Professional Documents
Culture Documents
Inventories Review
Inventories Review
IAS 2
• Inventories
Definition
• Inventories include assets held for sale in the ordinary course of
business (finished goods), assets in the production process for sale in
the ordinary course of business (work in process), and materials and
supplies that are consumed in production (raw materials)
Definition
• Inventories include assets held for sale in the ordinary course of
business (finished goods), assets in the production process for sale in
the ordinary course of business (work in process), and materials and
supplies that are consumed in production (raw materials)
Classes of inventory
• Merchandising
• Manufacturing
Classes of inventory
• Merchandising
Merchandise Inventory
• Manufacturing
Finished Goods
Raw materials
Work in process
Manufacturing Over head
Inclusion
• Perform legal test
Inclusion
• Perform legal test
• Goods owned and on hand
• FOB Destination and sold in transit
• FOB Shipping point purchased and in transit
• Goods out on consignment
• In the hands of Salesman/Agent
• Held by customer on approval or on trial
Inclusion
• Perform legal test Perspective natin is seller
• Net Method
Methods of Recording Purchases
• Gross method (eto yung ginagamit natin) pero it violates matching principle daw
record purchases gross of discount
• Net Method
record purchases net of discount
Measurement
• Initial Measurement
• Subsequent Measurement
Measurement
• Initial Measurement
At cost
• Subsequent Measurement
NRV
Measurement
• Inventories should be measured subsequently at the lower of cost,
and net realizable value
Initial Measurement at cost
• Cost of Purchase
Purchase price, import duties( tax),irrevocable taxes, Freight, handling Cost
• Cost of Conversion