tailieunhanh - Ebook Financial accounting - An international introduction (2/E): Part 2

(BQ) Part 2 book “Financial accounting - An international introduction” has contents: Inventories, financial assets, liabilities and equity, accounting and taxation, cash flow statements, group accounting, foreign currency translation, accounting for price changes, financial appraisal, international analysis. | 10 Inventories CONTENTS Introduction Counting inventory Periodic counts Perpetual inventory Valuation of inventory at historical cost Inventory flow Unit cost First in, first out (FIFO) Last in, first out (LIFO) Weighted average Base inventory Other cost methods Standard cost Retail inventory and gross profit margin Valuation of inventory using output values Practice Current replacement cost Construction contracts A worked example Construction contracts in practice Summary References and research Self-assessment questions Exercises 222 224 224 224 225 226 226 227 227 228 229 231 231 231 231 232 233 233 233 236 238 238 239 241 OBJECTIVES After studying this chapter carefully, you should be able to: n n n n n explain the nature of inventory, and outline methods of its physical quantification; define, calculate and appraise a variety of methods of valuing inventory under historical cost; outline regulatory requirements for inventory valuation; outline output value methods for inventory valuation; outline the problems of evaluating long-term construction contracts, and describe, simply illustrate and appraise the completed contract and percentage of completion methods of their evaluation. 221 Chapter 10 · Inventories Introduction This chapter considers issues relating to the counting and valuation of inventories. Inventories are current assets, tangible in nature, that are, or will become part of, the product to be sold by an enterprise. As discussed in Part 1 of this book, conventional accounting is generally based on the recording of transactions and on revenue and expense calculation, rather than on valuations. Consequently, when calculating the depreciation of assets as analyzed in the previous chapter, greater attention is paid to the meaning of the depreciation charge in the income statement than to the resulting effects on the .