Comparing LIFO And Sears Canada

There are also various cost assumptions used by businesses, with every entity choosing a respective method in accordance to their inventories, based on the effects they

A situation in which a company using LIFO accounting sells its oldest inventory. LIFO liquidation happens when the company's sales outpace its purchases for inventory. By using the LIFO inventory method this will the older you have to go back, the higher the net income. Inventory is always reported on the balance sheet. As you liquidate older inventory with the LIFO method you decrease your cost of good sold which will increase profitability.

When using the LIFO method, if sales are higer than current purchases inventory not sold may be liquidated. This is called LIFO liquidation. The effect of the LIFO liquidation on the Harnischfeger’s income statement is an increase in net income by $2.4 million or $.20 in fiscal year 1984. There is no income tax effect. On the balance sheet there is a decrease of inventory, due to liquidation.

Cost of inventory is determined using the average method; inventory is stated at the lower of cost or market. +pB13

inventory using the cost method and did not change the method used during the current

You use a perpetual inventory system and value the inventory using FIFO. Prior to making adjusting year-end entries you valued the inventory at the lower-of-cost or-market. Justify why you valued the inventory at lower-of-cost or-market.

4. What inventory method is used to value inventories? Does this method reflect current cost at year-end?

45. (LO1) ATW corporation currently uses the FIFO method of accounting for its inventory for book and tax

330-10-30330-10-30-1 The primary basis of accounting for inventories is cost, which has been defined generally as the price paid or consideration given to acquire an asset. As applied to inventories, cost means in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. It is understood to mean acquisition and production cost, and its determination involves many considerations. 330-10-30330-10-30-2 Although principles for the determination of inventory costs may be easily stated, their application, particularly to such inventory items as work in process and finished goods, is difficult because of the variety of considerations in the allocation of costs and charges.

“Companies can choose to use the accounting job order costing method when they have a single product line or numerous products to manufacture. However, it is less costly and less time-consuming if they elect to use process costing when calculating the manufacturing of a single product line. With similarities

Section 330-10-35-9 states that the most common method is to apply the lower of cost or market to each individual item of inventory. However, Section 330-10-35-10 states that when there is more than one ending product, the application of the lower of cost or market rule to the total of the items included in such major categories may result in the most useful determination of income. Therefore, since the company has three different types of inventory (live hogs ready for sale, developing animals, and processed pork products) and there are different types of ending products (live animals and processed products suchs as loins, hams, and bacon) the lower of cost or market should be applied to the total of the items included in such major categories, i.e. live hogs ready for sale, developing animals, and processed pork products.

2.2 Inventories (AASB 1019) as a general principle, inventories are valued at the lower of cost (including fixed and variable factory overheads where applicable) and net realizable value. Cost is determined on the basis of first-in-first-out, average or standard, whichever is the most appropriate in each case.

The second types of inventory methods to value its inventory that CVS uses is the most common one used for most business the First-In, First-Out (FIFO). First-In, First-Out (FIFO) is defined as the first inventories bought are the first ones to be sold. CVS only uses FIFO for Some Retail Pharmacy and Rest of Business (Front store). CVS utilizes this method because; the fresher products have to be out the door first. Also, FIFO is an easier method than Weighted Average Cost. And most importantly it may over inflate cost because the last products bought and out the door first are usually the most expensive products.

How inventory costs are handled is another area in which the IFRS and U.S. GAAP differ. Under U.S. GAAP, a company can either use the last-in, first-out (LIFO) or the first-in, first-out (FIFO) inventory method. Under IFRS, the LIFO method is not allowed to be used. The advantage to having one accounting standard is enhanced comparability between countries. It also removes the need to have to adjust LIFO inventories to FIFO inventories in comparison analysis between companies that use different accounting standards.