Rearch on Inventory Essay

736 Words Jan 13th, 2012 3 Pages
Topic7 Inventory
1 Identify the primary authoritative guidance for the accounting for inventories. What is the predecessor literature?
FASB ASC 330 Inventory provides primary authoritative guidance for the accounting for inventory.
The predecessor literature about it is Accounting Research Bulletins (ARB) No.43 Chapter 4, paragraph 4 (Issued June, 1953) and Statement of Financial Accounting Standard (FAS) NO.151 Inventory cost- an amendment of ARB No.43, Chapter 4 (Issued November, 2004).

2 List the three types of goods that are classified as inventory. What characteristic will automatically exclude an item from being classified as inventory?
Answer: Glossary (FASB ASC 330-10-20) 10-20: Inventory The term inventory embraces
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However, exceptions for reflecting assets at selling prices are permissible for both of the following: a. Inventories of gold and silver,when there is an effective government-controlled market at a fixed monetary value b. Inventories representing agricultural, mineral, and other products, with all of the following criteria: 1. Units of which are interchangeable 2. Units of which have an immediate marketability at quoted prices 3. Units for which appropriate costs may be difficult to obtain. Where such inventories are stated at sales prices, they shall be reduced by expenditures to be incurred in disposal.

35-15: Only in exceptional cases may inventories properly be stated above cost.
For example, precious metals having a fixed monetary value with no substantial cost of marketing may be stated at such monetary value; any other exceptions must be justifiable by inability to determine appropriate approximate costs, immediate marketability at quoted market price, and the characteristic of unit interchangeability.

A brief summary about predecessor standards
ARB NO.43 Chapter4 (issued June, 1953), is predecessor standards that corresponds to the Codification.
This chapter sets forth the general principles applicable to the pricing of inventories of mercantile and manufacturing enterprises. The standard gives a major

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