Discuss how a change to the LIFO method of inventory valuation is handled when it is impracticable to determine previous LIFO inventory amounts

Q: Under what circumstances is the relative sales value an appropriate basis for determining the price…

A:

Q: Changing the method of inventory valuation should be reported in the financial statements under what…

A: Inventory- A manufacturing company's inventory is a critical current asset. Inventory refers to the…

Q: Explain what is meant by the Internal Revenue Service conformity rule with respect to the inventory…

A: Internal Revenue Service conformity rule is when prices rise and inventory quantities are not…

Q: Explain the steps necessary to calculate and record LIFO Reserve, and consequential Write-Down under…

A: LIFO reserve refers to the inventory method which is defined as the difference among what the ending…

Q: If the net realizable of an entity's inventories is less than its cost, the entry to adjust the…

A: Introduction: Under the lower of cost or net realizable value (LCNRV) method, if net selling price…

Q: If circumstances indicate that an inventory write-down is no longer appropriate: a. The write-down…

A: The correct answer is Option (b).

Q: Which of the following statements regarding inventory shrinkage is not true?

A: Suppose that there is inventory of $400,000( 5,000 units) in any firm in the beginning of accounting…

Q: How much should be reported as loss from inventory write-down?

A: New Unit Cost to Sale = Unit Selling price updated - Unit Cost The difference in Profit per Unit =…

Q: Explain the appropriate accounting treatment required when a change in inventory method is made.

A: Definition:   Change in inventory method: Change in inventory method is said to be the difference…

Q: What is the difference between a perpetual inventoryand a physical inventory? If a company maintains…

A: Differentiate between a physical inventory system and a perpetual inventory system. Perpetual…

Q: Identify whether each description best applies to a periodic or a perpetual inventory system.…

A: Given description is:  Requires an adjusting entry to record inventory shrinkage.

Q: Reversals of inventory write-downs may exceed the amount of the original write-down previously…

A: Inventory:- Inventories are shown in asset side of balance sheet as a current asset. It shows the…

Q: Which of the following would cause periodic ending inventory to be overstated?

A: Note - the answer has been provided on the basis of information available in question. If any…

Q: What are the purposes of the period-end adjustment under the periodic inventory system?

A: Periodic inventory system:   The method or system of recording the transactions related to…

Q: Under the new revenue recognition standard, how is the sale of inventory recorded?

A: Revenue: It refers is the total amount of earnings generated from selling goods or rendering…

Q: When a company changes its inventory method to LIFO, an exception is made for the way accounting…

A: Explain the difference in the accounting treatment of a change to the LIFO inventory method from…

Q: In your own words, discuss the differences between a perpetual and periodic inventory system. Your…

A: Inventory is the current asset posted on the balance sheet of the company.

Q: what are the effects of inventory errors on the financial statements

A: Incorrect recording of Inventory balance results in the Inventory errors.

Q: How does an inventory error effect the financial statements?

A: Inventory error:   Inventory errors are sometimes caused by making mistake in physical count, in…

Q: Describe the typical approach for recording inventory write-downs.

A: Inventory write-down: As per GAAP (Generally Accepted Accounting Principles), the companies need to…

Q: adjustment to the perpetual inventory records. Give any entry record the final disposition of any…

A: Perpetual inventory system is the system of recording the level of inventory at a continuously means…

Q: following is accounted for prospectively? Change in reporting entity. Change in…

A: A change in an estimate is accounted for prospectively.

Q: Describe the accounting treatment for a change in inventory method other than to LIFO.

A: Method of Inventory: Inventory refers to the current assets that a company expects to sell during…

Q: Explain the accounting treatment of material inventory errors discovered in an accounting period…

A: Materials inventory: Material inventories are the primary materials which are used in the…

Q: Explain the appropriate accounting treatment required when an inventory error is discovered.

A: Assets: These are the resources owned and controlled by business and used to produce benefits for…

Q: Which of the following accounting principle changes typically is reported prospectively? Changing…

A: Accounting principles are the set of standards and rules followed by the accountant and companies…

Q: Describe the backflushing or post-deduct system of inventory recordkeeping

A: Backflushing is also known as the post-deduct system. When a product is shipped out of stock or used…

Q: If a misstatement of inventory occurs, the net income for-----periods will be misstated

A: The ending inventory affects the income statement and after that ending inventory becomes the…

Q: What can be the effect of inventory errors on the financial reports? How can these errors be…

A: Inventory is the detailed list of items that are present on hand. It constitute of all the finished…

Q: What makes the recording of inventory at its proper amount difficult on the financial statements?

A: Inventory is the current assets of the company. In a manufacturing concern, inventory includes the…

Q: What inventory costing methods are allowed under IFRS? How does this differ from the treatment under…

A: Inventory valuation refers to the valuation of closing stock in hand which is reflected in the…

Q: Explain Potential Misstatements- Inventory/ Cost of Goods Sold and the description of misstatements…

A: Internal control is a procedure for insuring that an organization's objectives in operational…

Q: Explain why errors in the valuation of inventory at the endof the year are sometimes called…

A: The errors in the valuation of ending inventory result in underestimate or overestimate the ending…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.