Under IAS 2, Inventories. all of the following should be decided when reporting inventories except
Answer(s): D
According to IAS 2, Inventories, disclosures about inventories include, for example. The accounting policies applied in measuring inventories. including the cost formulas used, total carrying amount; carrying amount for each classification appropriate to the entity. carrying amount of items carried at fair value minus costs to sell; amount of any reversal of write downs as income; reasons for such a reversal; and carrying amount of inventory pledged as security. Thus. is, disclosures under IAS 2 include the carrying amount of inventories carried at NRV, not the amount of ate inventory.
An entity had 1.000 units of opening inventory that cost US $10 per unit On May 1. 1 .000 units were purchased at a cost of US $11 each. and on September 1 another 1.000 units were purchased at a cost of US $12 each. If 2.000 units were sold during the year. the company will report cost of goods sold of List A if the List B method of inventory valuation is used.
Answer(s): C
Under FIFO, the first items purchased are presumed to be the first sold. Given that 3, 000 units were available and 2.000 units were sold. FIFO cost of goods sold must have been US $21.000 [(1, 000 $10) BI T1, 000 $11) May 1 purchase].
Which of the following changes in accounting policies resulting from a significant change in the expected pattern of economic benefit will increase profit?
Answer(s): B
According to IAS 16. Property, Plant, and Equipment, a change in depreciation method resulting from a significant change in the expected pattern benefits is accounted for as a change in estimate, that is. prospectively. In a period of falling cost=. FIF1 results in higher cost of goods sold than the weighted-average method. FIFO includes the higher, early in cost of goods sold, whereas the weighted-average method averages the later, lower costs with the higher, earlier costs. Thus, a change from FIFO to weighted-average costing reduces cost of goods sold and into !:3ses reported profit. An entity had the following account balances in the pre-closing trial balance:
The entity had net purchases for the period of
Answer(s): E
If the entity uses the weighted-average method of inventory valuation, cost of goods sold for the period will be
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