) iscredited.b. Inventory is recorded as an asset when it is firstpurchased. c. As inventory is sold, its cost is transferred from the bal-ance sheet to the income statement. d. As inventory is sold, its cost is transferred from theincome statement to the balance sheet.
The base for inventory in a vertical analysis is:a. total current assets.b. inventory.c. total liabilities.d. total assets.
2.The __________ method and the __________ method are the two common approaches to record inventory in financial statements.
Springer Anderson Gymnastics prepared its annual financial statements dated December 31. The company reported its inventory using the LIFO inventory costing method but did not compare the cost of its ending inventory to its market value (replacement cost). The preliminary income statement follows: Sales Revenue $ 160,000 Cost of Goods Sold Beginning Inventory $ 20,000 Purchases 101,000 Goods Available for Sale 121,000 Ending Inventory 38,140 Cost of Goods Sold 82,860 77,140 36,000 41,140 8,228 Gross Profit Operating Expenses Income from Operations Income Tax Expense (20%) Net Income $ 32,912 Assume that you have been asked to restate the financial statements to incorporate the LCM/NRV rule. You have developed the following data relating to the ending inventory: Purchase Cost Replacement Cost per Quantity 2,000 Per Unit $ 4.00 Item Total Unit $ 8,000 4,640 13,500 12,000 A $ 5.00 B 800 5.80 2.90 4,500 2,000 C 3.00 1.45 D 6.00 4.00 $ 38,140
Problem related financial Accounting
Listed below are selected examples of transactions related to the purchase and sale of inventory from the perspective of the seller or the buyer as indicated. Assume a perpetual inventory system is in use. 1. N 2. 3. 4. 5. 6. 7. 8. 9. 10. 3. For each of the above transactions, indicate (a) the basic type (asset, liability, revenue, or expense) of each account to be debited and credited; (b) the specific name(s) of the account(s) to debit and credit (for example, Inventory); and (c) whether each account is increased (+) or decreased (-) and by what amount. The first one has been done for you as an example. (Enter specific debited account items in alphabetical order. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) 4. (a) Item Basic Type of Account 1. Asset 2. 5. 6. 7. 8. Buyer: Purchase of $2,940 of inventory for cash. Buyer: Return of $630 of inventory to seller for credit on account. Buyer: Purchase of $3,360 of inventory on…
2. Which financial statement would users find these inventory accounts? 3. When inventory is sold, how does this impact the income statement and balance sheet? Please number your responses.

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Explain IAS 2 - Inventories. In your answer, cover the following aspects: 1. Definition and scope of IAS 2 (5 marks) 2. Measurement of inventories (10 marks) 3. Cost formulas for inventory valuation (5 marks) 4. The impact of inventory valuation on financial statements (5 marks)